A group of 23 Democratic senators, led by Senate Majority Leader Chuck Schumer, has called for an investigation into the recent multibillion-dollar acquisitions made by ExxonMobil and Chevron. The senators are concerned that these deals could result in increased gasoline prices, and have urged federal regulators to look into the matter.
Lawmakers wrote a letter addressed to the Federal Trade Commission expressing their concerns regarding Exxon’s proposed acquisition of Pioneer Natural Resources and Chevron’s proposed purchase of Hess Corp. The lawmakers highlighted that these two deals, with a combined value of over $113 billion, are some of the biggest in the history of the petroleum industry in the United States and may potentially breach antitrust regulations.
According to the senators, the agreements in question have the potential to negatively impact competition, which could then lead to higher prices for consumers and decreased output across the country. In addition, the senators noted that smaller businesses could be particularly vulnerable to the consequences of these deals, potentially resulting in lower wages for workers.
A group of 23 senators have signed a letter regarding antitrust concerns, with signatures including those of Minnesota’s Senator Amy Klobuchar, who chairs the Judiciary Committee’s antitrust panel, as well as other prominent antitrust advocates such as Massachusetts’ Senator Elizabeth Warren and Vermont’s Senator Bernie Sanders.
According to the senators, although some argue that the global market for oil and gas is massive enough that even big players like Exxon and Chevron cannot limit global capacity, the FTC must take into account the potential harm to American competition caused by their vertically integrated operations.
The FTC spokesperson acknowledged that they had received the letter, but opted not to provide any additional statements.
Since Russia’s invasion of Ukraine in February 2022, the likes of Chevron and Exxon have reported significant profits owing to high energy prices and demand. For instance, Exxon declared $9.1 billion in profits in the quarter that ended on September 30, while Chevron also posted $6.5 billion in profits.
According to a statement released by Exxon, the potential agreement with Pioneer Resources, based in Texas, has the potential to bolster energy security in the United States and bring significant benefits to the American economy and consumers.
According to the company, the merger of the two companies, despite concerns about competition, should not be a cause for worry as they only account for about 5% of U.S. oil production. On the other hand, the company believes that the merger will bring significant benefits to the economy and the environment, especially in terms of achieving greater energy independence and reducing emissions.
According to Chevron, the proposed partnership with Hess based in New York would enhance the company’s long-term performance while simultaneously reducing carbon dioxide emissions that add to the problem of global warming. The company believes that this deal would result in higher returns and lower environmental impact, making it a win-win situation for everyone involved.
Federal regulators must give their approval for both deals to go through.
The oil industry’s “merger mania” that poses a threat to competition has been called to attention by environmental groups, who have welcomed the investigation into the matter.
According to Lukas Ross, senior program manager at Friends of the Earth, the expansion of Big Oil poses a significant threat to both our climate and democracy. Ross emphasizes that the proposed mergers involving Exxon and Chevron would only serve to boost their already outsized political power. This increase in power would enable them to perpetuate the generation of planet-warming greenhouse gas emissions. Ross believes that the FTC holds a significant responsibility to take action against these mergers.
According to a spokesperson from the American Petroleum Institute, which is considered as the oil industry’s primary lobbying group, the mergers being proposed will lead to an increase in production and enhance the environmental performance.
According to Bethany Williams, a representative from API, it’s time to shift our attention away from the tired, divisive talking points that do nothing to protect America’s energy security amidst global turmoil. Instead, our focus should be on removing regulatory barriers that are currently causing harm to consumers.
Last year, the oil industry was under fire from Schumer and other Democrats who attempted to grant the FTC more power to combat companies that engage in price gouging. In response to public worries about the high cost of gasoline, Democrats argued that the FTC requires more resources, such as harsher fines and penalties and a specialized team of experts to oversee markets and pursue instances of price gouging. However, their efforts proved unsuccessful.
The previous Congress did not pass a bill aimed at curbing price gouging. However, a comparable bill is presently under consideration by the Senate Commerce, Science and Transportation Committee.