By OGJ editors
HOUSTON, Apr. 26 -- A group of 10 US senators, led by Charles Schumer (D-NY) asked the US Federal Trade Commission to examine how ChevronTexaco Corp.'s proposed $18 billion acquisition of Unocal Corp. might affect gasoline prices.
Schumer called on the FTC on Apr. 18 to block the pending ChevronTexaco-Unocal merger and to review previous mergers involving US-based oil majors to assess their impact on gasoline prices and retail competition.
ChevronTexaco plans to acquire Unocal in a stock and cash transaction (OGJ Online, Apr. 4, 2005).
The proposed acquisition represents the largest union of US oil and gas companies since Conoco Corp. merged with Phillips Petroleum Co. in a $15 billion transaction (OGJ Online, Aug. 30, 2002).
"The bottom line is, the price of gas is going way up, and competition is going way down," Schumer said. "Without regulating the mergers of these behemoth oil companies, gas prices will continue to skyrocket—lining the pockets of Big Oil and bilking American consumers."
In the FTC letter, the senators said they were concerned about what they called a "dangerous level of concentration in the oil industry." They said, "This consolidation has already drastically undermined competition, leaving American consumers vulnerable to repeated and sustained spikes in the price of oil."
Prudential Equity Group LLC analyst Andrew F. Rosenfeld of New York said, "We don't believe that concerted efforts by any one senator or group of senators is likely to successfully influence the FTC in these cases."
Individually, Schumer called on President George W. Bush to initiate a crude oil swap with companies from the Strategic Petroleum Reserve similar to former President Bill Clinton's release of 30 million bbl.
The latest proposal is for the release of 60 million bbl. Schumer believes that the release of stored crude would lower gasoline prices.
Referring to gasoline prices, Schumer called on Bush to help avert "what will be a very hot, very expensive summer for all Americans."