Nearly 50 Democratic Senators and Representatives are urging the Federal Trade Commission (FTC) to investigate the recent mergers in America’s oil and gas sector amid concerns that they would harm competition and hurt consumers.
In a letter to FTC chair Lina Khan, the Democratic Members of Congress, led by Senate Majority Leader Chuck Schumer, wrote that the recent wave of oil and gas industry consolidation “threatens competition in the industry and could lead to higher prices and fewer choices for businesses across the supply chain, suppress worker wages, and make heating, cooling, and gas at the pump more expensive for consumers.”
The lawmakers urge the FTC to fully investigate the announced mergers and oppose any acquisitions if it determines them to be in violation of antitrust law.''
“Contrary to disinformation spread by industry groups, these deals are not about efficiency, international competitiveness, or lowering costs; they are designed to pump more profits out of Americans’ pockets – plain and simple,” the Democratic Members of Congress wrote in the letter.
“Fossil fuel companies have overwhelmingly identified investor pressure as the reason to keep prices high so they can continue to benefit from record profits. Americans are paying the price for Big Oil’s greed and are still struggling to keep up with gas prices higher than prepandemic levels.”
Last year, Democrats had already raised the issue with the FTC when ExxonMobil and Chevron announced their respective mega deals. In November, Democratic lawmakers urged the antitrust regulator to “carefully consider all of the possible anticompetitive harms that these acquisitions present,” referring to Exxon’s proposed $60 billion acquisition of Pioneer Natural Resources and Chevron’s proposed $53 billion acquisition of Hess Corporation.
Since Exxon and Chevron announced the acquisitions, many other companies, large and small, have entered into M&A deals, including Occidental and Chesapeake.
The value of global upstream mergers and acquisitions this quarter is the highest first quarter since 2017, driven by frenzied consolidation in the U.S. shale patch, analysts told Reuters last month.
Industry executives and analysts expect the consolidation drive in the U.S. oil and gas sector to continue amid high stock values and the desire of many firms to get their hands on more inventory for production in the top shale basin, the Permian.
By Tsvetana Paraskova for Oilprice.com
