Public Citizen Analysis Predicts Higher Gasoline Prices
WASHINGTON, D.C. — Members of Congress and consumer groups today voiced their concerns about the proposed mergers of Exxon and Mobil, and BP Amoco and Atlantic Richfield (ARCO), because of evidence that the mergers would lead to higher prices for consumers, decreased competition in the marketplace and disproportionate political influence for those mega-companies. A Federal Trade Commission (FTC) decision on the proposed merger of Exxon and Mobil is imminent; a decision on the BP Amoco-ARCO merger is pending.
“I am very concerned about the proposed mergers of these powerful corporations, and I am calling for close scrutiny by Congress and the Federal Trade Commission to examine the full impact of this giant consolidation on consumers, workers, the environment, our economy and our political democracy,” said Sen. Paul Wellstone (D-Minn.).
If the merger of Exxon and Mobil is approved, the resulting company would be the leading retailer of gasoline, giving it unprecedented market dominance. For example in seven states Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York and Vermont and in Washington, D.C., Exxon and Mobil would have a combined market share of at least 20 percent of gas stations. Also, the Exxon-Mobil and BP Amoco-ARCO mergers likely would send other oil companies scrambling to find partners, further hampering competition.
“Teddy Roosevelt must be turning over in his grave. No one with any knowledge of the history of the oil industry can seriously believe that fewer companies will result in more competition,” said Wenonah Hauter, director of Public Citizens Critical Mass Energy Project. “The current wave of mergers here and overseas is creating a dangerously small group of super multinational oil companies that will cause havoc for consumers in the future. They already wield so much power that the FTC is afraid to say no to them.”
The consolidation mergers would give greater political power to the surviving companies and make the oil and gas industry as a whole more influential as power becomes concentrated in the hands of a few. Already the oil and gas industry wields considerable influence in Congress, spending more than $120 million lobbying Congress during 1997 and 1998. Exxon shelled out more than $10.8 million in 1997-98 lobbying expenditures. Mobil spent $11.4 million, BP Amoco spent $8.7 million, and ARCO spent $8.5 million.
“The proposed mergers set up a lose-lose-lose situation, said Athan Manuel of U.S. Public Interest Research Group. “With less competition consumers will lose. And the increased political power of these new mega-companies means that democracy and the environment will lose, too.