US Senate Majority Leader Charles Schumer has voiced apprehensions regarding the recent acquisitions of Exxon Mobil and Chevron Corp., marking them as two of the most significant oil and gas deals of the century. In a missive addressed to the Federal Trade Commission on Wednesday, the Democratic leader called upon the agency to scrutinize potential anti-competitive ramifications arising from the transactions, which were finalized earlier this month.
Exxon’s acquisition of Pioneer Natural Resources for a staggering $60 billion and Chevron’s purchase of Hess for $53 billion have raised alarm bells for Schumer. He asserted in his letter, “By permitting Exxon and Chevron to further consolidate their extensive operations in vital oil-and-gas sectors, these deals are likely to impede competition, potentially resulting in escalated consumer prices and diminished output across the United States.”
The oil industry witnessed a previous wave of substantial consolidation in the late 1990s, catalyzed by a precipitous decline in oil prices that left numerous companies vulnerable. This prompted industry titans such as Exxon, Shell, BP, and France’s TotalEnergies to merge with competitors, giving rise to colossal integrated entities. Benefitting from a surge in energy prices and demand precipitated by Russia’s incursion into Ukraine, Exxon and Chevron have amassed substantial profits.
Schumer, along with fellow Democrats, has voiced skepticism regarding whether these latest acquisitions are truly a response to shifting market dynamics or if they are primarily aimed at securing market dominance. He emphasized, “If anything, the FTC should be scrutinizing previous anti-competitive mergers of Big Oil conglomerates like Exxon Mobil and Chevron to determine whether these energy behemoths should once again be subjected to dissolution.”
This development unfolds against the backdrop of the U.S. oil and gas industry flexing its financial muscle in the face of an increasingly competitive European landscape, which has pivoted towards renewable fuels. Furthermore, investments in fossil fuels by oil and gas companies have been buoyed by former President Trump’s commitments to rolling back environmental regulations intended to counteract climate change.
With a view towards safeguarding competition and upholding consumer pricing, Schumer implores the FTC to conduct a thorough evaluation of the recent mergers and to contemplate whether divesting the two energy giants might be necessary for the wellbeing of the market.
Source: Reuters
