In an effort to help lower gas prices at the pump, U.S. Senators Jack Reed and Sheldon Whitehouse have led efforts to crackdown on potential gas price manipulation and antitrust violations by the oil and gas industry. Reed and Whitehouse have warned that unfair practices by Big Oil could greatly reduce competition, manipulate gas prices, and drive up gas prices at the pump for consumers. Rhode Island’s senators noted that domestic oil production under the Biden Administration recently broke records, hitting an all-time high, and said that strong U.S. production creating downward pressure on pump prices must not be undercut by unfair gas price manipulation and monopoly conditions in the industry.
Last month, Reed and Whitehouse joined with 21 of their colleagues in sending a letter to the Federal Trade Commission (FTC) urging a probe into Big Oil mergers that greatly reduce competition and drive up gas prices at the pump. ExxonMobil is already the largest oil and gas company in the U.S. Its proposed $60 billion acquisition of Pioneer Natural Resources and Chevron’s proposed $53 billion acquisition of Hess Corporation would be two of the biggest petroleum deals of the 21st century and could be detrimental to consumers.
This month, the FTC, which enforces federal antitrust law, requested additional information from ExxonMobil, Pioneer Natural Resources, Chevron, and a Hess, according to public filings. This represents a key step the FTC takes when reviewing whether a merger could be anticompetitive.
The joint letter, which was led by U.S. Senator Amy Klobuchar (D-MN) and signed by a total of 23 U.S. Senators, stated: “Exxon’s and Chevron’s operations downstream would enable them to redirect Pioneer’s and Hess’s crude supply to themselves, away from (and possibly to the detriment of) their midstream competitors. These new market dynamics could result in price hikes for midstream customers, and such added costs are often passed downstream to retail customers, including drivers at gas stations.”
Americans have felt the negative effects of unchecked Big Oil mergers for decades. A wave of over 2,600 mergers in the 1990s caused the number of major American energy companies to plummet, creating a Big Oil oligopoly in which oil companies have continued to see increasing profits, and consumers are left with higher gas prices.
The letter went on to note: “By 2005, due to the wave of mergers, the top five controlled 55 percent of the market, and the largest ten had 81.4 percent. This increase in concentration enabled the largest players to manipulate the industry by withholding supply in order to drive up prices, and since most of the firms were also vertically integrated, they benefited from higher prices at the retail level, as well.”
“We want the FTC to scrutinize this merger, which, if it goes through is almost certain to raise gas prices for Americans nationwide. The federal government has a responsibility to prevent price gouging and hold Big Oil accountable for market manipulation and other anticompetitive practices that result in American families paying more than they should at the pump,” said Senator Reed.
“We need to break the grip of Big Oil – not encourage further consolidation that will squeeze Rhode Islanders at the gas pump,” said Senator Whitehouse. “I have urged the FTC to closely investigate the potential anticompetitive outcomes of this proposed merger and consider whether this will increase gas prices for hardworking families.”
Reed and Whitehouse have championed efforts to lower energy costs for Rhode Islanders, including delivering federal assistance through the Low Income Home Energy Assistance Program (LIHEAP) and passing the historic Inflation Reduction Act, which is designed to lower energy costs for households and businesses, create manufacturing jobs for American workers, and deliver a clean, secure energy future.
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