Rosalind Evans
The oil and gas industry could be on the brink of a significant transformation following the recent mega-deals inked by ExxonMobil and Chevron, with ExxonMobil reaching an agreement to acquire Pioneer Natural Resources for $60 billion and Chevron revealing plans to purchase Hess for $53 billion. These blockbuster deals have prompted Senate Majority Leader Chuck Schumer, Sen. Elizabeth Warren, and nearly two dozen other Democrats to urge the Federal Trade Commission (FTC) to probe the mergers, citing concerns about potential harm to competition, rising consumer prices, limitations on U.S. production, adverse effects on smaller firms, and the suppression of wages.
In a letter to the FTC, the lawmakers expressed their apprehension, stating, “The oil-and-gas industry is still dominated by a handful of corporate giants, led by the top-two players Exxon and Chevron. Any further consolidation could harm American consumers.” They urged the FTC to “closely review” the deals for possible anticompetitive harm and to block the transactions if necessary.
Exxon, already America’s biggest oil company, and Pioneer Natural Resources, the owner of more drilling acreage than any other Permian producer, combined would be able to pump 1.2 million barrels daily. This is more than twice the output of their closest rival. Schumer, Warren, and other Senate Democrats argued that this deal “would enable the new Exxon to dominate the Permian – the most prolific oil-and-gas field in the world and America’s most important.”
The letter also pointed out past mergers that helped create Exxon and Chevron “enabled anticompetitive coordination” that limited the oil supply and harmed consumers. The Democrats called for investigating these past mergers and questioned if the companies “should be broken up once again.”
Furthermore, the Democrats expressed their concerns over Exxon and Chevron “doubling down” on fossil fuels at a time when many Americans are in support of clean energy initiatives. They believe that by promoting competition, the FTC can also prevent the fossil fuel industry from undermining democratic processes.
In response to the call for an investigation, Exxon defended its deal, stating that Exxon and Pioneer represent just about 5% of U.S. oil production combined. Exxon argued that the merger would benefit the environment by enabling ExxonMobil to extract more oil while achieving “vastly improved emissions levels.” Chevron has yet to respond to the call for investigation.
The calls for an investigation into the ExxonMobil and Chevron mega-deals highlight the growing concern among lawmakers about the potential negative impact these mergers could have on the industry and consumers. With the FTC still waiting to respond to the request for comment, the outcome of these deals remains uncertain. However, the push for scrutiny underscores the importance of maintaining a competitive landscape in the oil and gas industry to ensure fair prices, prevent anticompetitive practices, and support clean energy initiatives.
