US senators demand probe into mega takeovers by Exxon, Chevron

Nov 03, 2023 ExxonMobil, News, Oil & Gas

– say deals likely to harm competition, risk raising consumer prices, limit US production, hurt smaller firms and suppress wages

(CNN) – Senate Majority Leader Chuck Schumer, Sen. Elizabeth Warren and nearly two dozen other Democrats are demanding federal regulators probe the mega takeovers inked last month by ExxonMobil and Chevron.

In a letter on Wednesday to the Federal Trade Commission, the lawmakers warned the blockbuster Big Oil deals are likely to harm competition, risk raising consumer prices, limit US production, hurt smaller firms and suppress wages.

Exxon, already America’s biggest oil company, reached a deal in October to buy rival Pioneer Natural Resources for $60 billion. Days later, Chevron, the No. 2 US oil company, revealed plans to purchase Hess for $53 billion. Schumer, Warren, Sens. Bernie Sanders, Amy Klobuchar and others urged the FTC to “closely review” the deals for possible anticompetitive harm and block the transactions if necessary.

In the letter, the Senate Democrats argue past mergers that helped create Exxon and Chevron “enabled anticompetitive coordination” that hurt consumers by limiting supply of oil. “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,” the lawmakers wrote.

Senate Majority Leader Chuck Schumer

The Senate Democrats note that Pioneer owns more drilling acreage than any other Permian producer and Exxon is also a top producer there. The combined company could pump 1.2 million barrels per day, which is more than twice the closest rival. “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 said. “If anything,” the lawmakers said, the FTC should be investigating the past mergers that created Exxon and Chevron to determine if the companies “should be broken up once again.” The Democrats also expressed alarm at Exxon and Chevron “doubling down” on fossil fuels at a time when many Americans support efforts to clean up the environment.

“By taking actions to promote competition, the FTC would also prevent the fossil-fuel industry from further subverting our democratic processes,” the Democrats wrote. An FTC spokesperson confirmed the agency received the letter but declined to comment on the issue. In response, Exxon noted that it and Pioneer represent just about 5% of US oil production combined and argued the deal would be a positive for the environment. “For all those who seek even greater US energy independence and for lower emissions, this merger represents nothing but upside for our economy and our environment given that ExxonMobil has the resources to get more out of the ground and do it at vastly improved emissions levels,” Exxon said in a statement to CNN.

Chevron did not respond to a request for comment.

White House spokesperson Michael Kikukawa referred inquiries on the specific deals to the FTC but signaled broad support for strong antitrust action. “Generally speaking, this administration is committed to addressing concentration across industries and has made promoting competition a core pillar of our economic agenda,” he said.

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