US Senators Urge FTC To Block Chevron-Unocal Deal
WASHINGTON, Apr 19, 2005 (Dow Jones News via Comtex)
U.S. Sen. Charles Schumer, D-N.Y., and several other senators, are calling on the Federal Trade Commission to block ChevronTexaco Corp.'s (CVX) planned purchase of Unocal Corp. (UCL).
The price of gasoline has already reached record highs this year and the proposed merger could drive those prices even higher, the senators, all Democrats, said in a letter they sent to the FTC last week.
The group of senators protesting the proposed deal includes Schumer, Barbara Boxer of California, Patrick Leahy of Vermont, Maria Cantwell of Washington, Debbie Stabenow of Michigan, Russell Feingold of Wisconsin, Ron Wyden of Oregon, and Dick Durbin of Illinois as well as Christopher Dodd and Joseph Lieberman.
"We are troubled by the possibility that a joining of two of the largest companies in an already heavily consolidated industry could initiate a series of mergers and acquisitions that would continue to place an increasingly large amount of oil production and distribution capacity in the hands of a shrinking number of corporate entities," they said.
However, the companies responded by pointing out that the acquisition wouldn't involve any refineries or gasoline stations. Unocal's prime assets are oil and natural-gas reserves, including reserves in southeast Asia.
A spokesman for Unocal said Monday that he hadn't yet seen the letter but questioned the senators' argument because the company "doesn't manufacture, sell or distribute any gasoline."
A ChevronTexaco spokesman made a similar statement, adding that the deal would actually help consumers, not hurt them.
"The acquisition of Unocal by ChevronTexaco is in fact responsive to U.S. energy concerns," said ChevronTexaco spokesman Don Campbell. "The combined company will be better equipped to maximize the potential of Unocal's global oil and gas resources, 75% of which are located outside of the U.S."
The acquisition will help the company better ensure resource availability, which could mean more competitive prices for consumers, he said.
Still, the senators pointed out that the merger would create the fourth-largest publicly traded oil and gas company and that it would control 13 billion barrels of oil equivalent proven reserves, and would increase its oil equivalent production to 3 million barrels per day.
"We believe there is a significant danger that the ChevronTexaco-Unocal acquisition, like the Chevron-Texaco and Exxon-Mobil consolidations before it, will further reduce competition in the oil industry," they said.
In a statement released Monday further explaining the letter, Schumer said the FTC also needs to spend some time reviewing old mergers such as the Exxon-Mobil, Chevron-Texaco and Amoco-BP mergers to determine their influence on gasoline prices.
"The bottom line is, the price of gas is going way up and competition is going way down," Schumer said. "Without regulating the mergers of these behemoth oil companies, gas prices will continue to skyrocket - lining the pockets of big oil and bilking American consumers."
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