To Bring Gas Prices Down, Schumer Demands FTC Block Newly Announced ChevronTexaco-Unocal Merger
Merging two of the ten biggest oil companies could drive gas prices even higher; only a handful of oil companies remain, with control over resources similar to OPEC, Letter from 10 Senators Urge FTC to Examine Most Recent MergerSchumer Amendment Would Force Tapping of Strategic Petroleum ReserveSchumer calls for FTC review impact of Exxon-Mobil, Chevron-Texaco, Amoco-BP mergers
With gas prices hitting record highs around the country, as consumers pay 49 cents more now than they were paying last year at this time, and with summer just around the corner threatening to push gas prices even higher, U.S Senator Charles E. Schumer called on the FTC to block the ChevronTexacoUnocal merger and to review the ExxonMobil merger and the ChevronTexaco mergers to asses their impact on gasoline prices and retail competition. Additionally, he led a letter from 10 Senators to the FTC urging them to review the merger immediately.
Schumer also pressed for President Bush to initiate a swap in the Strategic Petroleum Reserve (SPR) to pressure OPEC to reduce perbarrel oil prices, by introducing an amendment on Friday afternoon to the supplemental spending bill which is still being debate in the Senate. There could be a vote on the Schumer SPR amendment as soon as this afternoon.
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.
The letter, signed by nine other Senators said, We are extremely concerned that this merger will only intensify the dangerous level of concentration in the oil industry. This consolidation has already drastically undermined competition, leaving American consumers vulnerable to repeated and sustained spikes in the price of oil.
On Friday, the price of crude oil on the New York Mercantile Exchange closed at $50.49, and crude oil has been trading at above $50 per barrel for half of 2005. In addition, the average price at the pump in New York State has hit $2.33 already 46 cents higher than it was last year on this date. National average retail gasoline prices have increased to 2.25 and analysts predict that prices could increase as the summer driving season rapidly approaches. In New York City, prices average out at 2.34 which is a full 40 cents above what people in the five boroughs were paying last year.
Gas prices in New York hit a record this Tuesday when they reached $2.34 per gallon and they have stayed there. This is a 9% increase over prices from a month ago and a 21% increase over prices of last year. If gas prices continues to rise at the rate they did this month, in a month, on May 17th a gallon of gas could cost $2.55, by June 17, a gallon will cost $2.78, and by July 4, gas will cost $ 2.93. Just three months from now gas could break 3.00 a gallon.
If current prices stayed the same for a year, the average New York driver would pay $234 more a year in gasoline over the next year and the average two car family would pay a whopping $468 more in 2005. In total, New York drivers will pay $390,767,832 more per year.
In an effort to create competition to drive these already too high gas prices down, Schumer called on the FTC to block the newly announced merger between ChevronTexaco and Unocal. The ChevronTexacoUnocal merger, like the ChevronTexaco and ExxonMobil mergers before it, will further reduce competition in the oil industry by placing the vast majority of production and distribution resources under the control of a handful of corporate giants. Schumer also called on the FTC to look at other oil company mergers including ExxonMobil, BPAmoco and ChevronTexaco to examine how to bring gas prices down.
If ChevronTexaco, which is already the worlds fifth largest oil company, is allowed to acquire Unocal, the ninth largest oil and gas company in the world, the resulting corporate entity would be the world's fourthlargest publicly traded oil and gas company behind Exxon Mobil, BP and Shell. Following the merger ChevronTexaco would control 13 billion barrels of oil equivalent proven reserves, and would increase its oil equivalent production to 3 million barrels per day. This amount exceeds the daily production of every OPEC member with the exceptions of Iran and Saudi Arabia
The merger of these two companies will only intensify the dangerous level of concentration in the oil industry. Consolidation has already seriously undermined competition, leaving American consumers vulnerable to repeated and sustained spikes in the price of oil. Because if the industrys vertical integration the five largest oil companies in the United States control almost as much crude oil production as the Middle Eastern members of OPEC, over half of domestic refiner capacity, and over 60 percent of the retail gasoline market.
Last year, with crude oil averaging $41 per barrel and working families paying exorbitant prices to heat their homes and fuel their cars, the worlds top ten oil companies made more than $100 billion in profit and in some cases posted recordbreaking fourth quarter earnings that were in some cases more than 200 percent higher than the previous year. This year, crude oil prices are consistently trading at above $50 per barrel, simultaneously increasing the financial burden of energy costs for working families and oil company profits.
Americans are getting scorched by skyhigh gas prices and the summer hasnt even arrived yet. The Bush Administration must do something now to avert what will be a very hot, very expensive summer for all Americans if they are paying 3 bucks or more for a gallon of gas, Schumer concluded.
Click here to view letter.
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