Senate Majority Leader Chuck Schumer, D-N.Y., and 22 Democratic senators sent a letter to the Federal Trade Commission (FTC) asking the regulator to investigate record-breaking deals by Chevron and ExxonMobil over concerns about the impact on competition in the energy sector.
Schumer and the nearly two dozen Senate Democrats expressed concern over two pending mega deals involving the energy sector giants — Exxon’s proposed acquisition of Pioneer Natural Resources for $60 billion and Chevron’s proposed purchase of Hess Corporation for $53 billion.
"By allowing Exxon and Chevron to further integrate their extensive operations into important oil-and-gas fields, these deals are likely to harm competition, risking increased consumer prices and reduced output throughout the United States," Schumer and the Democratic senators wrote. "At the regional level, the deals threaten to harm small operators and suppress wages."
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The letter blasted the large profits hauled in by the two energy firms in 2022, when Exxon earned $56 billion in profits while Chevron posted $36.5 billion in profits. The Democratic senators went on to note that gas prices rose from $1.84 a gallon in April 2020 at the depth of the COVID pandemic when demand was at its weakest to $4.93 in June 2022 and remain "relatively high today at $3.84." Although they didn’t mention the impact of Russia’s war against Ukraine on energy markets since the February 2022 invasion.
They echoed President Biden’s call for the FTC to "investigate the oil industry for price gouging since such surges cannot be explained away by increased production costs from the pandemic or inflation, especially in light of these firms’ astronomical profits."
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Further, the Democrats’ letter said the "proposed transactions would augment these corporations’ outsized political power, further enabling them to spend millions on lobbyists to thwart climate legislation, litigation to slash environmental rules, and a coordinated campaign to mislead consumers and discredit climate science — all to protect their billions in profits."
The Democratic senators went on to say the FTC taking action to promote competition would "prevent the fossil-fuel industry from further subverting our democratic processes."
They also took issue with the energy industry’s consolidation through a series of mergers and acquisitions involving Exxon and Chevron in the 1990s and early 2000s, writing, "If anything, the FTC should be investigating the past anticompetitive mergers of Big Oil conglomerates like ExxonMobil and Chevron to determine whether these energy giants should be broken up once again."
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The letter’s signatories included Sen. Amy Klobuchar, D-Minn., who chairs the Senate Judiciary Committee’s antitrust panel, and antitrust hawk Sen. Elizabeth Warren, D-Mass.
Several prominent members of the Senate Democratic Caucus up for re-election in swing states in 2024 did not sign onto the letter, including senators Joe Manchin, D-W.V.; Kyrsten Sinema, I-Ariz.; and Jon Tester, D-Mont.
Chevron’s purchase of Hess is expected to close in early 2024 and has been unanimously approved by both companies’ leadership boards pending regulatory approval. Chevron noted it would gain access to the Stabroek block in Guyana as well as Hess’ Bakken assets to broaden its portfolio.
ExxonMobil’s acquisition of Pioneer is also expected to close in the first half of 2024 and will boost Exxon’s foothold in the Permian Basin of Texas and New Mexico.
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"For all those concerned about competition, the fact that the two companies combined represent about 5% of U.S. oil production should set their mind at ease," Exxon told FOX Business in a statement. "For all those who seek even greater U.S. energy independence and far 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."
Chevron did not immediately respond to a request for comment.
FOX Business's Stephen Sorace and Reuters contributed to this report.
