Dems Challenge FTC Oil Refinery Merger Approvals

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Washington, D.C. – In an effort to protect American consumers at a time of record-high gasoline prices, U.S. Senators Russ Feingold (D-WI) and Dianne Feinstein (D-CA), along with 14 of their colleagues, today drew attention to the dangerous concentration of companies in the country's refining sector. The Senators called on the Chair of the Federal Trade Commission (FTC) for an explanation as to how the many oil industry mergers approved by the FTC, including the merger of Valero Energy and Premcor in early September, have not harmed consumers and have not hurt competition. Senators cosigning the letter with Senators Feingold and Feinstein were Jim Jeffords, Charles Schumer, Barbara Boxer, Jack Reed, Ron Wyden, Byron Dorgan, Maria Cantwell, Barbara Mikulski, John Kerry, Ken Salazar, Joe Lieberman, Mark Pryor, Dick Durbin, and Chris Dodd.

Following is the text of a letter the 16 Senators sent to FTC Chairwoman Deborah Platt Majoras:

Dear Chairwoman Majoras:

We are writing to express our concern regarding the Federal Trade Commission’s (FTC) role in permitting consolidation of oil refineries – consolidation that has directly and negatively affected American consumers. For example, just one week after hurricane Katrina, at a time of particularly high gas prices, the FTC approved yet another merger of refinery giants. The merger between Valero Energy and Premcor further consolidates the ownership of refineries (giving Valero nearly 13 percent of the national market share), thereby worsening the consumer’s already weakened position.

As a result of the FTC’s permissive merger policies, ownership over U.S. oil refining has become dangerously concentrated. In 1993, the five largest oil companies operating in the U.S. controlled 34.5 percent of domestic oil refinery capacity; the top ten companies controlled 55.6 percent. By 2004, the top five controlled 56.3 percent and the top ten refiners controlled 83 percent. As a result of the FTC’s policies, the largest five 5 oil refiners today control more capacity than the largest ten did a decade ago.

This concentration has significantly contributed to higher gasoline prices. A May 2004 U.S. Government Accountability Office report agreed that recent mergers in the oil industry have directly led to higher prices. What’s more, this GAO report may have underestimated the large impact mergers have on prices because its analysis does not extend past 2000 – ending before the mergers that created ChevronTexaco, ConocoPhillips, and Valero-Ultramar/Diamond Shamrock-Premcor.

Instead of being vigilant against efforts that may harm consumers, the FTC continues to allow refining capacity to be controlled by fewer and fewer hands. Thus, we request that the FTC explain how the mergers the agency has allowed have not harmed consumers, and, contrary to GAO findings, have not decreased competition.

http://www.lightupthedarkness.org/blog/?view=plink&id=1398

[depakid]

1. How many merged under Clinton's FTC?

One of the many criticisms of Clinton's administration is that they were weak and often incompetant regulators- which was made all the worse because for most of his presidency, the power of the administrative agencies was all he really had to wield- and he could have done so, because the far right didn't have the veto proof majority that it would have taken to overrule an agency rulemaking or decision.

Remember, the various energy crises happened under Clinton's watch.... his agencies were responsible for the lack of oversight that led to price guaging of petroleum, natural gas and of course, the fake west coast energy crisis.

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3. I have an idea

If you don't know, how about you find the information from reputable sources instead of posting speculation.

And I cannot even believe you're blaming California on Clinton, George Bush didn't even try to do that.

[depakid]

6. Well, do the timeline

It began and continued for 7 months under his watch.

I know, because I lived in LA during the rolling blackouts.

It WAS Clinton's failure- just as the natural gas pipeline manipulations that drove up prices several months earlier- were on Clinton's watch- and his agencies did nothing. Same thing with the Northwest gas price manipulation in 97. Again, his agencies DID NOTHING to protect consumers, even though Wyden uncovered conclusive evidence of market manipulation..

(I think BP was fined some comparatively minor amount a few years later).

Fact is, the merger wave continued unabated in many sectors of the economy where it should have been stopped- and aside from a halfhearted effort with Microsoft, the Clinton administration did nothing but approve mega merger after mega merger- to all of our detriments.

So, it's reasonable to assume that some of these refineries mergers were among those that Clinton's agencies rubberstamped. Whether that's true, I don't know.

[sandnsea]

7. That's just not true

From the very first blackout, Gray Davis and the Clinton Administration got involved. Gray Davis suspected price manipulation from the gate.

After a report by the CPUC finds faults with deregulation and warns of new increases in the cost of power, Governor Gray Davis calls for an investigation into "possible price manipulation in the wholesale electricity marketplace." State Attorney General Bill Lockyer announces his office is looking into price spikes in San Diego as part of a broad probe into the state's deregulation problems.

With California facing its largest shortfall of electric power ever, U.S. Energy Secretary Bill Richardson issues a rare emergency order for out-of-state power suppliers to sell electricity to California at the standard "just and reasonable" rates. The generators had been refusing to sell to California because they feared they wouldn't be paid by the state's cash-strapped utilities.

It goes on until Bush takes office, then..

Stating that this is the last time he will grant an extension, the new Bush administration Secretary of Energy, Spencer Abraham, extends for two more weeks Bill Richardson's emergency order directing power wholesalers to sell to California.

http://www.pbs.org/wgbh/pages/frontline/shows/blackout/california/timeline.html

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9. Mergers

The Bush administration approved 33 takeovers totaling $19.5 billion, on top of 21 deals worth $7.3 billion that occurred under President Bill Clinton,

Under Bush, the FTC hasn't tried to block any proposed refinery takeovers. During Clinton's eight years in office, the government sued once to block an oil-industry merger. In February 2000, the FTC sought to stop BP Plc's $33.1-billion purchase of Atlantic Richfield Co. after it concluded the combination could lead to higher prices of oil pumped from Alaska.

http://americaforsale.org/mt/archives/000091.php

I am not a fan of Clinton's corporate policies. But most of his policies were actually based on needed change, Bush just took them and went wild with them, the way corporatists always do. I'm not sure Clinton gets that part of corporatism, even now.

[nadinbrzezinski]

5. the fake west coast crisis

was Enron and bush was president last time I checked

[ladylibertee]

2. Thank you for posting this. It helps defuse some of the negative

hype.I really appreciate you posting this.:pals:

[texpatriot2004]

4. This sounds like a step in the right direction. n/t

[Kenneth ken]

8. thanks for this

and your posting of the Cantwell story.

Two questions (not for you necessarily):

1. Why are there only nine Dems signed on to both these letters
Boxer
Cantwell
Dorgan
Durbin
Feingold
Feinstein
Kerry
Lieberman
Wyden

Why isn't Reid signed on to both? He's supposed to be the Dem leader in the Senate.
Akaka
Bayh
Bingaman
Clinton
Corzine
Dodd
Lautenberg
Murray
Mikulski
Pryor
Salazar
Schumer
signed on to one or the other.


These are similar issues; it seems to me the Dems that are willing to sign on to one, should be willing to sign on to the other as well.

And it would be really good if the Dems who aren't signed on to either one, would stand up and show some party solidarity.