A group of mostly Democratic senators led by Majority Leader Chuck Schumer are urging Federal Trade Commission Chair Lina Khan to closely scrutinize two proposed multibillion-dollar deals in the oil sector for their potential consequences for U.S. consumers.
The lawmakers are concerned that ExxonMobil (NYSE:XOM)’s $59.5 billion acquisition of Pioneer Natural Resources (NYSE:PXD) and Chevron (NYSE:CVX)’s $53 billion purchase of Hess Corporation (NYSE:HES) deal could disrupt competition, increase gasoline prices, and have negative effects on smaller enterprises and wage levels due to potential anti-competitive coordination.
Schumer’s letter to FTC is the highest-profile call on the U.S. regulators so far to look into whether the deals announced last month would inflict damages to American consumers. The Democrats who signed the letter are concerned that the mega deals could push up gasoline prices.
Amy Klobuchar of Minnesota, Richard Blumenthal of Connecticut, Cory Booker of New Jersey, John Fetterman of Pennsylvania, and Tammy Duckworth of Illinois are among the other Democrats who have signed the letter.
The acquisitions are set to establish Exxon as the leading crude oil producer in the Permian region and expand Chevron’s assets offshore Guyana and in the U.S. Bakken shale play. These vertically integrated operations could potentially disrupt competition and drive up gasoline prices in national or regional markets.
The FTC is asked to consider “how Exxon’s or Chevron’s vertically integrated operations may harm American competition in any national or regional market?”
ExxonMobil (XOM) and Chevron (CVX) are both prominent players in the Oil, Gas, and consumable Fuels industry. ExxonMobil has raised its dividend for 41 consecutive years and is expected to be profitable this year.
Chevron, on the other hand, has raised its dividend for 36 consecutive years and is also predicted to be profitable this year. It’s worth noting that the company’s stock is currently in oversold territory, according to the Relative Strength Index (RSI).
