May 28, 2004
WASHINGTON – Consumers are facing higher prices at the gasoline pump because of a wave of oil industry mergers over the last decade reduced competition, according to a government study released yesterday.
The merger of Exxon and Mobil in 1999 – when the two companies were No. 1 and No. 2 in the industry – added up to 5 cents to the price of a gallon of gasoline sold by the combined company.
The General Accounting Office, an arm of Congress, looked at eight major oil industry mergers between 1994 and 2000 and found that six of them led to higher gasoline prices.
Some 2,600 mergers swept the oil industry since 1990, as firms sought to cut costs through economies of scale.
Refining capacity went from "moderately to highly concentrated" in the East Coast, and from "unconcentrated to moderately concentrated" on the West Coast, the GAO said.
The Midwest and Rocky Mountain regions saw minimal changes.
Overall, the GAO found a decrease in the amount of unbranded gasoline that is sold at lower prices because of a decline in the number of independent refineries.
