U.S. Senate Majority Leader Charles Schumer and 22 other Democratic senators recently wrote to the U.S. Federal Trade Commission (FTC), alleging that multi-billion dollar acquisitions by Exxon Mobil and Chevron would lead to reduced competition and higher prices for consumers and asking regulators to launch antitrust probes. Exxon has proposed buying Pioneer Natural Resources for $60 billion and Chevron agreed to acquire Hess for $53 billion. The letter clearly shows, however, that these politicians do not understand much about the U.S. oil market: its players and their contributions to the nation’s energy security. First, it is hard to understand how competition would be reduced when Exxon and Pioneer combined produce only about 5 percent of U.S. oil, which is just a fraction of the oil OPEC members control–approximately 80 percent of the world’s proven oil reserves. The United States has roughly 9,000 small independent oil producers that produce 83 percent of total U.S. oil production and 90 percent of total U.S. natural gas production. In Texas, there were more than 5,700 oil and gas producers operating in 2022.

These mergers are not unusual given the state of the oil market. Volatility in oil prices and the market forces that drive them have resulted in consolidation in the past. In addition, rising interest rates caused by Biden’s inflation have increased the cost of capital, making it more expensive for oil producers, who face massive capital outlays for exploration and development and to drill for new wells, making mergers more attractive. Oil companies need to be vigilant regarding Biden’s anti-oil and gas policies because they run the risk of investing in new oil and gas operations and infrastructure that might be made uneconomic if Biden’s net zero carbon program is fully implemented. These factors are compounded by the antagonistic regulatory environment that President Biden and his administration have promoted since his taking office.

Biden’s regulatory environment has caused U.S. gasoline prices to increase over his term in office. Schumer is right when he says “in April 2020 … retail gasoline prices averaged $1.84. Prices steadily rose for two years, hitting a historic height of $4.93 in June 2022, and remain relatively high today at $3.84.” The low prices Schumer sites occurred under President Trump’s energy dominance program, while the high prices occurred under President Biden’s anti-fossil fuel program.  In fact, to reduce gasoline prices before the mid-term election in 2022 to about where they are today, Biden robbed the Strategic Petroleum Reserve (SPR), the U.S. emergency oil reserve, of 260 million barrels of oil of the type that U.S. refiners need. He has yet to refill the emergency reserve. His vandalism has left the SPR at a 40 year low with much of the remaining oil not amenable to U.S. refiners who require certain grades of oil to refine into the products Americans use to make their lives better.

To support his argument, Schumer cited a 2004 GAO report that claimed petroleum industry mergers raised gasoline prices. The FTC, however, found that GAO report to be “fundamentally flawed.” It is also why the Commission resisted taking up Biden’s call to investigate the oil industry for price gouging.

The Schumer letter also claims that oil exports hurt consumers. That again is incorrect because U.S. oil exports work to lower oil prices and ease OPEC’s dominance of global oil markets. OPEC dominance was strong until the U.S. shale oil renaissance took off in the early 2000s and unlocked previously inaccessible reserves of oil and gas. More companies started producing oil from shale basins and oil production rose significantly. In 2022, U.S. oil production was 105 percent higher than in 2000. With the acquisition of Pioneer, Exxon’s Permian Basin production would more than double to 1.3 million barrels of oil, helping to lower prices and strengthen America’s energy security. Even the Dallas Federal Reserve Office has negated Schumer’s conviction. In 2022, a Dallas Federal Reserve study explained: “Because a cessation of U.S. crude oil exports would lower the supply of oil in global markets and raise its price, one would expect global fuel prices, if anything, to increase as a result….” The Senators’ argument may be simple and straightforward, but the record shows it is also wrong.

By allowing the major oil producers to increase their presence in U.S. shale oil plays, the deals create opportunities to bring significant new supplies to market. As The Wall Street Journal recently pointed out, President Biden demanded that oil and gas companies spend their record profits on increasing production, which is what they are doing, while also spending money on Biden’s energy transition. According to Chevron, the combined company is “expected to grow production and free cash flow faster and for longer” than its current five-year guidance. And, besides producing more oil due to its proposed merger with Pioneer, Exxon plans to produce lithium as soon as 2027 and to supply enough lithium to support the manufacture of 1 million electric vehicles annually by 2030, supporting Biden’s EV program. Earlier this year, the company purchased 120,000 acres of a geological site in southern Arkansas called the Smackover Formation that is rich in lithium. The big oil and gas companies are moving increasing amounts of money to renewable energy sources and “clean energy” technology, despite horrible economic performances of those approaches lately.

Some analysts believe that bigger companies would be better in reducing greenhouse gas emissions—the main culprit in the Democratic leaders’ desire to eliminate fossil fuels, or so they say. Oil majors have the financial flexibility and the engineering skills to reduce the carbon intensity of their operations far more than independent oil producers that are staffed by an average of 12 workers. Both Chevron and Exxon have made emissions reductions part of their deal announcements and presentations. Chevron plans on an anticipated 50 percent reduction in methane emissions by 2028 and Exxon has pushed forward Pioneer’s target of net-zero greenhouse gas emissions in the Permian Basin by 15 years, to 2035 from 2050. Besides having the money to reduce emissions, there is a greater motivation by the larger companies to reduce their emissions and to hit their net-zero targets because the shareholder bases and activist investor groups are more demanding of the large companies for hitting more aggressive emission targets.

If Schumer is interested in the real problem, he should turn his attention to the state-owned energy companies in the Middle East, China, Russia, and South America that constitute real market monopolies. In 2020, 16 of the top 19 oil companies in the world were state-owned, controlling over three-quarters of global crude oil reserves.

According to Exxon, “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.”  And since the United States creates energy with a higher environmental protection score than virtually every other country in the world, allowing these American companies to combine will hasten the U.S.’s already outstanding record.  If the Senate authors of the letter regarding mergers understood that, they would be encouraging more production in the United States, rather than fighting it at every turn, as has been their record.


Schumer and his Democratic Senate friends should take an Introduction to Oil course to learn the mechanics of the oil market, which is a global market, not a domestic market. As the Congressional Democrats and the Biden administration are tying the hands of the oil industry any way they can, the industry is trying to survive by keeping U.S. oil production up and by investing in Biden’s energy transition. But, no matter what the industry does, the Biden administration and Schumer’s Senate Democrats produce barriers to the industry’s mission of producing oil for American families while investing in Biden’s “green” energy program.

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