The threat of Bigger Oil

Senators and advocates are asking the FTC to investigate Exxon and Chevron’s mega-mergers — and stop them if need be.

Emily Sanders is the Center for Climate Integrity’s editorial lead.

---

Illustration by Tess Abbot

The two biggest U.S. oil companies are poised to become even bigger — and elected officials and advocates are sounding alarm bells about the harm they fear Bigger Oil could inflict on the climate, consumers, and the ability of the government to protect both from a more consolidated and politically powerful fossil fuel industry. 

Last month, ExxonMobil and Chevron separately announced two of the biggest oil and gas deals of the century, securing their dominance over the U.S. fossil fuel sector. Exxon’s $60 billion acquisition of Pioneer Natural Resources and Chevron’s $53 billion acquisition of Hess are the latest signs that the companies are committed to expanding their fossil fuel businesses, even as climate scientists warn that the continued use of fossil fuels is unleashing irreversible damage on communities and the planet.

In separate letters, 23 U.S. Senators and 22 advocacy groups have urged the U.S. Federal Trade Commission, the federal agency that protects the public from unfair business practices, to investigate whether the deals would violate antitrust law — and stop them if necessary. (Note: ExxonKnews is a project of The Center for Climate Integrity, which signed the advocates’ letter.) 

The officials and advocates lay out a number of concerns: 

Exxon and Chevron are doubling down on fossil fuels at the expense of the climate.

Exxon’s deal more than doubles its already-expansive properties in the Permian Basin, making it the largest producer in one of the most sought-after oil fields in the world. Chevron would acquire Hess’s shares in North Dakota’s Bakken Shale, the Gulf of Mexico, and offshore Guyana, a global carbon sink where an “oil arms race” is now playing out.

“At a time when Americans overwhelmingly support governmental efforts to clean up the environment and protect our nation from climate disasters, Exxon and Chevron are doubling down on fossil-fuel production,” the senators wrote in their letter to the FTC.

The companies’ plans to grow their fossil fuel operations come amid dire markings of climate catastrophe. One recent study found that the world will surpass the critical 1.5 degree threshold of warming in less than five years without action to limit fossil fuel emissions. Another concluded that without such action, the Greenland ice sheet is on track to breach a limit that could lead to “runaway melting.”

The mergers could expand oil companies’ lobbying power and undermine democracy.

The oil giants’ proposed megadeals, the senators argue, “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.”

Exxon and Chevron are currently embroiled in dozens of climate lawsuits filed by states and municipalities across the country that seek to hold the companies accountable for deceiving the public and policymakers about the harms their products cause. In one case, brought by 37 municipalities in Puerto Rico, Exxon is accused of engaging in a conspiracy to push climate denial in violation of the RICO Act — a law originally used to prosecute organized crime. That lawsuit was recently amended to cite a sentencing memo in a hacking scheme against #ExxonKnew activists, arguing that it "heavily implicates ExxonMobil’s participation in the hacking scheme, likely in furtherance and defense of the defendants’ racketeering enterprise."

If these companies get even bigger, the legislators argue, their outsized political influence could become even harder to rein in. “By taking actions to promote competition, the FTC would also prevent the fossil-fuel industry from further subverting our democratic processes,” they write.

The deals could threaten workers and consumers.

It wouldn’t be the first time the feds intervened to break up Big Oil when its consolidation became a danger to the rest of society. In 1911, the U.S. Supreme Court ruled to split up massive oil conglomerate Standard Oil, then the largest corporate trust in the United States, siding with the Department of Justice in its charges that the company had formed a monopoly in violation of antitrust laws. As Antonia Juhasz explains in her book, “The Tyranny of Oil,” Standard Oil’s consolidation spurred numerous state-level lawsuits and a progressive populist movement that put pressure on the government to finally act. 

“Consolidation gave [Standard Oil] unparalleled economic and political power, and it harmed the environment, public health, workers, and competition through its incredible undue influence over the government,” said Juhasz, who is now senior researcher on fossil fuels at Human Rights Watch. 

The Supreme Court split up Standard Oil into dozens of distinct firms — Standard Oil of California (now Chevron), Standard Oil of New Jersey (now Exxon), and Standard Oil of New York (Mobil) being just a few. But after antitrust laws were loosened during the Reagan administration in the 1980s, many of the companies were able to re-consolidate, creating the oil “supermajors” that reign over the U.S. fossil fuel industry today. 

“Such consolidation enabled anticompetitive coordination in the industry,” the senators wrote, citing internal Mobil and BP documents showing that the companies “were well aware that they were members of an oligopoly” and “knew that directing their individual supplies into, or away from, particular regions of the country enabled them to achieve ‘price uplift scenarios’ and to ‘leverage up’ prices.” In one 1999 internal BP memo, the company laid out a strategy to increase gas prices in the Midwest “by 1 to 3 cents per gallon” by taking advantage of “opportunities” to restrict supply; another 1996 internal memo from Mobil discusses buying up the Powerine refinery in California “and marketing it ourselves” at a higher price.

The result has not only been steeper prices, but communities made far more vulnerable to frontline pollution and climate change, said Juhasz. “What we would hope is that the FTC would return to an approach to antitrust which recalls its roots, which were founded in a concern not just for competition, but for democracy and the ability of the government to regulate on behalf of the public interest,” she said. “I can’t think of any place where that’s more relevant than in the fossil fuel sector, where the harms to human rights of the worsening climate crisis are so vast and mounting that the last thing we would want to see is a further consolidation of these same companies back to their mega-origins.”

What happens next?

For the deals to move forward, the FTC must review the mergers, after which time the agency can choose to issue a request for additional information from the companies. If the agency did move forward with a full investigation, depending on its findings, it could then either allow the deals to move forward, negotiate a consent agreement with the firms requiring certain provisions for the mergers to go ahead, or block the deals entirely. 

In deciding whether to investigate a merger, the FTC typically looks at how much market power the firms that are merging represent, whether that market power was gained through illegal methods of competition, and whether the deal could further entrench a firm’s monopoly power or otherwise cause harm, explained Denise Hearn, Resident Senior Fellow at the Columbia Center on Sustainable Investment.

As for the implications of these companies’ expanding fossil fuel operations on the climate, “I think in international agencies there’s been much more discussion than there has been in the U.S. around the environmental consequences of mergers, and whether they should start to include some of that analysis in how they enforce antitrust law,” Hearn said.

The question is whether companies like Exxon — which uses its debunked “net-zero” emission “ambition” to claim that its merger with Pioneer will actually “lower both companies’ methane emissions” — could effectively greenwash their way around such considerations.

Even if they try, Hearn said, “the IPCC is saying the way that we need to get ourselves out of this mess is to completely stop expanding our fossil fuel production, full stop. So can you justify it in that larger global context?”

The deals follow Big Oil’s years-long, multi-million dollar advertising campaigns to convince the public that they were leading partners in climate solutions — even while they spent almost nothing investing in renewable energy. In 2021, three advocacy groups — EarthWorks, Global Witness, and Greenpeace — filed a complaint with the FTC accusing Chevron of misleading consumers through greenwashing.

“Two and a half years ago we warned the FTC that the world’s largest polluters were carrying out a dishonest and dangerous plan to convince the public that they’re cleaning up their act while, in reality, doubling down on fossil fuels,” said Josh Eisenfeld, a Campaign and Communications Manager at Earthworks. “We need the FTC to fulfill its responsibility to protect American consumers by reining in Big Oil.”

---

ICYMI News Roundup

• McKinsey & Company pushes fossil fuel interests as advisor to UN climate talks, whistleblowers say

• US Supreme Court denies request by oil firms to halt coastal erosion suit

• ‘Insanity’: petrostates planning huge expansion of fossil fuels, says UN report