Economic aspects

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• PETROLEUM INDUSTRY PRE 2001
• Barrel of Crude oil
• End of 1998- 9.81
• Fall of 2000- 31.00
• Gallon of gasoline (Midwest)
• Early 1999- 0.83 Summer 2000- 2.13
• Explosion of mergers
• BPAMOCOARCO
• ExxonMobile

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• PETROLEUM INDUSTRY PRE 2001 (cont)
• Congressional hearing (industry on the carpet)
• Antitrust violations?
• Potential anticompetitive behavior?
• Explainable, industry operating factors?

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• POST HEARING
• May 2001, US Senate Permanent Subcommittee on
  Investigations requests the good guys (GAO) in
  white hats to investigate
• GAO study design
• Number of petroleum industry mergers and why?
• How has market concentration changed?
• How has the marketing of gasoline changed?
• Did mergers raise gasoline prices?

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• GAOs Report (GAO-04-96) May 17, 2004
• Lights a match with Congress, industry and the
  public
• Healthy debate ensued
• Going forward is todays focus

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Economic aspects

• Economic methodology intended to be retrospective
• Address question asked by Congress
• Lack of existing findings in the literature
• Use publicly available data

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What we said on quantitative impact of some
mergers
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Nature of the evidence(one gas type event study)
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What the GAO study is and is not

• What it is
• An independent investigation of a set of mergers
  in the oil industry in the late 1990s
• A serious effort to investigate the broad impact
  of the set of mergers where no similar evidence
  existed in the public record.
• Indication of the potential usefulness of
  retrospective evaluation

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• What it is not
• Not a study of causes of current price changes
• Not an audit of FTC actions
• Not the last word on the subject