Federal Trade Commission Chairwoman Lina Khan is being warned by Republican U.S. Sens. James Lankford and Markwayne Mullin along with a host of others not to follow what Democratic Senators want in the FTC probe of oil and gas mergers.
Lankford along with Texas Sen. Ted Cruz, GOP Leader Mitch McConnell and South Carolina Sen. Lindsey Graham sent a letter to Khan callling for a fair and unbiased review of recently announced oil and gas mergers. Khan started the probe after Democrats called for the FTC to probe the major energy acquisitions and cited what the Republicans called “misleading and false allegations.”
Previously, Senate Democrats also urged the FTC to abuse its authority by arguing that such investigations must be used to stop these companies from discrediting “climate science,” “subverting our democratic processes,” and “frustrate self-governing” through more oil and gas production.
The Republican Senators responded in their letter saying some of their Democratic ccolleagues don’t want Khan to apply relevant facts or antitrust precedent fairly to the mergers.
“Their letter makes specious and speculative claims about what these mergers would allegedly portend for “climate science” and “climate legislation,” among other things. But as you have stated, the drafters’ climate arguments have no role in the antitrust analysis of a merger,” declared the GOP Senators.
They told Khan Democrats in the Senate are entitled to their own opinons but a fair and unbiased review of the mergers must be based upon actual facts.
“We write to urge the Federal Trade Commission (FTC) to follow the law and the facts in its review of the recently announced oil and gas industry mergers. As is the case with any merger review, including those in the industrial sector, mergers must be assessed under a fair and unbiased standard grounded in sound economics and law that protects American consumers, and does not impose policy preferences to further political ends,” the Senators wrote.
Joining Lankford, Cruz, McConnell, and Graham in sending this letter are Senators Mike Crapo (R-ID), Lisa Murkowski (R-AK), John Cornyn (R-TX), John Thune (R-SD), John Barrasso (R-WY), Roger Wicker (R-MS), Jim Risch (R-ID), Jerry Moran (R-KS), John Boozman (R-AR), John Hoeven (R-ND), Rand Paul (R-KY), Mike Lee (R-UT), Tim Scott (R-SC), Deb Fischer (R-NE), Shelley Moore Capito (R-WV), Bill Cassidy (R-LA), Steve Daines (R-MT), Thom Tillis (R-NC), Dan Sullivan (R-AK), Todd Young (R-IN), John Kennedy (R-LA), Cindy Hyde-Smith (R-MS), Marsha Blackburn (R-TN), Kevin Cramer (R-ND), Rick Scott (R-FL), Cynthia Lummis (R-WY), Roger Marshall (R-KS), Bill Hagerty (R-TN), Markwayne Mullin (R-OK), Ted Budd (R-NC), JD Vance (R-OH), Eric Schmitt (R-MO), Katie Britt (R-AL), and Pete Ricketts (R-NE).
Read the full text of the here or below.
Dear Madam Chairwoman,
On November 1, 2023, twenty-three Senate Democrats sent you a letter “urg[ing] you to investigate” the recently announced oil and gas mergers. We write to urge the Federal Trade Commission (FTC) to follow the law and the facts in its review of the recently announced oil and gas industry mergers. As is the case with any merger review, including those in the industrial sector, mergers must be assessed under a fair and unbiased standard grounded in sound economics and law that protects American consumers, and does not impose policy preferences to further political ends.
The FTC has historically viewed the production of oil and gas in the context of a global market. In that market, a post-merger ExxonMobil would account for less than three percent of global production in a market dominated by foreign state-owned entities and less than six percent of United States domestic oil and gas production Similarly, a post-merger Chevron would account for just two percent of global production and four percent of US production. While not determinative, the FTC should, consistent with prior precedent and the application of basic economics, consider these relevant facts in its review.
Unfortunately, some of our Democratic colleagues do not want you to apply relevant facts or antitrust precedent fairly to these mergers, as demonstrated through their letter. Their letter makes specious and speculative claims about what these mergers would allegedly portend for “climate science” and “climate legislation,” among other things. But as you have stated, the drafters’ climate arguments have no role in the antitrust analysis of a merger.
For example, the letter decried oil exporting operations, demonstrating a fundamental misunderstanding of how US refineries operate at capacity, how global energy markets function, and how prices are determined. Furthermore, the letter pejoratively described the combined holdings of a merged ExxonMobil and Pioneer in the Permian Basin, but conveniently ignored that the new company would produce just fifteen percent of the Basin’s oil and gas, while numerous other firms of varying sizes would continue to account for the vast majority of production.
Incredibly, the letter also asked the FTC to simply ignore the parties’ plan to produce an additional one billion barrels of oil over the life of the assets beyond what could be achieved if the parties acted separately. In other words, the letter deliberately ignored evidence of what would be a clear benefit to consumers, workers, and our nation’s energy security: greater production.
Our Democratic colleagues may be entitled to their own opinions, but a fair and unbiased review of these mergers must be based upon actual facts.
Since these two proposed transactions will significantly expand oil and gas production, the obvious economic consequence would be that costs to consumers should fall. That would be a welcome development for American families who are paying substantially higher energy prices because of Biden administration policies.
While not a factor in proper FTC merger analysis, denying these mergers and the associated increase in production could also lead to greater global emissions of greenhouse gases. As domestic energy production decreases, it would need to be replaced by foreign substitutes. Our competitors like Russia produce natural gas that Energy Secretary Jennifer Granholm called the “dirtiest on earth.” On the other hand, the US produces some of the lowest methane intensive oil and gas in the world.
It is precisely because these transactions will produce more oil and gas that our Democratic colleagues oppose them. Such actions, according to our colleagues, are “subverting our democratic processes” and “frustrate self-governing.” However, our colleagues offer no similar hyperbole about the recent unilateral actions of the Biden administration to raise energy costs, limit competition, and reduce investment and access for the US oil and gas industry. Instead, it appears Senate Democrats view antitrust enforcement as an opportunity to impose the same anti-fossil fuel policy preferences to the detriment of the American people— policy preferences that Congress has not authorized the Federal Trade Commission to regulate.
We respectfully request that the FTC conduct a fair and unbiased review of these mergers that is rooted in the facts, economic realities, and precedent. The oil and gas industry (like any other industry) should not be subject to unfair investigations or heightened antitrust scrutiny in order to further a political agenda that seeks the end of fossil fuel production. We expect the Commission to exercise its authorities with adherence to the rule of law and respect for due process, not partisan pressures and policy preferences.
Sincerely,