Published on Thursday, October 19, 2000 by InterPress Service
Consumer, Environmental Groups Blast Spate Of Big Oil Mergers
by Danielle Knight
WASHINGTON - In light of a proposed merger of two
oil companies announced this week, consumer and environmental
warning that the growing concentration of power and wealth of the
is unsafe for the environment, communities, and consumers
On Oct. 15, California-based Chevron Corporation agreed to acquire Texaco Inc. for about 36 billion dollars in stock, creating the world's fourth-largest oil company. The acquisition comes at a time when crude oil prices have hit their highest in a decade, while oil company profits have skyrocketed.
Both companies are expected to be forced to sell off some of their as sets in order to win approval by the Federal Trade Commission (FTC). Regardless of the long road before the acquisition is approved, the merger will likely go ahead relatively smoothly since the green-light has already been given recently to several even larger oil mergers.
In April, British Petroleum (BP) Amoco and ARCO (Atlantic Richfield C ompany) received clearance from the US FTC for the combination of their companies. The union will create a corporate group worth some 200 billion dollars.
And in late 1999, the regulatory agency approved the 82 billion dollar merger of Exxon Corporation and Mobil Corporation.
Consumer and environmental groups alike are concerned that the recent spate of mergers will lead to an unhealthy concentration of power. They say the mergers are unmaking history by putting back some of the pieces of the Standard Oil empire that was broken up into 34 companies by the US Supreme Court i n 1911.
Exxon was originally Standard Oil of New Jersey, while Mobil was once Standard Oil of New York. Atlantic Refining was one of the Standard Oil companies and in 1965 was later named ARCO. Standard Oil of California was renamed Chevron, while Standard Oil of Indiana was renamed Amoco. Standard Oil of Ohio was bought out in 1987 by British Petroleum.
Wenonah Hauter, director of Public Citizen's Critical Mass Energy Project says that this trend toward more consolidation is bad for consumers in the long run and has the added impact of increasing the political power of these larger companies to influence environmental and energy policy.
Most of these recently merged oil companies have been involved in campaigns against an international agreement on climate change, known as the Kyoto Protocol. The treaty requires industrialised countries to reduce their heat-trapping greenhouse gas emissions, caused by the burning of coal, oil, and petrol.
The influence of the oil companies on US lawmakers, through campaign contributions and lobbying, has already thwarted ratification of the Protocol. As they merge, their views become even more commanding.
Rather than moving away from the use of oil, these larger, more politically powerful companies, says Hauter, ''can influence public policy and th is results in more subsidies, more tax breaks for the oil industry and increased pressure to drill in environmentally sensitive areas''.
James Love, director of the Consumer Project on Technology, an advocacy group based in Washington, says that worldwide consolidation of the oil industry makes it easier for the Organisation of Petroleum Exporting Countries (OPEC) to keep prices high.
''OPEC benefits from increased oil company concentration, which makes it much easier to monitor private actions and even to solicit co-operation fr om the leading private actors,'' he told reporters.
Some politicians have also voiced concern about the mergers. Upon announcement of the Chevron-Texaco merger, Chris Lehane, a spokesman for Democratic presidential candidate Al Gore told reporters: ''Given the fact that oil companies saw their profits rise by more than 300 percent in the past year, it raises the question whether big oil is getting too big.''
Despite Vice President Gore's family connection to Occidental Petroleum, the Presidential candidate has donned a populist hat. He said various times while on the campaign trail that ''big oil'' was getting too powerful.
Environmental groups are campaigning against California-based Occidental to stop drilling for oil on land claimed by an indigenous tribe in Colombia.
Environmentalists say that the Chevron-Texaco merger unites two ''corporate criminals'' which have troubled records on the environment and human rights. Both companies are currently being sued in US court for their operations abroad which allegedly have led to environmental and human rights violations.
''These facts are rarely considered by the regulators when looking at mergers and acquisitions, but they should be,'' says Danny Kennedy, executive director of Project Underground, a California-based environmental watchdog.
Chevron is facing a lawsuit in Federal Court for its alleged role in providing the Nigerian military with equipment that was used to attack people protesting the oil companies in 1998. The company is also accused of aiding the military in an attack on the villages of Opia and Ikenyan in the Niger Delta region.
New York-based Texaco is facing a billion-dollar class action lawsuit filed by people in Ecuador, including several indigenous tribes, charging the company deliberately polluted the environment.
According to Judith Kimerling, a lawyer who first documented the impact of oil development on the Ecuadorian Amazon in the 1991 book 'Amazon Crude', Texaco discharged an estimated 4.3 million gallons of highly toxic ''produced'' water per day into the rain forest, as it pumped billions of gallons of crude out of Ecuador.
The plaintiffs claim that the company - which denies all charges - ignored oil industry standards and instead of re-injecting the waste into the ground, Texaco dumped its toxic cocktail of chemicals into unlined pits that eventually leached into streams and rivers.
Paulina Garzon with the Center for Economic and Social Rights in Quito, Ecuador has worked with indigenous communities in documenting the impact of pollution allegedly caused by Texaco's past operations.
''Now, we find that the first thing (oil) companies say when they come to Ecuador is that they are not like Texaco,'' says Garzon.
Copyright 2000 IPS