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Petroleum Mergers and Competition in the Northeast United States

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  • Louis Silvia
  • Christopher T. Taylor

Abstract

Sunoco's 2004 acquisition of El Paso's, New Jersey refinery and Valero's 2005 acquisition of Premcor's Delaware refinery significantly consolidated refinery control in the US Northeast. The Federal Trade Commission investigated both transactions but challenged neither. We examine the FTC's enforcement rationale and test whether these mergers were associated with post-merger price increases in either gasoline or diesel at retail and wholesale. Our findings indicate that the transactions were largely competitively neutral. There was some indication that some unbranded rack prices may have increased after the mergers, but this result was not robust across controls or assumptions. In some other instances, prices in merger-affected areas may have fallen relative to prices elsewhere.

Suggested Citation

  • Louis Silvia & Christopher T. Taylor, 2013. "Petroleum Mergers and Competition in the Northeast United States," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 20(1), pages 97-124, February.
  • Handle: RePEc:taf:ijecbs:v:20:y:2013:i:1:p:97-124
    DOI: 10.1080/13571516.2012.715275
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    File URL: http://hdl.handle.net/10.1080/13571516.2012.715275
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    References listed on IDEAS

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    1. Chouinard Hayley H & Perloff Jeffrey M, 2007. "Gasoline Price Differences: Taxes, Pollution Regulations, Mergers, Market Power, and Market Conditions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-28, January.
    2. Barton, David M & Sherman, Roger, 1984. "The Price and Profit Effects of Horizontal Merger: A Case Study," Journal of Industrial Economics, Wiley Blackwell, vol. 33(2), pages 165-177, December.
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    Cited by:

    1. Nicholas Kreisle, 2015. "Merger Policy at the Margin: Western Refining’s Acquisition of Giant Industries," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 47(1), pages 71-89, August.
    2. Orley Ashenfelter & Daniel Hosken & Matthew Weinberg, 2014. "Did Robert Bork Understate the Competitive Impact of Mergers? Evidence from Consummated Mergers," Journal of Law and Economics, University of Chicago Press, vol. 57(S3), pages 67-100.

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