BP Amoco, Arco Shouldn’t Unite

“BP Amoco Says FTC Rejected Concessions” [Jan. 14], relating to BP Amoco’s proposed takeover of Atlantic Richfield--uniting two of the largest gasoline retailers in the U.S.--did not mention in any detail the potential negative effects on consumers, workers, the environment, the economy and our democracy. This merger will lead to anti-competitive behavior at the expense of consumers, especially on the West Coast, where Arco has kept prices low, possibly leading to higher prices at the pumps.

The merger will create an oil giant with enormous pricing and political power, able to skew critical policy debates over matters such as labor standards, global warming, opening of environmentally sensitive areas to oil exploration, government support for alternative energy sources, and corporate welfare.

Approval of the BP Amoco-Arco merger would encourage other mergers in the oil industry, further concentrating political power and intensifying the remaining firms’ ability to set above-market prices.

Teddy Roosevelt must be turning over in his grave. No one with any knowledge of the history of the oil industry can seriously believe that fewer companies will result in more competition. The Federal Trade Commission should move to protect consumers, competition and the environment by blocking the merger.

CHARLES HIGLEY

Research Director

Public Citizen’s

Critical Mass Energy Project

Washington, D.C.

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I see many articles on the effect of reduced competition on gasoline prices, but I see very little about the cause of the reduced competition. The competition has been reduced primarily because of the shutdown of small refineries and the production of reformulated gasoline.

There used to be many small refineries in California, and the competition was so severe that there were gasoline price wars. I believe that all the small refineries have been shut down now primarily because they could not afford to make investments required by environmental regulations.

Our environmental regulations also require that reformulated gasoline be sold in most of California. This reformulated gasoline is a unique product and does not directly compete with the gasoline sold in the rest of the world.

Our environmental regulations have done much to clean up our air but have had the inadvertent result of decreasing competition and thereby increasing gasoline prices more than was anticipated by our regulators.

EUGENE I. MOTTE

La Canada Flintridge