ChevronTexaco had announced at the beginning of April that it was to acquire Unocal in an $18 billion cash and stock agreement. However, vocal opposition from democratic politicians, led by Senator Charles Schumer of New York, has thrown a cloud over the deal.
Schumer and his colleagues have called for the Federal Trade Commission (FTC) to block the purchase citing fears that the deal will reduce competition in the US oil industry, causing prices to rise. The price of oil is already a contentious topic in the light of recent price increases due to a volatile world market.
The opposition to the acquisition was laid out in a letter to the FTC by the group of protesting senators, which include Schumer, Barbara Boxer of California, Patrick Leahy of Vermont, Maria Cantwell of Washington, Debbie Stabenow of Michigan, Russell Feingold of Wisconsin, Ron Wyden of Oregon, and Dick Durbin of Illinois.
The senators said that they want a thorough review of all market and consumer impacts from the deal to be conducted, while also calling for previous merger agreements to be reviewed.
Responding to the move, ChevronTexaco refuted the senator’s concerns, stating that it believed the opposite would be true, as production costs would be reduced enabling a stronger grip on pricing.
