Gasoline is subject to dramatic price swings. A multitude of factors affect U.S. gasoline markets, including world crude oil costs and limited refining capacity. Since the 1990s, another factor affecting U.S. gasoline markets has been a wave of mergers in the petroleum industry, several between large oil companies that had previously competed with each other. For example, in 1999, Exxon, the largest U.S. oil company, merged with Mobil, the second largest. This testimony is based primarily on Energy Markets: Effects of Mergers and Market Concentration in the U.S. Petroleum Industry (GAO-04-96, May 17, 2004). This report examined mergers in the industry from the 1990s through 2000, the changes in market concentration (the distribution of market shares among competing firms) and other factors affecting competition in the industry, how U.S. gasoline marketing has changed since the 1990s, and how mergers and market concentration in the industry have affected U.S. gasoline prices at the wholesale level. To address these issues, GAO purchased and analyzed a large body of data and developed state-of-the art econometric models for isolating the effects of eight specific mergers and increased market concentration on wholesale gasoline prices. Experts peer-reviewed GAO's analysis.
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