Oil company mergers: Refineries shut down, thousands lose jobs
1984Carl Finamore 1984-04Read it in the scan (PDF at ETOL), page 7 →
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OAKLAND, Calif.—The latest flurry of mergers threatens the jobs of oil workers and raises the likelihood of an increase in gasoline prices for consumers. The oil companies are rejecting any large scale improvement of their current plants in favor of acquiring the plants of their competitors.
The largest corporate takeover in history with the $10.2 billion purchase of Getty Oil by Texaco was quickly exceeded by the $13.4 billion buyout of Gulf by Standard Oil of California (SOCAL). This was soon followed by Mobil gobbling up Superior Oil, the nation's largest independent oil producer.
Who benefits from these mergers?
Gulf's chairman, James Lee, can console himself for the loss of his company with the $11 million proceeds of his stock options and shareholdings. Wall Street analysts report that Salomon Brothers and Merrill Lynch will share a $46-million fee for arranging their end of the deal for Gulf. SOCAL's bankers, Morgan Stanley and Bank of America, are also being suitably rewarded.
But what's in it for the rest of us? For starters, it will significantly increase monopoly control of the oil market and enable the top producers to maintain high gasoline prices despite the worldwide oil glut. At the same time, they can But not one new oil well has been drilled as a result of the billions of dollars being exchanged in these deals. On the contrary, mergers signal a decrease in oil exploration and production. Mobil and SOCAL were able to "strike oil" by purchasing the large reserves of their competitors. As competition disappears, this trend will continue. Undoubtedly this will prompt the oil companies to demand more tax benefits for any future explorations.
Planning for use—not profit Using hundreds of millions of dollars in tax write-offs the oil companies make a private claim on a natural resource and then sell it back to us at an inflated price. We need a far more equitable plan to rationally develop our oil reserves for the benefit of all of us, not private profit. A start would be to look into the financial records of the oil companies.
A national plan of investment and production could best be accomplished by nationalizing the oil industry with industrywide working conditions regulated by the unions involved. This type of nationalization under workers' control would end the private exploitation of an important natural resource and is the only protection against further layoffs and price increases.