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April 04, 2006

Mergers and gas prices

With gas prices well over $2 per gallon, some have blamed oil company mergers for the relatively high cost of fuel. But N.C. State University economist Mike Walden says that research shows that there are other factors.

“There have been a lot of mergers in the oil business, and there have been some really key ones between some big players,” says Dr. Walden, a North Carolina Cooperative Extension specialist. “The concern is that such mergers would reduce competition in the oil market and potentially result in higher oil and gas prices.

“So actually the government has gone out and studied this: The Government Accounting Office, which is sort of a watchdog government agency filled with very competent people, ... went out and studied this issue.

“Their major finding was that mergers, yes, have resulted in some increases in wholesale gas prices, but they’ve been relatively small -- maybe 2 cents per gallon.

"And, instead, the big culprit behind rising and high oil and gas prices has simply been rising world demand, particularly from developing countries.”

Posted by deeshore at April 4, 2006 08:00 AM