Oil industry consolidation and refined product prices: Evidence from US wholesale gasoline terminals

Our objective in this paper is to quantify the impact of petroleum industry consolidation on refined product prices, controlling for other important factors that could also impact prices. Our empirical analysis focuses on the US petroleum refining industry using data on industry consolidation and wh...

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Bibliographic Details
Published in:Energy policy 2010-07, Vol.38 (7), p.3498-3507
Main Authors: Kendix, Michael, Walls, W.D.
Format: Article
Language:English
Subjects:
Acquisitions
Acquisitions & mergers
Applied sciences
Consolidation
Cross sections
Crude oil
Economic data
Empirical analysis
Energy
Energy economics
Exact sciences and technology
Fossil fuels and derived products
Fuel prices
Fuels
Gasoline
Gasoline prices
General, economic and professional studies
Impact analysis
Markets
Oil
Oil industry mergers
Oil price
Oil refining
Petrol
Petroleum
Petroleum industry
Petroleum refining
Petroleum refining Oil industry mergers Fuel prices
Producer prices
Refineries
Regression analysis
Studies
Terminals
Time series
U.S.A
Wholesale prices
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Summary:Our objective in this paper is to quantify the impact of petroleum industry consolidation on refined product prices, controlling for other important factors that could also impact prices. Our empirical analysis focuses on the US petroleum refining industry using data on industry consolidation and wholesale gasoline prices collected over the interval 2000–2008. We match refinery units to wholesale city-terminal gasoline markets, and then estimate pooled cross-section time-series regressions to quantify the impact of petroleum industry consolidation on wholesale gasoline prices at city-specific terminals. The results of the empirical analysis of mergers are mixed, showing that some petroleum industry mergers resulted in statistically significant increases in refined product prices; others resulted in statistically significant declines and still others had no statistical impact at all. Our analysis of the effects of measures of market concentration—one at the level of city-specific wholesale terminals and another at the level of regional spot markets—found evidence that less concentrated markets are associated with lower price levels.
ISSN:0301-4215
1873-6777
DOI:10.1016/j.enpol.2010.02.023