BP Amoco's Proposed Purchase of Atlantic Richfield Co. Faces Opposition in California

Strategic Insights -

California's consumer lawyers have filed a complaint with the Federal Trade Commission (FTC), arguing that the proposed purchase of Atlantic Richfield Co. by BP Amoco could lead to higher gas prices in California, where about half of the gasoline is refined from Alaska North Slope crude oil. The combination of BP and Arco would give the resulting company a significant lock on Alaska crude oil production, which would push up gas prices in California. The FTC has yet to comment on the complaint, but Alaska Attorney General Bruce Botelho has stated that the gas price issue in California is among the questions he expects to be considered during the review of the BP-Arco deal.

Key Takeaways:

  • The proposed acquisition of Atlantic Richfield Co. by BP Amoco could lead to a significant concentration of Alaska crude oil production, which would drive up gas prices in California.
  • The combination of BP and Arco would produce about 70% of the oil from the North Slope, making them the dominant player in Alaska's oil market.
  • California's consumer lawyers, led by Dan Mogin, are concerned that the concentration of market power in the hands of BP and Arco would lead to higher gasoline prices for Californians.
  • The proposed acquisition would give BP Amoco control over a significant portion of California's gasoline supply, which is currently around 45-50%.
  • The class-action lawsuit pending against California oil refiners and marketers, including Arco, Mobil, and Exxon, is scheduled for oral argument before the California 4th District Court of Appeal next month.
  • Alaska Attorney General Bruce Botelho has expressed concerns about the potential impact of the proposed acquisition on gas prices in California.

Statistics:

  • 24 million people in California rely on gasoline refined from Alaska North Slope crude oil.
  • BP and Arco together produce about 70% of the oil from the North Slope.
  • Between 45% and 50% of oil refined in California comes from Alaska.
  • Californians pay the highest prices for gasoline in the continental United States.

Sources:

  • Federal Trade Commission (no specific source date mentioned)
  • Dan Mogin, letter to the FTC (no specific source date mentioned)
  • Alaska Attorney General Bruce Botelho, interview with the Daily News (no specific source date mentioned)
  • Barbara Motz, acting assistant attorney general for the California attorney general's office (no specific source date mentioned)
  • BP Exploration (Alaska) Inc. (no specific source date mentioned)