Competition in U.S. Petroleum Refining and Marketing: Part I - Industry Trends

29 Pages Posted: 11 Mar 2008

Date Written: January 2007

Abstract

Perceptions about high U.S. gasoline prices or inexplicable differentials in prices between geographic areas have prompted a range of disparate policy proposals. However, there is a distinct lack of consensus on the cause of undesirable price dynamics. These dynamics are likely to be the product of a complex set of factors. It is thus important that any intervention in domestic markets recognize both the unique characteristics of petroleum products, the more recent changes in the underlying structure of refining and marketing markets, and the behavioral incentives created by those changes. This paper analyzes the three major areas where the most significant changes in U.S. refining and marketing have occurred: (1) merger activity; (2) refining; and (3) gasoline marketing. The analysis indicates substantial consolidation (and concentration), largely involving integrated assets in the downstream refining and marketing segment. The profile of wholesale transactions has also changed in fairly complex ways as the integrated "majors" have restructuring and formerly unintegrated "independents" have expanded their market reach. These changes are important to consider in making intervention decisions and crafting policy approaches.

Keywords: competition, market power, market definition, merger, enforcement agencies, regulation, economic analysis, concentration

Suggested Citation

Moss, Diana L., Competition in U.S. Petroleum Refining and Marketing: Part I - Industry Trends (January 2007). American Antitrust Institute Working Paper No. 07-02, Available at SSRN: https://ssrn.com/abstract=1103581 or http://dx.doi.org/10.2139/ssrn.1103581

Diana L. Moss (Contact Author)

American Antitrust Institute ( email )

1025 Connecticut Ave. NW
Suite 1000
Washington, DC 20036
United States

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