Oil Mergers May Destabilize Fuel Prices, WSJ Says

Sweeping changes in the oil refining industry may result in volatile fuel price spikes despite weak worldwide oil prices, the Wall Street Journal said Thursday.

Fuel is a major variable cost item for trucking companies and run-ups in the price of either diesel fuel or gasoline, or both, could put some companies out of business.

Consolidation of the control over refining into fewer and fewer hands, the WSJ said, has given the resulting behemoths greater dominance over retail gasoline stations in certain areas.

And, comparing refinery consolidations to similar trends in cable television, the Journal said the concentration of power has pushed gasoline prices higher.

In addition, new cost-cutting strategies, which allow companies to reduce the amount of oil and gasoline they keep on hand, mean that modest disruptions like plant fires, environmental regulations or surges in demand can lead to sudden price jumps in affected regions.

When all currently planned mergers are completed, the Journal said, six companies will own or franchise 55% of the nation’s 175,000 gasoline stations.