1. ABA Spring Meeting, 2005 1

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3. 3 PETROLEUM INDUSTRY PRE – 2001 Barrel of Crude oil End of 1998- $9.81 Fall of 2000- $31.00 Gallon of gasoline (Midwest) Early 1999- $0.83 Summer 2000- $2.13 Explosion of mergers BP+AMOCO+ARCO Exxon+Mobile

4. ABA Spring Meeting, 2005 4 PETROLEUM INDUSTRY PRE – 2001 (cont) Congressional hearing (industry on the carpet) Antitrust violations? Potential anticompetitive behavior? Explainable, industry operating factors?

5. ABA Spring Meeting, 2005 5 POST HEARING May 2001, US Senate Permanent Subcommittee on Investigations requests the good guys (GAO) in white hats to investigate GAO study design Number of petroleum industry mergers and why? How has market concentration changed? How has the marketing of gasoline changed? Did mergers raise gasoline prices?

6. ABA Spring Meeting, 2005 6 GAO’s Report (GAO-04-96) May 17, 2004 Lights a match with Congress, industry and the public “Healthy debate” ensued Going forward is today’s focus

7. ABA Spring Meeting, 2005 7 Economic aspects Economic methodology intended to be retrospective Address question asked by Congress Lack of existing findings in the literature Use publicly available data

8. What we said on quantitative impact of some mergers

9. Nature of the evidence (one gas type; event study)

10. ABA Spring Meeting, 2005 10 What the GAO study is and is not What it is: An independent investigation of a set of mergers in the oil industry in the late 1990s A serious effort to investigate the broad impact of the set of mergers where no similar evidence existed in the public record. Indication of the potential usefulness of retrospective evaluation

11. ABA Spring Meeting, 2005 11 What it is not: Not a study of causes of current price changes Not an audit of FTC actions Not the last word on the subject