Marathon-Andeavor merger will lower gasoline costs, Heminger says
Marathon Petroleum’s CEO expects $1 billion in cost reductions resulting from the Marathon’s acquisition of Andeavor, a deal that he says will lower gasoline costs.
“A billion dollars of synergies is great for shareholders. It’s also good for the consumer. If we can take a billion dollars out of the refining system, it’s just going to help lower costs,” Marathon Petroleum CEO Gary Heminger told FOX Business’ Maria Bartiromo during “Mornings with Maria.”
“Scale matters in this business,” he added. Marathon’s purchase of Andeavor for $23 billion will create the largest U.S. refiner, and a top five global player.
Cost savings, Heminger said, will come from some layoffs. “When you have two corporate entities combining, you don’t need two of each,” he said, but he noted that the majority of the costs savings will come from bringing best practices into refining and retail.
The executive expects to maintain the employees working in the refineries.
When asked about his expectations for oil prices, he said crude oil and gasoline prices will level out the rest of the year, noting that inventories are largely in balance. But something to watch is if more barrels of oil will come from the Organization of Petroleum Exporting Countries later in the year.
Oil prices are currently hovering around a three-year high. They have recovered from a bear market that was a result of a global oversupply leaving the market awash in oil. Global production balanced the market.