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Unocal Shareholders Approve Chevron Bid

STEVE INSKEEP, host:

The business news starts with the end of the fight over Unocal.

Yesterday Unocal's shareholders approved an $18 billion takeover by Chevron. This vote came as the price of crude oil hit a new high, nearly $65 a barrel. NPR's Scott Horsley reports.

SCOTT HORSLEY reporting:

Seventy-seven percent of Unocal's owners approved the Chevron buyout. At a special shareholders' meeting in Los Angeles, some investors said they were grateful for an unsuccessful Chinese bid that helped to drive up the price. Fierce political opposition prompted China's CNOOC company to withdraw its Unocal offer last week, but not before Chevron was forced to sweeten its bid. Unocal investors will receive the equivalent of $69 a share in cash and Chevron stock. In exchange, Chevron gains access to Unocal's oil and gas holdings. As energy analyst Ted Harper of Frost National Bank in Houston notes, those holdings are concentrated in Asia and the Caspian region.

Mr. TED HARPER (Frost National Bank): What Chevron was attracted to was Unocal's large Asian base of operations, which gives Chevron very easy access to hot growth markets in China and emerging-market Asia.

HORSLEY: Whether Unocal's sales price is justified will depend in part on how successful Chevron is in tapping those energy reserves and on what happens to the price of oil. Crude oil prices hit $64.90 a barrel yesterday, a record high, not accounting for inflation.

Despite high prices, the world's appetite for oil continues to grow. Energy economist Steve Brown of the Federal Reserve Bank in Dallas says it will take some time for efficiency and new supplies to catch up.

Mr. STEVE BROWN (Energy Economist): We'll see some moderation from the current prices, but I think prices will remain above $50 a barrel into the next decade.

HORSLEY: That means little relief for drivers. The Energy Department predicts that gasoline prices will keep climbing, at least for the next few weeks. Scott Horsley, NPR News. Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.