Recently, a number of mergers have occurred in the petroleum industry involving upstream firms that are imperfectly integrated into retail markets. To empirically evaluate the effects of such mergers, this paper proposes a structural model of supply and demand that reflects divisions between upstream producers and downstream retailers. A downstream model relating observed prices to downstream costs, wholesale prices and downstream mark-ups is combined with a model of upstream competition that relates wholesale prices and upstream costs to upstream mark-ups. The supply model is estimated along with a demand model reflecting downstream product differentiation using data from the Hawaiian islands in the early 1990s.