Senate Majority Leader Chuck Schumer (D-N.Y.) and 22 Democratic senators urged the Department of Justice (DOJ) to investigate allegations of price-fixing in the oil and gas industry.
The group of senators claimed that industry collusion might have resulted in a 49 percent decline in the domestic crude production growth rate. They estimate that this might have cost the average U.S. household up to $500 per car in increased yearly fuel costs, “an unwelcome tax that is particularly burdensome for lower-income families.”
The lawmakers also alluded to the Federal Trade Commission’s (FTC) allegation that the recent Exxon-Pioneer merger led to evidence that U.S. oil executives worked with the Organization of the Petroleum Exporting Countries (OPEC) to boost oil prices arbitrarily.
Last year, ExxonMobil announced the acquisition of Pioneer in an all-stock transaction valued at nearly $65 billion. The FTC had approved the Exxon-Pioneer merger on the condition that Scott Sheffield, the former Pioneer president and CEO, would be prohibited from serving on ExxonMobil’s board of directors.
“Mr. Sheffield’s past conduct makes it crystal clear that he should be nowhere near Exxon’s boardroom. American consumers shouldn’t pay unfair prices at the pump simply to pad a corporate executive’s pocketbook,” said Kyle Mach, deputy director of the FTC’s bureau of competition. “The FTC will remain vigilant in its enforcement efforts to protect competition in these vital markets.”
Congressional Democrats contend that these alleged offenses enrich corporations and force consumers to pay more at the pump, the letter stated.
“The DOJ must protect consumers, small businesses, and the public from petroleum-market collusion, and an important part of that mission means seeking full restitution and imposing all penalties supported by the facts and the law,” they wrote.
If the oil and gas sector is found to have engaged in illegal conduct, the senators will demand that the industry redress any threats to competition and harm to consumers.
Mr. Sheffield recently fired back against the allegations, asserting in a 23-page response that the federal agency “unjustly smeared” him.
“It also shows how publicly and unjustifiably vilifying me will have a chilling effect on the ability of business leaders in any sector of our economy to address shareholder demands and to exercise their constitutionally protected right to advocate for their industries,” he added.
The White House refused to comment on the letter. However, press secretary Karine Jean-Pierre noted that “the President has made clear that any illegal collusion between big corporations is unacceptable and rips off hardworking families, including if it raises prices at the pump.”
Targeting Oil, Gas
In recent years, the current administration and leading Democrats have lambasted the oil and gas sector, accusing these companies of taking advantage of the situation, be it geopolitical crises or persistent inflation, by price-gouging consumers.In September 2022, President Joe Biden promised to conduct investigations if fuel prices climbed, offering a warning to oil and gas industry executives.
“Do not—let me repeat, do not—do not use this as an excuse to raise gasoline prices or gouge the American people,” President Biden said at a White House conference.
A month later, President Biden compared energy firms to war profiteers and threatened to implement a windfall tax.
“Oil companies’ record profits today are not because of doing something new or innovative,” the president said in prepared remarks. “Their profits are a windfall of war, a windfall for the brutal conflict that’s ravaging Ukraine and hurting tens of millions of people around the globe.”
Other Democrats have pushed the DOJ to “investigate Big Oil for its decades-long disinformation campaign,” comparing the industry to Big Tobacco.
In response to Mr. Raskin, the American Petroleum Institute (API) recommended Congress “abandon misleading election year rhetoric” and advocate for energy solutions.
“As the largest association representing the oil and natural gas industry, API unapologetically has and will continue to advocate for pro-American energy policies with elected officials, policymakers, and candidates from across the political spectrum to ensure the energy needs of tomorrow are met.”
The organization added that petroleum prices are determined by market forces rather than individual companies.
The current administration asserts that corporate greed, or what officials call “greedflation,” has kept inflation elevated. This prompted the White House to start a joint FTC-DOJ task force to probe unfair and illegal pricing for a broad array of goods and services.
Government data show that Washington’s inflation progress stalled in the first four months of 2024, with the annual consumer price index remaining above 3 percent.
