(Source – The Hill)
Senate Majority Leader Chuck Schumer, along with nearly two dozen Democratic senators, has called on the Justice Department (DOJ) to investigate the oil industry for alleged collusion and price fixing. In a letter to Attorney General Merrick Garland, the senators expressed deep concern over allegations that a Texas oil executive attempted to conspire with OPEC to manipulate oil and gasoline prices.
In their letter, Schumer and his colleagues highlighted the need for the federal government to take strong action against potential collusion in the oil market. “The federal government must use every tool to prevent and prosecute collusion and price fixing that may have increased gasoline, diesel fuel, heating oil, and jet fuel costs, materially harming virtually every American household and business,” the letter stated. The Senate Democrats Urge the DOJ to investigate the oil industry thoroughly, hold accountable those found liable, and put an end to any illegal activities.
The letter, spearheaded by Schumer, was co-signed by 22 other senators, including notable figures such as Elizabeth Warren, Amy Klobuchar, Bernie Sanders, and Dick Durbin. This push from Senate Democrats Urge comes in the wake of significant accusations by the Federal Trade Commission (FTC) against Scott Sheffield, the former CEO of Pioneer Natural Resources.
Allegations of Collusion
Earlier this month, the FTC accused Sheffield of attempting to collude with OPEC and its allies to keep the oil supply low. According to the FTC, Sheffield exchanged hundreds of text messages with OPEC officials discussing oil prices, production, and market dynamics. The investigation revealed that Sheffield had private conversations with high-ranking OPEC representatives, assuring them that Pioneer and its competitors in the Permian Basin were working to keep oil output artificially low.
In their letter, Schumer and the other senators argued that this alleged collusion may have contributed to a significant reduction in US oil production, subsequently raising gas prices by 94 cents per gallon from pre-pandemic levels and costing the average household up to $500 per car annually in fuel costs. While the FTC has banned Sheffield from serving on Exxon’s board following its takeover of Pioneer, the senators emphasized that only the DOJ has the authority to prosecute and fully address the alleged anticompetitive behavior in the oil sector.
The lawmakers pointed out that under the Sherman Act, corporations found guilty of price fixing could face fines of up to $100 million, while individuals could face fines of up to $1 million and 10 years in prison. “The DOJ must protect consumers, small businesses, and the public from petroleum-market collusion,” they wrote, stressing the importance of seeking full restitution and imposing all appropriate penalties.
Industry and Government Response
White House Press Secretary Karine Jean-Pierre told CNN that while the White House would not comment on specific cases, President Joe Biden has made it clear that illegal collusion between big corporations is unacceptable. “President Biden will continue to call out corporations when they break the law and engage in anti-competitive practices that increase prices for families,” Jean-Pierre said, specifically targeting Big Oil companies.
Scott Sheffield responded to the FTC’s allegations by denying any involvement in anti-competitive behavior and calling for the agency to rescind its order against him. He argued that the FTC mischaracterized the facts and that vilifying him publicly could hinder business leaders’ ability to advocate for their industries.
The American Petroleum Institute also pushed back against the claims, defending the US oil industry’s role in stabilizing energy markets. “The United States is the largest crude oil producer, leading the world in new oil production since 2020,” said Andrea Woods, a spokesperson for the API. She criticized the administration’s economic policies, stating that US producers have been meeting growing energy demands despite inflationary pressures.
The ongoing debate highlights the complex dynamics at play in the oil industry and the broader economic landscape, with significant implications for consumers and businesses alike.
