US Democrats Escalate Oil Price Fixing Crackdown to DOJ

The House Judiciary Committee of Democrats has urged the United States Department of Justice (DOJ) to investigate potential collusion among oil and gas companies to inflate prices artificially.

The call, made through a letter to Attorney-General Merrick Garland and Assistant Attorney-General Jonathan Kanter, comes after the House Committee of Democrats for Energy and Commerce initiated a probe into the matter.

Both lower house committees cited the Federal Trade Commission’s (FTC) accusation that former Pioneer Natural Resources Co. chief executive Scott Sheffield had schemed with representatives from the Organization of Petroleum Exporting Countries (OPEC) and OPEC ally countries to curb production to boost prices.

The FTC found out about Sheffield’s purported attempts at price fixing during an extended anti-trust review of Exxon Mobil Corp’s $64.5 billion acquisition of Pioneer. It banned Sheffield from holding a board or advisory position at ExxonMobil as a condition in granting anti-trust clearance, according to an FTC statement May 2. While Sheffield retired from the chief executive role last year, he remained on the Pioneer board.

Pioneer then issued a statement saying Sheffield would not contest the condition and prevent the merger. Pioneer however argued that the FTC accusation “reflects a fundamental misunderstanding of the U.S. and global oil markets and misreads the nature and intent of Mr. Sheffield’s actions”.

“On the contrary, Mr. Sheffield focused on legitimate topics such as investor feedback on independent oil and gas company growth and capital reinvestment frameworks; unfair foreign practices that threatened to undermine U.S. energy security; and, through dialogue with government officials, the need to sustain a resilient, competitive and economically vibrant oil and gas industry in the United States”, Pioneer said.

ExxonMobil announced the completion of the merger May 3.

In the letter to the DOJ leadership, the Democrat lawmakers claimed, “Taken together, the FTC’s allegations suggest a potentially widespread conspiracy among U.S. oil producers to keep prices high by artificially suppressing production”.

“Gas prices today average $3.60 per gallon, up from last year”, they said. “As Americans contend with the rising cost of living, prices at the pump play a major role. In a single month last year, rising gas prices made up more than half of the overall increase in the rate of inflation”.

“Troublingly, the full extent of this price-fixing conspiracy may never have come to light had Exxon not acquired Pioneer”, stated the letter, signed by 10 legislators including Jerrold Nadler, ranking member of the House Judiciary Committee of Democrats.

“[T]he antitrust enforcement authorities must immediately open full investigations into this illegal scheme”, the letter said. “Because DOJ has sole authority for criminal antitrust enforcement, your Department must take the lead in this effort.

“We urge you to immediately open an investigation into a potential antitrust conspiracy among U.S. oil producers, OPEC, and OPEC+. We strongly encourage you to use every tool at the Department’s disposal, including criminal penalties, to uncover and punish wrongdoing”.

Responding to the recent conspiracy about price fixing, industry lobby group American Petroleum Institute (API) said U.S. producers have played a key role in helping “rebalance” the global oil and gas market, but has not directly addressed the allegations of collusion.

“While we don’t know the details of the FTC’s allegations against one individual, the FTC itself acknowledges the undeniable fact that U.S. producers have led the world in production gains over the past few years”, API spokesperson Andrea Woods told Rigzone in comments about the probe by the House Committee of Democrats for Energy and Commerce.

“This increase in American production has been instrumental in meeting growing demand and helping rebalance markets—especially in the face of supply cuts from OPEC and other producers”, the statement added.

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