BREAKING: Democrats escalate probe into Big Oil's alleged price-fixing collusion with OPEC
BREAKING: Democrats escalate probe into Big Oil's alleged price-fixing collusion with OPEC
Lawmakers sent letters, reviewed by Landmark, to the CEOs of seven major domestic oil producers demanding information about efforts to artificially raise prices on Americans.
Top Democrats in Congress have sent letters to seven major oil and gas companies demanding more information about their potential collusion with the international oil cartel OPEC to fix oil prices, marking a sharp escalation of investigations launched earlier this year.
The letters, reviewed by Landmark before they were made public Thursday, were sent to the CEOs of BP America, Chevron, Expand Energy, Devon Energy, ExxonMobil, Hess and Occidental Petroleum.
They demand that the companies cooperate with probes looking into whether around over a dozen domestic oil producers illegally coordinated with the Organization of the Petroleum Exporting Countries (OPEC) to raise prices on American consumers.
The effort is being led by Senate Budget Committee Chairman Sen. Sheldon Whitehouse and House Commerce Committee Ranking Member Frank Pallone, Jr.
“Considering the effect that anticompetitive behavior in the oil and gas sector can have on the U.S. economy and on the federal budget, the substantive responses of many of your peer companies, and continued public reporting about the oil and gas industry’s suspected coordination with OPEC and OPEC+, your lack of any substantive responses to our recent letters is very troubling,” Whitehouse and Pallone wrote to the CEOs.
The oil and gas companies didn’t immediately respond to requests for comment on Thursday.
How the probes started
The letters mark an escalation of probes launched by the lawmakers earlier this year after the U.S. Federal Trade Commission alleged that former Pioneer Natural Resources CEO Scott Sheffield attempted to collude with OPEC to raise oil prices.
The FTC made the allegations even as it approved Exxon’s $60 billion purchase of Pioneer, which significantly boosted Exxon’s presence in the oil-rich Permian Basin in Texas.
The federal agency said that Sheffield, through public statements, text messages, in-person meetings, WhatsApp conversations and other communications while at Pioneer, sought to artificially align oil production across the Permian Basin in West Texas and New Mexico with OPEC.
OPEC is a co-operation of leading oil-producing and oil-dependent countries, including Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The countries are known to coordinate to influence global oil prices.
The mega-merger was a clear signal that Exxon believes there is a strong future in domestic oil and gas production, despite the Biden administration’s efforts to respond to climate change.
Last month, the FTC also alleged Hess CEO John B. Hess inappropriately communicated publicly and privately with the past and current secretaries general of OPEC and an official from Saudi Arabia about oil price stabilization and inventory management. That communication came to light as the agency reviewed a proposal for Chevron to acquire Hess.
‘Responsible for 25% of U.S. inflation’
The Congressional Democrats leading the probes said that oil and gas price-gouging can have serious impacts on American pocketbooks.
They noted that one report in Matt Stoller’s Substack BIG, for instance, that estimated the schemes may have caused roughly 27% of the increase in inflation 2021 in the wake of the COVID-19 pandemic.
The collusion between American oil companies and the Saudi cost the average American family $3,000 last year, Stoller wrote, at a time when major oil companies were making huge profits.
Private class action lawsuits have also claimed that oil producers operating in the Permian Basin region have illegally worked together to depress oil production and raise prices on consumers.
And the probe is not the first time that Congressional Democrats have put Big Oil under a microscope.
A probe led by Whitehouse and Rep. Jamie Raskin has recommended that the U.S. Department of Justice investigate Big Oil for engaging in an alleged campaign of deception that undermined public perception around climate change in order to continue selling fossil fuels.