Biden orders probe of oil companies over ‘illegal conduct’ in high fuel prices

President Joe Biden has asked the federal trade commission (FTC) to launch an investigation into possible illegal conduct by oil companies in the United States.

Biden disclosed this in a letter posted by the White House to Lina Khan, FTC chair, on Wednesday in Washington, D.C.

Last month, the US government blamed the jump in oil prices on the cautious oil output by OPEC, calling on the oil cartel to ramp up production.

The cartel, including Nigeria, snubbed the US pressure at its 21st OPEC and non-OPEC ministerial meeting.

In the letter, he directed Khan to haul out potential disfavour of consumers’ interest meted out by oil and gas companies in the U.S.

“The bottom line is this: gasoline prices at the pump remain high, even though oil and gas companies costs are declining,” Biden said.

“The Federal Trade Commission has authority to consider whether illegal conduct is costing families at the pump. I believe you should do so immediately.”

The President admitted that there had been efforts by the commission to ‘strengthen oversight of mergers in the oil and gas sector’, but insisted that the rise in pump prices give way for suspicions.

According to him, there had been an ‘unexplained large gap’ between prices of ‘unfinished gasoline’ and the ‘average price at the pump’, which had become higher than the average price before the Covid-19 pandemic struck.

“However, prices at the pump have continued to rise, even as refined fuel costs go down and industry profits go up,” he added. 

“Usually, prices at the pump correspond to movements in the price of unfinished gasoline, which is the main ingredient in the gas people buy at the gas station.

“But in the last month, the price of unfinished gasoline is down more than 5 percent while gas prices at the pump are up 3 percent in that same period.

“This unexplained large gap between the price of unfinished gasoline and the average price at the pump is well above the pre-pandemic average.

“Meanwhile, the largest oil and gas companies in America are generating significant profits off higher energy prices.

“The two largest oil and gas companies in the United States, as measured by market capitalisation, are on track to nearly double their net income over 2019— the last full year before the pandemic.

“They have announced plans to engage in billions of dollars of stock buybacks and dividends this year or next.

“I do not accept hard-working Americans paying more for gas because of anti-competitive or otherwise potentially illegal conduct.

“I, therefore, ask that the Commission further examine what is happening with oil and gas markets and that you bring all of the commission’s tools to bear if you uncover any wrongdoing.”