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Senate Majority Leader Chuck Schumer, along with nearly two dozen Democrats, has called on the Justice Department (DOJ) to investigate alleged collusion and price fixing within the oil industry.
This plea, detailed in a letter to Attorney General Merrick Garland on Thursday, comes in response to allegations from federal regulators that a prominent Texas oil executive attempted to conspire with OPEC to manipulate oil and gasoline prices.
The letter, signed by 23 senators including Elizabeth Warren, Amy Klobuchar, Bernie Sanders and Dick Durbin, highlighted the “alarming” nature of the accusations against Scott Sheffield, the former CEO of Pioneer Natural Resources.
Sheffield is accused by the Federal Trade Commission (FTC) of engaging in private communications with OPEC officials to keep oil supplies artificially low. According to CNN, these allegations stem from hundreds of text messages exchanged between Sheffield and OPEC representatives discussing pricing and production strategies.
“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 in a way that has materially harmed virtually every American household and business,” the Senate Democrats stated in their letter.
The senators are pressing the DOJ to investigate the oil industry thoroughly, hold accountable any parties found guilty of illegal activities, and take measures to stop such practices. The letter from Schumer and his colleagues underscores the growing pressure on Big Oil in light of the FTC’s findings, which suggest that such collusion may have contributed to a significant rise in gas prices and a substantial financial burden on American households.
The FTC’s investigation into Sheffield, who has denied the allegations, revealed that he had numerous private conversations with high-ranking OPEC officials, assuring them that Pioneer and its competitors in the Permian Basin were committed to limiting oil production. These actions, according to the FTC, helped to artificially inflate fuel prices, causing consumers to pay an additional 94 cents per gallon on average compared to pre-pandemic prices.
While the FTC has barred Sheffield from serving on Exxon’s board following its acquisition of Pioneer, the Senate Democrats argue that only the DOJ has the authority to prosecute and fully address the anticompetitive behavior within the oil sector. They pointed out that under the Sherman Act, corporations can face fines of up to $100 million, and individuals can face fines of up to $1 million and 10 years in prison for price fixing.
“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,” the letter emphasized.
In his response to the FTC’s allegations, Sheffield asserted that the agency misrepresented the facts and evidence, calling for the order against him to be rescinded. He argued that the FTC’s actions could have a chilling effect on business leaders across various sectors.
The oil industry, represented by the American Petroleum Institute, also refuted the Democrats’ claims, criticizing the economic policies of the White House. Andrea Woods, the spokesperson for the API, stated that the U.S. has been the largest crude oil producer, stabilizing the market despite OPEC’s supply cuts. She suggested that inflationary policies from the current administration have posed a greater threat to energy security.
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