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Joe Biden demands probe of ‘potentially illegal conduct’ in oil sector

US President Joe Biden has referred to as on the Federal Trade Commission to instantly examine whether or not the nation’s largest oil firms are engaged in “potentially illegal conduct” that’s ensuing in larger gasoline costs for Americans.

In a letter to FTC chair Lina Khan, Biden mentioned there was “mounting evidence of anti-consumer behaviour” in the market, noting that the 2 “largest oil and gas companies . . . as measured by market capitalisation” have been planning “billions of dollars of stock buybacks and dividends” whilst costs on the pump proceed to rise.

The high two US oil and gasoline firms by market valuation are ExxonMobil and Chevron. Biden mentioned the businesses have been “generating significant” income, including: “The bottom line is this: gasoline prices at the pump remain high, even though oil and gas companies’ costs are declining.”

The president’s intervention comes as he faces mounting political strain over rising petrol costs and surging inflation. His approval ranking has hit file lows in current weeks, with an rising share of Americans taking a dim view of his dealing with of the economic system.

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Biden’s intervention had echoes of Donald Trump’s use of the bully pulpit to persuade firms into altering their practices, though the previous president tended to make use of his Twitter account reasonably than writing letters to the FTC.

The Obama administration additionally enlisted the FTC to probe rising gasoline costs as half of an “Oil and Gas Price Fraud Working Group” introduced in 2011. The fee determined that the primary driver of gas costs was the value of crude oil. And in 2006, President George W Bush referred to as for an investigation into whether or not oil firms have been manipulating costs.

The Biden administration is contemplating releasing crude oil from a federal strategic stockpile in a bid to drive down petrol costs and has repeatedly referred to as on Saudi Arabia, Russia and different Opec+ oil international locations to elevate crude manufacturing.

“The FTC is concerned about this issue, and we are looking into it,” the regulator mentioned. Exxon, and Chevron didn’t instantly reply for requests for remark.

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Crude oil costs crashed to file lows final 12 months as pandemic lockdowns devastated demand, however have greater than doubled since vaccine breakthroughs have been introduced final November and lockdowns eased.

The rise in crude costs has additionally pushed up US petrol costs, with a gallon of gasoline now promoting on common for about $3.41 — up 60 per cent in the previous 12 months — in accordance with motoring group AAA.

Biden’s letter to Khan marks an escalation in the White House’s rhetoric on competitors in the oil and gasoline business. Brian Deese, director of the National Economic Council, despatched a separate letter to Khan in August calling on the FTC to crack down on any collusion in the US petrol market.

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Biden’s oil business critics blame the administration’s local weather insurance policies and limits on new drilling for pushing up petrol costs, however analysts say Wall Street strain on operators to pay again debt and capital has hampered the drilling restoration following final 12 months’s value crash.

US oil manufacturing is roughly 11.5m barrels a day, in accordance with the Energy Information Administration, about 12 per cent under its pre-pandemic highs. US petrol consumption hit a low close to 5m barrels a day in the course of the lockdowns final 12 months however has nearly doubled since.

Analysts mentioned Biden’s letter to the FTC adopted a well-known political playbook for presidents looking for culprits for rising gas prices and would have little affect on costs.

“How many times has the FTC investigated gas prices and turned up nothing? It’s a political stunt,” mentioned Robert Campbell, head of oil merchandise at consultancy Energy Aspects.

“The biggest influence on gasoline prices is the price of crude. The global market is tight. There’s not a lot the US can do about that right now,” Campbell mentioned

Additional reporting by Kiran Stacey in Washington and Myles McCormick in New York

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