US President Joe Biden called on the Federal Trade Commission to investigate whether the country’s largest oil company has engaged in “potentially illegal activities” that have caused American gasoline prices to rise.
In a letter to FTC Chairman Lina Khan, Biden stated that there is “increasing evidence of anti-consumer behavior” in the market and pointed to the two “largest oil and gas companies”. .. “Measured by market value” is planning “billions of dollars in stock repurchases and dividends” even if oil prices continue to rise.
The top two US oil and gas companies by market capitalization are Exxon Mobil and Chevron. Biden stated that these companies are “generating substantial” profits, adding: “The bottom line is that although the cost of oil and gas companies is falling, the price of gasoline at gas stations is still high.”
The president’s intervention came at a time when he was facing political pressure from rising fuel prices and soaring inflation. In recent weeks, his approval ratings have declined, and more and more Americans are skeptical about his handling of the economy.
As part of the “Oil and Gas Price Fraud Working Group” announced in 2011, the Obama administration also invited the FTC to investigate the increase in gasoline prices. The committee determines that the main driver of fuel prices is crude oil prices. In 2006, President George W. Bush also called for investigations into whether oil companies were manipulating prices.
The Biden administration is considering releasing crude oil from the Federal Strategic Reserve to lower gasoline prices, and has repeatedly called on Saudi Arabia, Russia and other OPEC + oil countries to increase crude oil production.
“The Federal Trade Commission is concerned about this issue, and we are investigating,” the regulator said. Exxon Mobil and Chevron did not immediately respond to requests for comment.
As the pandemic blockade destroyed demand, crude oil prices fell to historical lows last year, but since the announcement of the vaccine breakthrough and the relaxation of social restrictions in November last year, crude oil prices have more than doubled.
Rising crude oil prices have also pushed up gasoline prices in the United States. According to the automotive organization AAA, the average price of gasoline per gallon is now about $3.41, a 60% increase in the past 12 months.
Biden’s letter to Khan marked an escalation in the White House’s remarks about competition in the oil and gas industry. Brian Deese, director of the National Economic Council, sent another letter to Khan in August, calling on the Federal Trade Commission to crack down on any collusion in the US gasoline market.
Biden’s critics in the oil industry blame the government’s climate policy and restrictions on new drilling for pushing up prices, but analysts say Wall Street’s pressure on operators to repay debt and capital has hindered the recovery of drilling after the price collapse last year.
According to data from the Energy Information Administration, US oil production is about 11.5 million barrels per day, which is about 12% lower than the pre-pandemic high. During the blockade last year, US gasoline consumption reached a low of nearly 5 million barrels per day, but it has almost doubled since then.
Analysts said that Biden’s letter to the FTC followed a political playbook familiar to the presidents. They looked for the culprit of rising fuel costs and had little effect on prices.
“How many times has the Federal Trade Commission investigated gas prices and found nothing? This is a political gimmick,” said Robert Campbell, head of petroleum products at the consulting firm’s energy sector.
“The biggest impact on gasoline prices is the price of crude oil. The global market is tight. Currently, the United States cannot do anything about it,” Campbell said.
Additional reporting by Kiran Stacey in Washington and Myles McCormick in New York