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Lina Khan Accuses Trump FTC of Trying to Let Oil Exec 'Off the Hook' for Price Gouging Scandal
As FTC chair, Khan stopped a fossil fuel CEO from "cashing in and joining Exxon's board," said one lawmaker. "Now, with Trump bending to the whims of Big Oil, he's considering overturning that punishment."
May 06, 2025
"So much for America First," said one progressive lawmaker on Monday regarding the Federal Trade Commission's new push to reverse a ban on two fossil fuel CEOs from serving on the boards of ExxonMobil and Chevron—the oil giants that were acquiring their companies.
The FTC is accepting public comments until May 12 on a petition filed by former Pioneer National Resources CEO Scott Sheffield, which would set aside the Biden administration's consent order; finalized days before President Donald Trump took office, that barred Sheffield from serving on Exxon's board.
The order also applied to John Hess, CEO of Hess Corp., which was being acquired by Chevron.
Then-FTC Chair Lina Khan barred the CEOs from becoming board members over concerns that they would collude with representatives of the Organization of Petroleum Exporting Countries (OPEC) to ensure Americans continued paying high oil prices.
Sheffield and Hess both communicated with OPEC officials, including "the past and current secretaries general" of the organization "and an official from Saudi Arabia," according to an FTC probe under the Biden administration.
The two executives and their companies denied the allegations. Republican members of the FTC at the time voted against Khan's ban on the board positions, claiming it overstepped the agency's authority.
But on Monday, Khan urged those who oppose oil price fixing by energy giants to submit public comments on the Trump administration's "proposal to release Sheffield from accountability."
"The FTC is now trying to let this oil executive off the hook," said Khan, a law professor at Columbia University.
Exxon, the largest U.S. oil company, bought Pioneer in a $59.5 billion deal last year. Chevron's purchase of Hess for $53 billion is currently pending during arbitration proceedings.
The FTC's investigation last year found that Sheffield communicated with OPEC about cutting oil production and driving up consumer prices while publicly blaming government policies. One analysis found such price fixing schemes by corporations were to blame for 27% of the inflation spike that American families faced in 2021.
Sheffield pushed to "keep gas prices high so his shareholders could make even more money," said Rep. Mark Pocan (D-Wis.) on Monday. "Lina Khan's FTC prevented him from cashing in and joining Exxon's board. Now, with Trump bending to the whims of Big Oil, he's considering overturning that punishment."
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Gas Price Fixing Scandal Grows as Another US Oil Exec 'Caught Colluding With OPEC'
"We cannot allow fossil fuel companies to gouge the American public in concert with OPEC while raking in record profits," said one watchdog, calling for congressional hearings.
Sep 30, 2024
Consumer advocates demanded congressional hearings on alleged price fixing by oil giants on Monday after the Federal Trade Commission banned an executive from serving on the board of Chevron, saying he had colluded with international representatives to keep oil prices high.
The FTC said it would prohibit John B. Hess, CEO of the Hess Corporation, from serving on Chevron's Board of Directors as part of Chevron's acquisition of the company, citing Hess' public and private communications "with the past and current secretaries general of the Organization of Petroleum Exporting Countries (OPEC) and an official from Saudi Arabia."
"In these communications, Mr. Hess stressed the importance of oil market stability and inventory management and encouraged these officials to take actions on these issues and speak about them at different events," said the FTC.
The FTC's complaint marks the second time since May that an oil executive has been accused of collusion and price fixing to ensure Americans would continue paying high prices for gas, adding an estimated $500 per year, per vehicle, in fuel costs for the average U.S. household.
Democratic lawmakers have demanded a probe by the Department of Justice into collusion by fossil fuel companies, following the FTC's revelation that Scott Sheffield, founder of Pioneer Natural Resources, communicated with OPEC representatives via text messages, WhatsApp, and in person to encourage high oil prices.
"Americans who are struggling to make ends meet cannot afford any more price fixing collusion between Big Oil CEOs and foreign countries."
Rep. Mark Pocan (D-Wis.) said that "jail time should seriously be considered," highlighting the financial pain Sheffield's actions added to households already struggling to afford groceries, childcare, and other essentials.
The five largest U.S. oil companies have reported more than $250 billion in profits over the last two years.
"We cannot allow fossil fuel companies to gouge the American public in concert with OPEC while raking in record profits," said Tyson Slocum, director of consumer advocacy group Public Citizen's energy program. "The FTC is lifting the veil on an effort, apparently by multiple U.S. oil companies, to communicate with foreign actors to artificially raise energy prices for American families and around the world. We reiterate the call for Congress to immediately hold hearings to investigate illegal conduct by Big Oil."
Government watchdog Accountable.US described the news as "another Big Oil CEO caught colluding with OPEC."
"Americans who are struggling to make ends meet cannot afford any more price fixing collusion between Big Oil CEOs and foreign countries," said Chris Marshall, a spokesperson for the group. "They should be held accountable to make sure consumers pay a fair price at the pump."
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Key Senate Panel Launches Probe of Big Oil-OPEC Collusion
Illegal coordination between oil companies and OPEC may have cost U.S. families thousands of dollars in higher costs for gas and other necessities.
Jun 27, 2024
Announcing a probe into potential efforts by fossil fuel companies to illegally coordinate with international oil producers in order to fix prices, U.S. Sen. Sheldon Whitehouse on Wednesday wrote to 18 oil giants demanding that they turn over communications with the Organization of Petroleum Exporting Countries, commonly known as OPEC.
Whitehouse (D-R.I.) wrote to companies including ExxonMobil, Chevron, and ConocoPhillips in his capacity as chairman of the Senate Budget Committee, weeks after the Federal Trade Commission (FTC) accused the former CEO of Pioneer Natural Resources Company of attempting to collude with OPEC.
Text messages, WhatsApp communications, and records from in-person meetings showed that Scott Sheffield tried to collude with representatives of OPEC countries to manipulate oil and gas production worldwide and raise oil and gas prices.
The commission made its discovery while reviewing a plan by ExxonMobil to acquire Pioneer in a $64.5 billion deal.
"The FTC's findings indicate that Sheffield and Pioneer may not have been the only individual or entity engaging in such collusive activities," wrote Whitehouse to the 18 oil giants, citing numerous examples.
"We're talking $500-1000 dollars of extra cost per year to Americans through direct and indirect effects of this conspiracy."
"In view of the findings against Sheffield, I seek to understand whether other oil producers operating in the United States may also have been coordinating with OPEC and OPEC+ representatives concerning oil production output, crude oil prices, and the relationship between the production and pricing of oil products," said Whitehouse.
Whitehouse called on the companies to provide communications between and among companies' corporate and affiliate officers and members of the OPEC Secretariat and OPEC+ concerning oil production output, crude oil prices, and the relationship between the production and pricing of oil products, dating from January 1, 2020 through the present.
The companies have until July 12 to provide the materials, the senator said.
Whitehouse noted that efforts by Sheffield and, potentially, other oil executives, to illegally coordinate oil production and prices with OPEC, may have had major, tangible effects on American families. He cited an analysis by the American Economic Liberties Project which found that "crude oil price-fixing schemes may have caused over 25% of the increase in inflation that hurt so many American families throughout 2021 in the wake of the Covid-19 pandemic."
"Since the U.S. consumes 7 billion barrels of oil annually, the amount saved by shale oil drillers during their price war with OPEC was $140 billion to $210 billion a year," wrote Matt Stoller, the group's research director.
"Once that price war ended, presumably so did the savings," Stoller continued. "The cost itself is likely a lot higher because pulling shale off the market when demand spiked probably caused prices to increase by much more than $20-30 a barrel. Anyway, we're talking $500-1000 dollars of extra cost per year to Americans through direct and indirect effects of this conspiracy. This cost shows up most obviously in the form of more expensive gas, but higher oil prices increase the price of everything right down to potato chips because of gas being a primary cost in distribution of goods and services. For a family of four, that's two to four thousand dollars a year in higher costs."
Whitehouse wrote in his letter to the oil company that he was "concerned about the possibility that oil and gas companies could be engaging in collusive, anti-competitive activities with OPEC+ that would raise crude oil prices, resulting in higher costs not only for American families, but also for the U.S. government when it acquires crude oil for the Strategic Petroleum Reserve."
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Scalise Took $40K in Campaign Cash From PAC of CEO Accused of Oil Price Rigging
"Big Oil CEOs are out for themselves and the politicians who support their quest to drill for profit at the expense of the American people," said a spokesperson for Accountable.US, which highlighted the donation.
Jun 03, 2024
U.S. House Majority Leader Steve Scalise received a $40,000 campaign donation from the political action committee of a Big Oil CEO who allegedly colluded with the Organization of Petroleum Exporting Countries to drive up energy prices, the watchdog Accountable.US noted Monday.
Scalise (R-La.)—who has made opposing efforts to protect public lands from fossil fuel drilling a top legislative priority—took the money from the Williams Companies PAC, whose board includes Pioneer Natural Resources CEO Scott Sheffield, who was accused last month by the U.S. Federal Trade Commission (FTC) of holding private conversations with the OPEC cartel in which he allegedly assured members that his company would throttle production, creating an artificial scarcity in a bid to boost oil prices.
The majority leader ranks fourth among all House lawmakers in 2023-24 campaign contributions from oil and gas interests, according to the watchdog OpenSecrets. His $325,833 in Big Oil contributions trails only Rep. August Pfluger (R-Texas), who took $572,421; former House Speaker Kevin McCarthy (R-Calif.), who received $335,399; and House Speaker Mike Johnson (R-La.), who got $328,019.
"If Congressman Scalise wants to protect American consumers he should start by holding accountable Big Oil price gougers."
"Big Oil CEOs are out for themselves and the politicians who support their quest to drill for profit at the expense of the American people," Accountable.US spokesperson Chris Marshall said in a statement Monday. "So if Congressman Scalise wants to protect American consumers he should start by holding accountable Big Oil price gougers."
The FTC alleges in a complaint that "Sheffield has, through public statements and private communications, attempted to collude with the representatives of [OPEC] and a related cartel of other oil-producing countries known as OPEC+ to reduce output of oil and gas, which would result in Americans paying higher prices at the pump, to inflate profits for his company."
The regulator subsequently barred Sheffield from joining the board of ExxonMobil, which bought Pioneer, over the alleged collusion.
"Mr. Sheffield's past conduct makes it crystal clear that he should be nowhere near Exxon's boardroom," FTC Bureau of Competition Deputy Director Kyle Mach said in a statement last month. "American consumers shouldn't pay unfair prices at the pump simply to pad a corporate executive's pocketbook."
Senate Majority Leader Chuck Schumer took to the upper chamber's floor Monday to reiterate his call for the U.S. Department of Justice (DOJ) to investigate Big Oil collusion and price fixing.
"It's not hard to feel the frustration—the sheer exasperation—felt by millions when America's biggest oil companies rake in record profits but still raise prices at the pump. It is deeply, deeply unfair—and now we have reason to believe that in some cases it may be unlawful," the senator said.
Schumer called the FTC allegations against Sheffield "very, very troubling."
"This is what frustrates Americans so much about Big Oil: Even when they're making money hand over fist they'll keep raising prices on us, they will keep squeezing us for everything we've got," he said. "And now they may—may—have crossed the line into unlawful behavior."
"So the DOJ needs to step in and determine if any laws against collusion or price-fixing have been broken," Schumer added. "At minimum, the American people deserve to know if Big Oil executives are conspiring with each other or with OPEC behind our backs to illegally raise prices at the pump."
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Big Oil's Un-American Scheme to Price-Gouge Consumers
From ExxonMobil's long-running climate denial to Pioneer's recent price-fixing, it's clear this rogue industry's business model is deny, deceit, and delay.
May 09, 2024
You know how the oil industry is always saying the U.S needs to drill more to lower gas prices and protect energy independence? Well it turns out they've actually been scheming behind the scenes with the Organization of the Petroleum Exporting Countries to do the exact opposite.
A bombshell complaint filed by the Federal Trade Commission (FTC) last week reveals that Scott Sheffield, the former CEO of Pioneer Natural Resources—one of the largest oil producers in the Permian Basin—colluded with OPEC officials in an attempt to artificially limit supply and jack up prices.
The FTC's complaint alleges that Sheffield exchanged private WhatsApp messages with leaders at OPEC, assuring them that Pioneer and other Permian companies would pump the brakes on output in order to keep prices high. He even threatened to "punish" any companies that dared to ramp up production. I don't know about you, but to me it's hard to imagine anything more un-American and anti-competitive than that.
The FTC complaint is the latest proof: The fossil fuel industry will always put their greed above American consumers and fair competition.
This private coordination with OPEC glaringly contrasts with Big Oil's public rhetoric blaming the Biden administration for constraining U.S. production and raising energy costs—a bogus talking point that Republicans have been parroting for months now. The bad faith has been laid bare: Oil executives themselves are colluding with a foreign cartel to throttle supply and price-gouge American consumers to pad their own pockets.
These revelations fit into a broader pattern of the fossil fuel industry's deception and abuse. Just one day before the FTC filing, the Senate Budget Committee held an explosive hearing detailing how oil giants have waged a decades-long, industry-wide disinformation campaign to downplay the catastrophic climate damage that they knew their products would cause, all while raking in record profits. From ExxonMobil's long-running climate denial to Pioneer's recent price-fixing, it's clear this rogue industry's business model is deny, deceit, and delay.
Here's the kicker: Big Oil is about to get a whole lot more powerful. With it looking like the Exxon-Pioneer merger is going to move forward (without Scott Sheffield), and Chevron pursuing a $50 billion takeover of Hess, a few mega-corporations are rapidly consolidating to control our energy grid. Studies show that mergers like these are pretty certain to squash competition, send prices soaring, and concentrate massive political influence to block necessary climate action.
That's the grim future we face if we let them get away with it: A world where a handful of greedy oil oligarchs collude with OPEC to bleed us dry at the pump while knowingly burning our planet. Fortunately, cities and states are fighting back with lawsuits and legislation to make polluters pay for their lies and damages.
Last year, California joined the fight, suing Exxon, Shell, BP, Chevron, and their lobbying arm for deliberately deceiving the public about fossil fuels' climate impacts, aiming to force them to cough up billions for disaster recovery. And right now, states like Vermont are advancing bills to create climate "superfunds" funded by Big Oil's ill-gotten gains. In fact, New York just passed their polluter pay bill in the Senate this week, bringing New Yorkers and the nation one step closer to accountability for Big Oil.
But in order to truly rein in this reckless industry, we need help at the federal level. At a minimum, Congress should eliminate fossil fuel subsidies and strengthen antitrust laws. At the Department of Justice, leaders must investigate the industry's long history of spreading disinformation. And in the White House, President Joe Biden should declare a climate emergency and wield his powers to rapidly increase the production of clean energy resources.
For decades, Big Oil has ransacked our wallets, ravaged our environment, and rigged our democracy. The FTC complaint is the latest proof: The fossil fuel industry will always put their greed above American consumers and fair competition. It's time to make polluters pay.
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Congress Urged to Tax Big Oil for Price Fixing and 'Issue Every American a Refund'
The Groundwork Collaborative's leader also said that "the Department of Justice should criminally prosecute Scott Sheffield," the former Pioneer CEO whom the FTC blocked from joining ExxonMobil's board.
May 07, 2024
Groundwork Collaborative executive director Lindsay Owens on Tuesday responded to U.S. government allegations of fossil fuel industry price fixing with calls for federal prosecution and congressional action to return money to the American public.
"Americans have been working harder and harder to cover rising energy costs, with the understanding that supply chain snags and geopolitical forces were keeping prices high," Owens said. "Now the Federal Trade Commission has uncovered the real source behind the price at the pump: collusion."
"The Department of Justice should criminally prosecute Scott Sheffield and Congress should tax back the industry's windfall profits and issue every American a refund," she added, referring to Pioneer Natural Resources' founder and longtime CEO.
Owens' statement came after members of the Federal Trade Commission (FTC) declined to contest ExxonMobil's controversial $64.5 billion acquisition of Pioneer—which was completed Friday—but approved a consent order barring Sheffield from serving on Exxon's board of directors or as an adviser to the fossil fuel giant.
"This complaint is a wake-up call about the dangerous consolidation of Big Oil's economic and political power."
The FTC voted 3-2 to accept the order and place related documents on the record for public comment. Citing communications including in-person meetings, public statements, text messages, and WhatsApp conversations, a commission complaint accuses Sheffield of trying to collude with the representatives of the Organization of Petroleum Exporting Countries (OPEC) and OPEC+.
"Mr. Sheffield's past conduct makes it crystal clear that he should be nowhere near Exxon's boardroom. American consumers shouldn't pay unfair prices at the pump simply to pad a corporate executive's pocketbook," said Kyle Mach, deputy director of the FTC's Bureau of Competition. "The FTC will remain vigilant in its enforcement efforts to protect competition in these vital markets."
Pioneer told Fortune that the company and its founder "believe that the FTC's complaint reflects a fundamental misunderstanding of the U.S. and global oil markets and misreads the nature and intent of Mr. Sheffield's actions," but neither party would take "any steps to prevent the merger from closing."
ExxonMobil "learned of the FTC's allegations regarding Sheffield from the agency and said in a statement that they are 'entirely inconsistent with how we do business,'" according to Fortune. "Exxon has agreed to the terms of the consent decree," which also "prohibits the oil giant from appointing any Pioneer employee or director to its board for five years."
Still, since the FTC's allegations were initially reported by The Wall Street Journal last week and then confirmed with the complaint's release, demands for additional action by the U.S. Department of Justice (DOJ) and Congress have mounted.
Cassidy DiPaola, Fossil Free Media's director of communications, on Monday called the complaint "explosive" and said that Democrats "must respond with bold action to hold this rogue industry accountable," including:
- Aggressive congressional and DOJ investigations into the full extent of Big Oil's price fixing;
- A windfall profits tax to claw back ill-gotten gains; and
- End taxpayer subsidies for oil and gas.
"But accountability is just the first step. This complaint is a wake-up call about the dangerous consolidation of Big Oil's economic and political power. We can't let them use megamergers to entrench their control and crush clean energy competition," she stressed. "Ultimately, this is about the future we choose: One where we remain at the mercy of Big Oil's greed and destruction, or one where clean, democratically controlled energy powers our communities. It's time to make the right choice."
In response to the Journal's reporting, Tyson Slocum, director of Public Citizen's Energy Program, similarly said that "Congress must immediately hold hearings on Big Oil's alleged collusion with OPEC to raise gasoline prices for Americans."
"Congress must not only investigate Pioneer's alleged role in conspiring with OPEC, but whether there existed a broader conspiracy by U.S. oil companies to collude with OPEC nations," he argued. "Big Oil must be held accountable for any conspiracy by or among American oil companies and OPEC members."
The reporting was notably published on the same day as the U.S. Senate Budget Committee's hearing about a nearly three-year investigation into fossil fuel companies and trade groups' decadeslong "campaign of deception and distraction," which has evolved from denying the planet-heating impact of their products to pretending to be part of the solution to the climate emergency.
"The joint report and documents we discovered show how, time and again, the biggest oil and gas corporations say one thing for the purposes of public consumption but do something completely different to protect their profits," Rep. Jamie Raskin (D-Md.), the ranking member on the House Oversight Committee, testified during the hearing. "Company officials will admit the terrifying reality of their business model behind closed doors but say something entirely different, false, and soothing to the public."
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'Crunch Time at COP28': Latest Draft Still Has Loopholes, Omits 'Just' Fossil Fuel Phaseout
As the newest Global Stocktake draft was released, an OPEC letter showed oil-producing companies are fearful that the world is getting closer to phasing out fossil fuels.
Dec 08, 2023
Reviewing the latest draft of the Global Stocktake regarding the climate emergency out of the 28th United Nations Climate Change Conference, campaigners on Friday noted that negotiators left in numerous loopholes that would allow the fossil fuel industry to continue polluting, while eliminating one option for a clause that appeared to call for a just transition toward renewable energy.
The new draft is the result of three more days of negotiations since the last version of the Global Stocktake (GST) was released on Tuesday, when advocates warned policymakers appeared insistent on including a call for "abatement" of fossil fuel emissions—meaning further development of carbon capture and storage (CCS) technologies, which have so far failed to deliver the emissions-reduction results promised by proponents.
The latest version of the document includes four options for a paragraph that would address the future of fossil fuel use in the remaining years of this decade.
The options that remain in the draft are:
- A phaseout of fossil fuels in line with best available science;
- A phasing out of fossil fuels in line with best available science, the Intergovernmental Panel on Climate Change's 1.5°C pathways and the principles and provisions of the Paris agreement;
- A phaseout of unabated fossil fuels recognizing the need for a peak in their consumption in this decade and underlining the importance for the energy sector to be predominantly free of fossil fuels well ahead of 2050; and
- No text regarding changes to fossil fuel use.
Negotiators crossed out an option that would call for "an orderly and just phaseout of fossil fuels."
"There is some good stuff in there, but still too many dangerous distractions," said 350.org on social media. "We must agree [to] a fair and fast phaseout of fossil fuels and to triple renewable energies by 2030!"
The draft suggested that many policymakers remain committed to calling for a phaseout of "unabated" fossil fuel emissions—those that are not "captured" and stored underground or under the seabed before they hit they atmosphere.
As Common Dreams reported Friday, more than 470 lobbyists representing carbon capture and storage interests and companies are in attendance at COP28—along with more than 2,400 lobbyists for the fossil fuel industry, which has openly supported CCS as a solution that would allow oil, gas, and coal giants to continue operating.
Rachel Cleetus, policy director and lead economist for the Union of Concerned Scientists' Climate and Energy Program, said world leaders must take their "historic opportunity to secure a global agreement to phase out fossil fuels in line with what the science shows is necessary to meet critical climate goals."
"It's crunch time at COP28," Cleetus told Common Dreams. "The latest draft of the Global Stocktake text includes several potential options, with varying degrees of ambition. Now, it's time to reach consensus on a final outcome that is true to the science, includes near- and long-term benchmarks, has no loopholes, and has an equitable provision of finance to drive a clean energy transition. Countries must take bold action and rise above narrow self-interest and zero-sum political games, as well as the influence of fossil fuel companies, to deliver what people around the world urgently need as climate impacts rapidly worsen."
"The time is now, and the place is Dubai, to finally address the root cause of this global crisis: fossil fuels," said Cleetus.
Oil Change International global policy manager Romain Ioualalen said the latest draft left him hopeful that the world has "never been closer to an agreement on a fossil fuel phaseout."
"What that transition will look like will be a fierce battle over the next few days," said Ioualalen. "We are alarmed about some of the options in this text that seem to carve out large loopholes for the fossil fuel industry. These will need to be opposed. The draft is also missing a clear recognition that developed countries will need to phase out faster and provide their fair share of finance, as well as a recognition that the decline of fossil fuel production must start immediately, not in the distant future."
Ghiwa Nakat, executive director of Greenpeace MENA, said the latest draft and "everything so far" at COP28 "has been just a prelude to what we really want to hear—commitment to a just and equitable phaseout of all fossil fuels by mid-century, coupled with key milestones for this critical decade."
While "alternative formulations on fossil fuel phaseout" have never "made it this far into a draft text," said Greenpeace International, "there are still no guarantees on a decision on fossil fuels, so all is in play."
Shortly after the draft was made public, letters from the Organization of the Petroleum Exporting Countries (OPEC) were leaked to multiple news outlets and made it even more clear that campaigners' fight for a strong final Global Stocktake is not over—but that major fossil fuel producers are growing concerned that COP28 could be a turning point for the industry.
The letters, dated December 6 and signed by OPEC secretary-general and Kuwaiti oil executive Haitham al-Ghais, were sent to members countries including Saudi Arabia, Iran, and Nigeria.
Al-Ghais urged the countries to "proactively reject any text or formula that targets energy, i.e. fossil fuels, rather than emissions."
"These letters show that fossil fuel interests are starting to realize that the writing is on the wall for dirty energy," Mohamed Adow, director of Power Shift Africa, told The Guardian. "Climate change is killing poor people around the globe and these petrostates don't want COP28 to phase out fossil fuels because it will hurt their short-term profits. It's shameful."
While the draft text "offers hope with several options for a phaseout of fossil fuels," said Cansın Leylim, associate director of global campaigns for 350.org, fossil fuel lobbyists are still "trying to block progress" at COP28.
"OPEC needs to get with the program or move out of the way of our just transition to a 100% renewable energy powered future," said Leylim. "The spotlight is now on the COP28's presidency and if they will broker a deal for a just transition or instead align themselves with the oil industry."
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Group Calls for US Ban on Gasoline Exports to Combat Big Oil Price Gouging
"The fossil fuel industry has made obscene profits throughout a deadly global pandemic, and will continue this profiteering at the pump by promoting fuel exports when supplies are tight."
Oct 19, 2022
The advocacy group Food & Water Watch on Wednesday urged the Biden administration to protect U.S. consumers from fossil fuel industry profiteering by moving to reinstate a long-standing ban on oil exports.
"These corporations are simply deciding to make more money--no matter the pain it causes here at home."
As Americans have paid near-record prices at filling stations across the country this year--the American Automobile Association reports that gasoline is currently averaging $3.84 per gallon nationally, with five Western states paying $5 or more--consumer advocates have accused Big Oil of intentionally inflicting "pain at the pump" in order to boost profits at consumers' literal expense.
As Common Dreams reported in July, eight fossil fuel companies raked in $52 billion in record second-quarter profits, a 235% increase over the previous year.
"The fossil fuel industry has made obscene profits throughout a deadly global pandemic and will continue this profiteering at the pump by promoting fuel exports when supplies are tight," Food & Water Watch executive director Wenonah Hauter said in a statement.
"This is highly profitable for them," she added, "and absolutely disastrous for American families struggling with sky-high inflation."
In addition to pushing a windfall profits tax to combat both corporate avarice and the climate emergency, progressives are calling on U.S. President Joe Biden to reimpose a fuel export ban, which was in effect for 40 years until lifted in 2015.
"These corporations are simply deciding to make more money--no matter the pain it causes here at home," said Hauter. "The White House should take proactive steps to ban gasoline exports to protect American consumers from Big Oil's price gouging."
Proponents of an export ban say the policy would lower U.S. gas prices, and point to the crucial role that booming exports have played in exacerbating domestic fuel costs.
As the consumer advocacy group Public Citizen noted in June, the 2015 law ending the U.S. export ban contains a provision enabling the president to unilaterally "impose export licensing requirements or other restrictions on the export of crude oil from the United States for a period of not more than one year, if the president declares a national emergency."
Earlier this month, White House officials tasked the U.S. Department of Energy with studying the potential impacts of reinstating the fuel export ban. This, after U.S. Energy Secretary Jennifer Granholm said in September that the administration was not considering such a ban, while urging fossil fuel producers to increase domestic inventories of gasoline and diesel to combat high prices.
On Wednesday, Biden's chief economic adviser, National Economic Council Director Brian Deese, told Bloomberg Tax that "we have to keep all options on the table" to ease U.S. fuel prices.
"The profit that energy refining companies are now capturing on every gallon of gasoline is about double what it typically is at this time of year."
U.S. refiners are girding for the remote possibility that Biden will restrict fuel exports ahead of next month's midterm elections. They're urging his administration to eschew such a policy, which leading lobbies American Petroleum Institute and American Fuel and Petrochemical Manufactures argue "would likely decrease inventory levels, reduce domestic refining capacity, put upward pressure on consumer fuel prices, and alienate U.S. allies during a time of war."
On Tuesday, the White House announced the U.S. will release 15 million barrels of oil from the national Strategic Petroleum Reserve (SPR), to be delivered in December, while calling on the Department of Energy "to be ready to move forward with additional significant SPR sales this winter if needed due to Russian or other actions disrupting global markets."
Additionally, Biden "is calling on companies to pass through lower energy costs to consumers right away," with the White House noting that "the profit that energy refining companies are now capturing on every gallon of gasoline is about double what it typically is at this time of year, and the retailer margin over the refinery price is more than 40% above the typical level."
"These outsized industry profit margins--adding more than $0.60 to the average price of a gallon of gas--have kept pump prices higher than they should be," the White House asserted. "Keeping prices high even as input costs fall is unacceptable, and the president will call on companies to pass their savings through to consumers--now."
While fossil fuel interests and many capitalist experts claim there is little evidence of Big Oil price gouging, progressive economists and advocacy groups say that--along with supply and demand issues, Russia's invasion of Ukraine, and the move by OPEC+ nations to reduce global oil supplies--corporate greed is to blame for high pump prices.
An analysis published earlier this month by Accountable.US, for example, showed that even though crude oil prices had recently fallen to their lowest levels since January, "prices for consumers are still 13% higher than they were last time oil was this cheap."
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Saudi-Led OPEC Production Cut Could Be 'Tipping Point' for Global Recession, IEA Warns
The International Energy Agency said a jump in oil prices combined with "unrelenting inflationary pressures and interest rate hikes" could spark a worldwide economic downturn.
Oct 13, 2022
The International Energy Agency warned Thursday that the Saudi-led OPEC cartel's decision to slash oil production in the coming weeks could be the final catalyst for a global economic recession as central banks try--and, thus far, fail--to rein in inflation with demand-crushing interest rate hikes.
"With unrelenting inflationary pressures and interest rate hikes taking their toll, higher oil prices may prove the tipping point for a global economy already on the brink of recession," the IEA said in its monthly report on the state of the global oil market.
"This is MBS' October surprise. This is his election interference."
OPEC leaders announced last week that starting in November, members of the alliance will cut their combined oil production by two million barrels per day in an effort to prop up prices, a move that drew furious responses from the Biden administration and Democratic members of Congress.
The IEA said in its new report that OPEC's "plan to sharply curtail oil supplies to the market has derailed the growth trajectory of oil supply through the remainder of this year and next, with the resulting higher price levels exacerbating market volatility and heightening energy security concerns."
The energy agency's assessment builds on recent warnings from other prominent global institutions--including the International Monetary Fund and the World Bank--that a painful global recession could be right around the corner thanks to a confluence of factors, including Russia's war on Ukraine, stubbornly high inflation, ongoing supply chain snags from the pandemic, financial instability, and relentless corporate profiteering.
New Consumer Price Index figures released Thursday show that U.S. inflation rose in September, heightening concerns that the Federal Reserve could push the country into recession with additional large rate hikes--the impacts of which reverberate worldwide, particularly in poor nations.
OPEC's decision to slash oil output piles on yet another recessionary risk factor, according to the IEA, as it's likely to drive worldwide gas prices back up after their recent downtrend.
Facing massive backlash from U.S. lawmakers and the Biden White House over OPEC's planned production cut, Saudi Arabia's foreign ministry suggested in a statement Thursday that the Biden administration privately urged OPEC to postpone its supply reduction announcement by one month, a delay that would have pushed the decision off until after the U.S. midterm elections.
In response, White House National Security Council spokesperson John Kirby accused the Saudis of trying to "deflect" and said the U.S. presented the kingdom with an analysis showing that "there was no market basis to cut production targets, and that they could easily wait until the next OPEC meeting to see how things developed."
"Other OPEC nations communicated to us privately that they also disagreed with the Saudi decision, but felt coerced to support Saudi's direction," Kirby added. "We are reevaluating our relationship with Saudi Arabia in light of these actions."
Analysts have argued that OPEC's move was clearly politically motivated.
"This is MBS' October surprise," Trita Parsi, executive vice president of the Quincy Institute for Responsible Statecraft, told The Intercept, referring to Saudi Crown Prince Mohammed bin Salman. "This is his election interference."
"It forces Biden to make a choice," Parsi added. "Will he protect America's democracy and Democratic lawmakers in Congress, or will he triple down on a flawed gamble that says that the U.S. has no choice but to acquiesce to Saudi Arabia to prevent Riyadh from aligning with Russia?"
This story has been updated with comments from White House National Security Council spokesperson John Kirby.
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Reuters reports that the Biden White House is upset with Saudi Arabia over the recent OPEC+ decision to cut the output of the 21 nations grouped in the bloc by 2 million barrels a day. President Biden told CNN's Jake Tapper in an interview Tuesday, "there will be consequences" for Saudi Arabia's relationship with the U.S.
The correct way to take the Saudis down a notch is two-fold.
Sen. Bob Menendez (D-NJ) is also angry, and has said he will put a hold on weapons sales to Saudi Arabia in response. The OPEC+ cut guarantees higher gasoline prices going into the midterms, which hurts Democrats. It also helps Russia, an OPEC+ member, realize more earnings on every barrel of oil it manages to sell despite US and European Union sanctions, and so helps fund the war against Ukraine.
Although it would not be such a bad thing for fewer high-tech weapons to flood into the oil Gulf states, Menendez's solution to the problem is not very satisfactory. Saudi Arabia has currency reserves plus a sovereign wealth fund that total all together $1.1 trillion, and that is apart from their regular annual oil income. So if Riyadh wants fancy weapons, it can buy them from France or the UK or Russia if the US won't sell to the Saudis.
The correct way to take the Saudis down a notch is two-fold. One is to make a full court press to restore the 2015 Iran nuclear deal. With its current domestic problems, which derive in part from the US trade and financial blockade on Iran, the government in Tehran has reason to be more flexible. If the Democrats do well in the mid-terms, the same would be true of Biden. Bringing Iran in from the cold would put another two million barrels a day on the market in short order. Biden is also trying to take sanctions off Venezuelan production, but that country's industry is degraded and Caracas will need time to ramp up production. Letting Iran sell its oil, as the US did before May, 2018, would completely make up for the OPEC+ cut, and maybe then some.
An Iran freely pumping oil would also hurt Russia, which would see clandestine markets dry up, and would put even more pressure on Putin to back down.
The other way to address Saudi bad pricing behavior is to push the electrification of transportation even harder. Electric cars are freedom-mobiles. Petroleum is mainly used for transportation,, and if US transportation quickly goes green, it will pull the rug out from under Riyadh and Moscow, depriving them of their ability to blackmail the world because of their energy resources. Electric cars have doubled to 6% of new car purchases in the US this year.
China and Europe are way ahead of us, which has implications for the future of the automobile industry. In China this year, battery electric vehicles were 19% of new car sales, and plug-in hybrids were another 5%, so almost a quarter of new cars were some sort of EV. In Europe, BEVs are 10% of new car purchases, and PHEVs are 9%, so nearly 20% of new cars registered in the European Economic Area are EVs.
Why did Saudi Arabia defy Biden? Global oil production is up by over 4 million barrels a day to about 100 million barrels a day this year compared to last. The extra production this summer had begun to bring down prices from a high of $120 a barrel last spring to $95 a barrel today. Before the cut was announced, prices had gone even softer, sometimes under $90 a barrel.
The Organization of Petroleum Exporting Countries was founded in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Its membership has fluctuated since, with some countries joining and others leaving, depending on their petroleum output and their sensitivity to prices. OPEC is a cartel, which conspires to influence prices. Its members do not control enough of the market to set prices, but they seek to smooth out the ups and downs. Primary commodity prices are a roller-coaster, which is inconvenient for producers who don't want to be broke one year and rich as Croesus the next. How can you plan out building airports, roads and office buildings that way? Many primary commodity producers have attempted to establish such cartels at one time or another, as with tea.
OPEC+ for the past several years has grouped 11 OPEC members with 10 non-OPEC producers, including Russia, Malaysia and Mexico.
Last week OPEC+ agreed on a cut to their country quotas that would yield an over-all reduction of two million barrels a day. Given stable or rising demand, that cut in supply will cause prices to rise.
The Biden administration was all along unrealistic in hoping for a rise in Saudi or OPEC production. Analysts concluded earlier this year that the oil producing countries were already producing at their peak capacity, including Saudi Arabia, and the Saudis tried to tell the Americans that. Washington, however, chose to believe that they were just being fed a line and that there was more oil out there to be had. There wasn't.
In the early twenty-first century, Saudi Arabia had a low-price policy, because it did not want to kick-start the electric vehicle revolution with high gasoline prices. But now, as the US, China and the EU are backing EVs strongly and the percentage of new car buys that are electric is rising quickly, that game is over. Saudi Arabia is now in a race to get as much money as possible for its petroleum before transportation is largely electrified. Crown Prince Mohammed Bin Salman wants to use the current value of petroleum to pay for a Saudi transition to a non-oil economy. He can't do that by lowering the price of oil.
The US and Saudi Arabia are no longer on the same page about the future and how to get there. The US is going green because of the climate crisis. The Saudis are happy to wreck the planet to get the last penny of value from their stranded asset. We may as well recognize this fact and begin doing some offshore balancing by bringing Iran in from the cold.
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