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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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