President Joe Biden has called on the Federal Trade Commission (FTC) to probe possible anti-competitive or “illegal conduct” by oil and gas companies that may have pushed up gasoline prices at the pump, drawing a critical response from a major oil lobby that blames the president’s policies for stifling U.S. energy production.
Biden said in a Nov. 17 letter to FTC Chair Lina Khan that there was “mounting evidence of anti-consumer behavior by oil and gas companies,” pointing to an apparent market dislocation—falling production costs and declining prices of unfinished gasoline, while pump prices are up.
“Usually, prices at the pump correspond to movements in the price of unfinished gasoline, which is the main ingredient in the gas people buy at the gas station,” Biden wrote, noting that in the past month, the price of unfinished gasoline was down 5 percent while the retail price at the pump was up around 3 percent.
The average retail gas price per gallon in the United States was $3.413 as of Nov. 17, an increase from $3.319 a month ago and $2.121 a year ago, according to the American Automobile Association. The current futures price for unfinished gasoline, known as RBOB, was trading at $2.30 a gallon at 3:57 p.m. New York time.
Biden also noted that the two biggest U.S. oil and gas companies were on track to nearly double their net income compared to 2019.
“Prices at the pump have continued to rise, even as refined fuel costs go down and industry profits go up,” Biden said in the letter, calling on the FTC to “examine what is happening with oil and gas markets” and to “bring all of the Commission’s tools to bear if you uncover any wrongdoing.”
“I do not accept hard-working Americans paying more for gas because of anti-competitive or otherwise potentially illegal conduct.”
The American Petroleum Institute (API), the nation’s biggest trade association for the oil and gas industry, called Biden’s letter to the FTC a “distraction” and blamed his administration’s “ill-advised” policies for constraining the country’s energy supply and exacerbating the pain at the pump.
“Demand has returned as the economy comes back and is outpacing supply,” Frank Macchiarola, API senior vice president of policy, economics, and regulatory affairs, said in a statement.
“Further impacting the imbalance is the continued decision from the administration to restrict access to America’s energy supply and cancel important infrastructure projects,” Macchiarola added, presumably referring to Biden’s decisions to freeze new oil and gas drilling leases on federal land and waters, and canceling the Keystone XL pipeline project.
Instead of pressing the FTC to probe closely monitored and regulated oil and gas markets or “pleading with OPEC to increase supply, we should be encouraging the safe and responsible development of American-made oil and natural gas,” he said.
Biden has faced sharp criticism over surging gasoline prices, with his administration’s chief plan to relieve pain at the pump being to persuade OPEC to boost production more sharply to reduce the supply crunch, but thus far, that plan has failed.
At its most recent meeting on Nov. 4, the oil-producing cartel rebuffed calls from the Biden administration to ramp up crude production more sharply, voting to gradually raise daily crude production by 400,000 barrels each month.
The administration has also faced calls to tap into the Strategic Petroleum Reserve (SPR) to help drive down gasoline prices, but there has been no action from the White House on that front.
Biden struck a noncommital note when a reporter asked at a Nov. 6 press briefing when he would respond with an SPR release, given that “OPEC-plus has snubbed your call to pump more oil.”
“There are other tools in the arsenal that we have” to get “more energy in the pipeline,” Biden said, although he didn’t provide details, except that his administration is “dealing with other countries” and that he would discuss the matter further “at an appropriate time.”
Meanwhile, U.S. consumer confidence has plunged to a 10-year low, according to a University of Michigan survey, which blamed surging inflation and a growing conviction among American consumers that the Biden administration hasn’t put in place any effective policies to tame runaway prices.