Pallone Launches Investigation Into Reports of Oil Companies Colluding to Drive Up Gas Prices

“If U.S. oil companies are colluding with each other and foreign cartels to manipulate global oil markets and harm American consumers who then pay more at the pump, Congress and the American people deserve to know.”

Washington, DC – Energy and Commerce Committee Ranking Member Frank Pallone, Jr. launched an investigation into seven oil and gas companies today, demanding answers for the behavior of crude oil producers as concerns grow that oil companies are illegally colluding to artificially inflate gas prices. The new probe comes in the wake of recent revelations from a Federal Trade Commission (FTC) investigation into Scott Sheffield, the former CEO of Pioneer Natural Resources Company, who allegedly attempted to illegally coordinate crude oil production levels with OPEC and his competitors in order to drive up prices at the pump and rake in additional profits.

“At a hearing last Congress, Committee Democrats raised concern that oil companies were artificially inflating gas prices to gouge consumers and produce record profits for shareholders,” Pallone wrote to the CEOs of BP America, Shell USA, Chevron, Occidental Petroleum, Devon Energy, Hess, and ExxonMobil Corporation (Exxon). Pallone went on to underscore that Democrats’ concerns have been realized: “The FTC’s complaint details troubling actions by Mr. Sheffield, who allegedly attempted to illegally collude and coordinate crude oil production levels with Pioneer’s competitors and representatives from the Organization of the Petroleum Exporting Countries (OPEC) and OPEC+.”

Pallone noted that OPEC and OPEC+ are cartels in which many of the major oil-producing nations of the world openly collude to artificially limit production and manipulate oil prices. Moreover, OPEC has shown a significant willingness to use its oil leverage for geopolitical reasons, such as when it caused the 1973 oil crisis.  Starting in the 2010s, however, increasing U.S. crude oil production limited OPEC’s ability to manipulate global supply as American oil producers — subject to antitrust and competition laws in the United States — refused to artificially limit supply. Without those U.S. protections, Pallone wrote, American consumers would be at the mercy of OPEC and OPEC+’s member nations, including Russia and Iran.

“Unfortunately, Mr. Sheffield and Pioneer appear to have flouted those laws,” Pallone wrote. “Even more troubling, Mr. Sheffield appears to have attempted to encourage other U.S. oil producers to follow his and Pioneer’s lead in colluding with a cartel to drive up energy costs at Americans’ expense.”

Pallone pointed to publicly available data that suggests U.S. oil producers limited their production growth, despite high prices, over the same period that Mr. Sheffield was trying to influence his competitors. Meanwhile, crude oil prices have soared as high as $120 per barrel.

“I am concerned that Mr. Sheffield’s behavior may represent common practices across the industry, as reporting and the FTC complaint have suggested. Simply put, I am worried that Mr. Sheffield’s actions, rather than being ‘entirely inconsistent with how we do business,’ as Exxon has claimed, are instead industry-standard practice — directly contradicting what the largest oil companies, including Pioneer and Exxon, testified to the Committee last Congress,” Pallone concluded.  “If U.S. oil companies are colluding with each other and foreign cartels to manipulate global oil markets and harm American consumers who then pay more at the pump, Congress and the American people deserve to know.”

Pallone demanded answers and documents from each of the seven companies, including:

• All communications between each company’s current or former employees involved in developing future production plans and representatives of OPEC or OPEC+;
• A list of meetings between each company and representatives of OPEC or OPEC+, as well as a list of meetings between each company and competing U.S. oil producers;
• All communications between each company and representatives of competing U.S. oil producers that describe or allude to present, planned, or projected production;
• Any legal guidance pertaining to antitrust, competition, or sanctions issues ahead of meetings with representatives of OPEC or OPEC+;
• Any non-public communications or meetings that executives have had with shareholders or equity owners on crude oil production levels or prices; and
• A detailed description of any efforts to influence potential federal or state government efforts to artificially limit crude oil production.

In his letter to Exxon, which recently acquired Sheffield’s Pioneer Natural Resources Company, Pallone made additional demands, including:

• All communications between Pioneer employees who were involved in developing production plans and representatives of OPEC or OPEC+;
• A detailed description of any guardrails Exxon plans on implementing in the wake of the acquisition to ensure that the alleged behavior by Mr. Sheffield is not replicated within Exxon; and
• A detailed description of how former employees of Pioneer will be incorporated into Exxon’s corporate structure and their role in developing future production plans or in altering existing production plans for any of Exxon’s assets.

Full letters are available here:

• BP America
• Shell USA
• Chevron
• Occidental Petroleum
• Devon Energy
• Hess
• Exxon