Senate Budget Committee to Investigate If Big Oil in the U.S. is In Bed With OPEC to Raise Prices

The Senate Budget Committee announced on Thursday that it would begin an investigation into 18 oil and gas producers and whether they have engaged in “efforts to illegally coordinate” with the international oil cartel OPEC in order to raise prices at the pump for Americans.

The investigation follows on findings from the Federal Trade Commission in May that the founder and former CEO of Pioneer Natural Resources, Scott Sheffield, got up to some shady stuff. Specifically, that he “attempted to collude with the representatives of the Organization of Petroleum Exporting Countries (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 FTC got involved because of ExxonMobil’s pending $64.5 billion purchase of Pioneer, part of a massive round of Big Oil mergers and consolidation. Though they have allowed the largest oil industry acquisition in two decades to move forward, the FTC banned Sheffield from serving on Exxon’s board.

“Based on recent events involving Pioneer Natural Resources Company, soon to merge with ExxonMobil Corporation, I am 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,” wrote Budget Committee chairman Sheldon Whitehouse (D—RI) in a letter sent to companies including Chevron, Shell, ConocoPhillips, and others.

Sheffield’s shenanigans turned out to be fairly overt. Per the FTC, he “exchanged hundreds of text messages with OPEC representatives and officials discussing crude oil market dynamics, pricing and output.” Some estimates suggest that price fixing and collusion may have caused as much as 27 percent of excess oil industry profits — and thus the price increases at the pump  — seen in 2021.

And Sen. Whitehouse is worried that Sheffield wasn’t the only one, just the most egregious.

“The FTC’s findings indicate that Sheffield and Pioneer may not have been the only individual or entity engaging in such collusive activities,” he wrote in his letter, which requests each company to provide communications among its employees and executives and any OPEC or OPEC+ representatives starting in 2020. The FTC found plenty of reason to think its a more widespread conspiracy: “[t]hrough public statements, text messages, in-person meetings, WhatsApp conversations and other communications while at Pioneer, Sheffield sought to align oil production across the Permian Basin in West Texas and New Mexico with OPEC+.”

As the largest oil producer in the world, the U.S. is constantly engaged in a quiet war with OPEC countries, especially given that gas prices seem to have outsized effects on things like elections. President Biden has, by some accounts, been more than adept at managing the relationship with OPEC, but it sure sounds harder to manage the Saudi Arabias of the world when Chevron and Exxon may be working against you behind the scenes.

Sen. Whitehouse asked for the companies’ compliance by July 12.