WASHINGTON — President Joe Biden on Wednesday called for federal regulators to investigate whether oil and gas companies are engaging in “illegal conduct” by profiting from high gas prices at the pump that have skyrocketed during the pandemic.
Biden, facing increasing pressure politically as inflation has soared to a 31-year high, requested the probe in a letter to Federal Trade Commission chair Lina Khan, claiming “mounting evidence of anti-consumer behavior by oil and gas companies.”
“The bottom line is this: gasoline prices at the pump remain high, even though oil and gas companies’ costs are declining,” Biden said in the letter. “The Federal Trade Commission has authority to consider whether illegal conduct is costing families at the pump. I believe you should do so immediately.”
The national average price for a gallon of regular gasoline is $3.41 – $1.29 more than a year ago, according to the American Automobile Association, and a seven-year high. Although the national average dropped a penny last week, gas prices in California broke a new record Tuesday with an average price tag of $4.687 for a regular gallon.
Biden said gas prices at the pump typically respond to changes in the prices of unfinished gasoline, which he noted is down more than 5% over the last month while gas prices are up 3% over the same period.
“This unexplained large gap between the price of unfinished gasoline and the average price of the pump is well-above the pre-pandemic average,” Biden said, adding that the largest oil and gas companies are generating “significant profits off higher energy prices.”
He said the two largest oil and gas companies – which he did not identify by name – are on track to nearly double their net income over 2019, the last full year before the pandemic. The two largest oil and gas companies based on market capitalization in 2021 are ExxonMobil and Chevron.
Biden said both companies have announced plans to “engage in billions of dollars of stock buybacks and dividends this year or next.”
“I do not accept hard-working Americans paying more for gas because of anti-competitive or otherwise potentially illegal conduct,” Biden said in the letter. “I therefore ask that the commission further examine what is happening with oil and gas markets, and that you bring all of the commission’s tools to bear if you uncover any wrongdoing.”
Representatives of ExxonMobil and Chevron did not immediately respond to requests for comment.
The Federal Trade Commission has the authority to open an investigation to obtain data on how companies set gas prices and other data on pricing. The Biden administration has slowly ramped up pressure on the agency. In August, Brian Deese, director of the National Economic Council, asked the FTC to “monitor” for potential illegal conduct by oil and gas companies.
Frank Macchiarola, senior vice president of policy, economics and regulatory affairs at the American Petroleum Institute, called Biden’s push for a probe “a distraction” from the market shift and “ill-advised government decisions that are exacerbating this difficult situation.”
Macchiarola said higher gas prices resulted from increasing demand for gasoline outpacing supply as the economy rebounds from the pandemic. “Further impacting the imbalance,” he added, are moves from the Biden administration to restrict access to fossil fuels.
“Rather than launching investigations on markets that are regulated and closely monitored on a daily basis, or pleading with OPEC to increase supply, we should be encouraging the safe and responsible development of American-made oil and natural gas.”
Reach Joey Garrison on Twitter @joeygarrison