On Friday, June 28, Bloomberg reported that a US Senate committee is investigating potential illegal coordination between oil producers and OPEC to raise prices. This follows accusations that the former head of Pioneer Natural Resources Co. colluded with the organization.
The probe is being led by Budget Committee Chairman Sheldon Whitehouse, an industry critic. Whitehouse has requested documents from 18 oil companies, including Exxon Mobil Corp., BP PLC, and Chevron Corp., citing evidence that the industry might be attempting to reduce production.
“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,” Whitehouse wrote in letters to the companies, made public last Thursday.
The documents sought by Whitehouse include communications among company officials and members of the Organization of the Petroleum Exporting Countries related to oil production and prices, from January 2020 to the present. Representatives of BP, Chevron, and Exxon did not immediately respond to requests for comment last Thursday, according to Bloomberg.
This investigation follows the Federal Trade Commission’s (FTC) review of Exxon’s $60 billion acquisition of Pioneer. During this review, the FTC found evidence suggesting that Scott Sheffield, Pioneer’s former head, attempted to communicate with OPEC and US peers about oil pricing and output. The FTC has referred the matter for a potential criminal investigation. Sheffield has denied the allegations.
Sheffield is accused of seeking to align Pioneer’s production and pricing strategies with those of OPEC and other industry players, potentially violating US antitrust laws. The FTC, which oversees and enforces these laws, found documents and communications that suggested Sheffield had made efforts to coordinate with OPEC and other US oil companies. If proven, such actions could be deemed as collusive behavior intended to manipulate oil prices and restrict production, disadvantaging consumers.
The FTC’s referral for a potential criminal investigation indicates the severity of the allegations. Federal prosecutors could potentially pursue charges against Sheffield if sufficient evidence of illegal activities is found. The Department of Justice would handle such a criminal investigation, which could lead to significant penalties, including fines and imprisonment, if Sheffield is found guilty. However, Sheffield maintains that any communications with OPEC or other oil companies were within legal bounds and were part of standard industry practices.
A spokeswoman for the American Petroleum Institute, speaking to Bloomberg, dismissed the new probe as “yet another election-year stunt.”
“The reality is that US producers have increased production to record levels despite a growing list of inflationary policies that hurt consumers and threaten to cede our energy advantage to nations hostile to US interests,” stated Bethany Williams, a spokeswoman for the trade group, in an email.
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