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President Joe Biden has asked the Federal Trade Commission to investigate the possibility of oil companies’ involvement in price trends in retail fuels, alleging illegal conduct on the part of the companies.
There is allegedly “mounting evidence of anti-consumer behavior by oil-and-gas companies,” according to a letter sent by the White House to FTC chairwoman Lina Khan, as cited by the Wall Street Journal.
Despite the fact that unblended gasoline prices were down by more than 5 percent over the last month, the letter said, finished gasoline prices were 3 percent higher over the period.
“This unexplained large gap between the price of unfinished gasoline and the average price at the pump is well above the pre-pandemic average,” the president wrote. “Meanwhile, the largest oil-and-gas companies in America are generating significant profits off higher energy prices.”
"The Federal Trade Commission has authority to consider whether illegal conduct is costing families at the pump. I believe you should do so immediately," Biden also wrote, as quoted by Reuters.
High prices at the pump have turned into a major headache for the Biden administration, prompting the president to repeatedly urge OPEC to boost production more substantially. The U.S. oil industry has suggested it could help with the supply of crude, with Occidental chief executive Vicki Hollub saying “if I were gonna make a call [[regarding oil production], it wouldn’t be long distance, it would be a local call.”
“I think first you, you stay home, you ask your friends, and you ask your neighbors to do it. And then if we can’t do it, you call some other countries,” Hollub also said earlier this week, as quoted by CNBC.
According to analysts interviewed by the Wall Street Journal, an FTC investigation into gasoline prices is unlikely to find sufficient evidence of illegal conduct on the part of oil companies.
Citing an not too uncommon divergence between unblended and finished gasoline prices over the past 10 years, research firm ClearView Energy Partners said “This gives us some reason to suggest that today’s FTC investigation might end up like past such efforts: with limited evidence to validate assertions of market manipulation and price gouging.”
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com