Senate Democrats call on DOJ to investigate alleged collusion with Big Oil

Senate Majority Leader Chuck Schumer, along with nearly two dozen Democrats, have called on the Department of Justice (DOJ) to investigate allegations of collusion and price-fixing within the oil industry.

The plea, detailed in a letter to Attorney General Merrick Garland on Thursday, follows allegations by federal regulators that a prominent Texas oil executive tried to conspire with OPEC to manipulate oil and gasoline prices.

The letter, signed by 23 senators, including Elizabeth Warren, Amy Klobuchar, Bernie Sanders and Dick Durbin, highlighted the “alarming” nature of the accusations against Scott Sheffield, the former CEO of Pioneer Natural Resources.

Sheffield is accused by the Federal Trade Commission (FTC) of having private communications with OPEC officials in order to keep oil supplies artificially low. According to CNN, these allegations stem from hundreds of text messages exchanged between Sheffield and OPEC representatives discussing pricing and production strategies.

“The federal government must use every tool to prevent and prosecute collusion and price fixing that may have increased the prices of gasoline, diesel fuel, heating oil and jet fuel in a manner that caused material harm to virtually every American household and business,” Senate Democrats said. indicated in their letter.

Senators pressure DOJ to fully investigate the oil industry, hold accountable any parties found guilty of illegal activities, and take steps to end such practices . The letter from Schumer and his colleagues highlights the growing pressure on big oil companies in light of the FTC's findings, which suggest such collusion may have contributed to a significant rise in gas prices and a substantial financial burden for American households.

The FTC's investigation into Sheffield, who denied the allegations, found that he had numerous private conversations with senior OPEC officials, assuring them that Pioneer and its Permian Basin competitors were committed to limit oil production. These actions, according to the FTC, helped artificially inflate fuel prices, forcing consumers to pay an average of 94 cents more per gallon compared to pre-pandemic prices.

While the FTC banned Sheffield from serving on Exxon's board following the Pioneer acquisition, Senate Democrats argue that only the DOJ has the authority to fully prosecute and combat anticompetitive behavior within of the oil sector. They pointed out that under the Sherman Act, companies can face fines of up to $100 million, and individuals can face fines of up to $1 million and up to 10 years prison for price fixing.

“The DOJ must protect consumers, small businesses, and the public from collusion in the oil market, and an important part of that mission is to seek full restitution and impose all sanctions supported by the facts and the law,” underlines the letter.

In his response to the FTC's allegations, Sheffield claimed the agency misrepresented facts and evidence, calling for the order against him to be overturned. He argued that the FTC's actions could have a chilling effect on business leaders in various industries.

The oil industry, represented by the American Petroleum Institute, also refuted the Democrats' claims, criticizing the White House's economic policies. Andrea Woods, an API spokeswoman, said the United States was the largest producer of crude oil, stabilizing the market despite OPEC's supply cuts. She suggested that the current administration's inflationary policies pose a greater threat to energy security.