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Citing high gas prices, Biden asks FTC to redouble probe of possible 'illegal conduct'

Stock MarketsNov 17, 2021 05:46PM ET
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© Reuters. FILE PHOTO: Choices at the gas pump including ethanol or no ethanol gas are seen in Des Moines, Iowa, U.S., January 29, 2020. REUTERS/Brian Snyder

By Andrea Shalal and Jarrett Renshaw

WASHINGTON (Reuters) - U.S. President Joe Biden on Wednesday said there was mounting evidence of anti-consumer behavior by oil and gas companies that is keeping fuel prices elevated, asking the Federal Trade Commission to dig deeper into possible "illegal conduct" in the market.

The White House is pressing on several fronts to try to lower fuel costs, even as tight global oil supply drives gasoline and heating oil prices higher. Retail gasoline prices recently touched seven-year highs as consumer demand has recovered while oil supply remains below pre-pandemic peaks.

Biden in August asked the FTC to investigate possible illegal conduct causing the spike in gas prices, which are contributing to surging inflation. On Wednesday he told FTC Chair Lina Khan in a letter that further action was needed.

"The Federal Trade Commission has authority to consider whether illegal conduct is costing families at the pump. I believe you should do so immediately," he wrote.

An FTC spokesperson said they were also concerned about the issues raised in the White House letter and that the consumer agency was looking into the situation, a spokesperson said.

Gas prices have continued to rise at the pump even though the price of unfinished gasoline has dropped over the last month, Biden said, noting that the two largest U.S. oil and gas companies were on track to nearly double their net income compared to 2019.

"I do not accept hard-working Americans paying more for gas because of anti-competitive or otherwise potentially illegal conduct," the president said in the letter to Khan.

"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."

The two largest oil and gas companies in the U.S. by market capitalization, Exxon (NYSE:XOM) and Chevron (NYSE:CVX), respectively, didn't immediately reply to a request for comment.

Biden's approval ratings have dropped to the lowest point of his presidency in recent months amid growing concerns about rising prices, although his top economic advisers still say the surge will be transitory and should ease next year.

Republicans are using concerns about inflation as a "cudgel" to pound the Biden administration, his press secretary Jen Psaki said last week.

The FTC could use its authority to launch an "open study investigation" to obtain data on how companies set gas prices, and study actual pricing at the pumps, the White House said.

Kevin Book, a managing director with Clearview Energy Partners, said price changes often take time to filter through to consumers.

“There is an up-like-a-rocket, down-like-a-feather phenomenon that happens at the pump and it frustrates politicians,” he said.

For example, unfinished gasoline futures prices fell by $1.18 a gallon between January and late March of last year during the first coronavirus pandemic outbreak, but retail prices only dipped by 45 cents before ebbing later. (For graphic see https://graphics.reuters.com/USA-BIDEN/GASPRICES/jnvwexkrovw)

The FTC has looked into this issue many times and often comes up empty, Book said, adding that there were simply too many actors in the retail gasoline market for them to collude.

The average retail gas price per gallon in the United States was $3.413 as of Wednesday, from $3.319 a month ago, according to the American Automobile Association. The current futures price for unfinished gasoline known as RBOB is trading at $2.317 a gallon, but was trading at $2.49 a gallon a month ago.

The price of crude oil accounts for half of the cost of retail gasoline, according to the U.S. Energy Department, followed by local and state taxes, along with refining, transportation and distribution costs.

Retail gasoline prices vary state-by-state, with prices around $3 in Oklahoma and as high as $4.69 a gallon in California, due to state excise taxes and other factors. The federal gas tax is 18 cents per gallon.

Biden said he appreciated that the FTC had directed Commission staff to strengthen oversight of mergers in the oil and gas sector that result in fewer consumer choices and potentially higher prices.

Reuters reported last month that U.S. antitrust regulators had extended the approval process for at least five oil and gas mergers and acquisitions in the last three months.

Citing high gas prices, Biden asks FTC to redouble probe of possible 'illegal conduct'
 

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Comments (10)
James Thacker
quienes_tu_papa Nov 17, 2021 11:34AM ET
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Here for the comments. Was not disappointed.
MK MK
MK MK Nov 17, 2021 11:30AM ET
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So, bubble in asset is ok. Why gas should be cheap? That is free market, isn't it?
Mart Bab
Rubberduck1973 Nov 17, 2021 10:58AM ET
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Omg. To all commenting below. Demand for oil is low. So how come price is high? In eu 2/3 of traffic compared to pre pandemic levels. Someone can empty your pockets and you will blame Biden. Not a fan of Biden. But just blaming him for every problem is not going to bring the right solution. Oil markets seem pretty manipulated and so is gas. Geesss.
DJ Ryte
DJ Ryte Nov 17, 2021 10:58AM ET
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Sounds eerily similar to the prior President getting constantly attacked and blamed for everything, including "fabricated hoaxes."
Mart Bab
Rubberduck1973 Nov 17, 2021 10:58AM ET
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DJ Ryte  oh i forgot. You Yanks only onderstand politics a the blame game. Sometimes I tend to think this site is for investors with analytic brains who want to understand what’s really moving markets. Guess everything is like Facebook this days.
Forex Harbingers
Forex Harbingers Nov 17, 2021 10:58AM ET
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We obviously arent Europe. Your demand may be low, yall might be locked down. But America isn't. And we didnt have this problem with Keystone deal now did we? He sent hundreds of millions of dollars over to the middle east to build their pipeline. So now they control the supply, while we cut our own. Now they are trying to negotiate with OPEC to open production, and they wont do it. That is your reason right there. That is simple economics and supply and demand. And Bidens political agenda is directly responsible for it.
Andrew Rombach
Andrew Rombach Nov 17, 2021 10:58AM ET
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DJ Ryte damn right, they don't like the shoe being on the other foot
Peter Murton
Peter Murton Nov 17, 2021 10:58AM ET
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Forex Harbingers  lol - That was quite the hash of political dogma and lies!  Skill-testing question: How much gasoline was flowing through the Keystone XL pipeline during the Trump admin, to keep the price down?  Inflation and high gasoline prices are because of capitalism.  Target the actual problem.
James Dickerson
James Dickerson Nov 17, 2021 10:56AM ET
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Who’s going to investigate the Federal Reserve for all thr inflation they have created in the last 20 months?!? (Let alone the last 20 years!)
Connecticut Yankee
A_Jaundiced_Eye Nov 17, 2021 10:55AM ET
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Joey actual words: "and I want you to RE-double your efforts - that's, like, DOUBLE-DOUBLE your efforts!"
New Jazenevd
New Jazenevd Nov 17, 2021 10:45AM ET
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They should investigate and prosecute biden for suppression and destruction US oil industry, causing high  oil and gas prices.
Forex Harbingers
Forex Harbingers Nov 17, 2021 10:35AM ET
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Noooo, this has nothing to do with shutting down our pipeline while paying for a pipeline in the Middle East now does it? No, its illegal company activities. Anyone eating up this dribble is incredibly ignorant of the facts
Connecticut Yankee
A_Jaundiced_Eye Nov 17, 2021 10:35AM ET
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"...and that you bring all of the Commission's tools to bear..." Translation: Shakedown.  (Nothing a few well-placed campaign contributions won't solve.)
Mike ND
Mike ND Nov 17, 2021 10:32AM ET
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So he shuts down all the gas pipelines then starts blaming the companies what a scatter brain POS
Felipe Daniel
Felipe Daniel Nov 17, 2021 10:31AM ET
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FTC should investigate Brandon admin, first move was to shut down Keystone Pipeline and forbid/restrict any prospecting on federal lands cutting oil exploration and then you ask OPEC to pump more oil to help Americans? Biden admin is working tirelessly against the interests of US citizens.
 
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