Citing high gas prices, Biden asks FTC to double down on investigation into possible ‘illegal behavior’

WASHINGTON, Nov. 17 (Reuters) – U.S. President Joe Biden said Wednesday there was mounting evidence of anti-consumer behavior by oil and gas companies that is keeping fuel prices high, and asked the Federal Trade Commission to dig deeper into possible ” illegal conduct” on the market.

The White House is pushing for fuel costs to be cut on several fronts, even as tight global oil supplies are pushing up gasoline and heating oil prices. Retail gasoline prices recently hit their seven-year high as consumer demand has recovered, while oil supply remains below pre-pandemic peaks.

Biden asked the FTC in August to investigate possible illegal behavior that is causing the spike in gas prices, contributing to rising inflation. On Wednesday, he told FTC chairman Lina Khan in a letter that further action was needed.

“The Federal Trade Commission has the power to assess whether illegal behavior is costing families at the pump. I believe you should do this immediately,” he wrote.

An FTC spokesman also said he was concerned about the issues raised in the White House letter and that the consumer agency was investigating the situation, a spokesman said.

Gas prices have continued to rise at the pump, even as the price of unfinished gasoline has fallen in the past month, Biden said, noting that the two largest U.S. oil and gas companies were on track to nearly double their net incomes by comparison. with 2019.

“I will not accept hardworking Americans paying more for gas because of anticompetitive or otherwise potentially illegal behavior,” the president said in the letter to Khan.

“I therefore ask the Commission to further investigate what is happening with the oil and gas markets, and that you take up all the Commission’s tools if you uncover any wrongdoing.”

The two largest US oil and gas companies by market capitalization, Exxon (XOM.N) and Chevron (CVX.N), respectively, did not immediately respond to a request for comment.

Biden’s approval ratings have fallen to the lowest point of his presidency in recent months amid growing concerns about rising prices, though his top economic advisers still say the rise will be transient and should slow down next year.

Republicans are using inflation concerns as a “cudgel” to crush the Biden administration, his press secretary Jen Psaki said last week.

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

Kevin Book, a director at Clearview Energy Partners, said price changes often take time to reach consumers.

“There is a phenomenon that rises like a rocket, down like a feather that occurs at the pump and it frustrates politicians,” he said.

For example, prices of unfinished gasoline futures fell $1.18 a gallon between January and the end of March last year during the first outbreak of a coronavirus pandemic, but selling prices fell only 45 cents before easing later. (For image see https://graphics.reuters.com/USA-BIDEN/GASPRIES/jnvwexkrovw/)

The FTC has investigated this matter many times and often comes up empty-handed, Book said, adding that there were simply too many players in the retail gasoline market to collude.

According to the American Automobile Association, the average retail price of gasoline per gallon in the United States was $3,413 on Wednesday, compared to $3,319 a month ago. The current futures price for unfinished gasoline, known as RBOB, trades at $2.317 a gallon, but traded at $2.49 a gallon a month ago.

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

Retail prices for gasoline vary from state to state, with prices around $3 in Oklahoma and as high as $4.69 per 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 instructed 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 US antitrust regulators had extended the approval process for at least five oil and gas mergers and acquisitions in the past three months.

Reporting by Andrea Shalal and Jarrett Renshaw; additional reporting by Diane Bartz and Sabrina Valle; Editing by Heather Timmons, Andrea Ricci and Chizu Nomiyama

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