President Biden on Wednesday called for the Federal Trade Commission to probe whether oil and gas companies are engaging in criminal conduct by profiting from artificially high prices at the pump, even as wholesale fuel costs decline.
Biden – under mounting political pressure with inflation at the highest rate in more than three decades – urged FTC Chair Lina Khan in a letter to investigate potential wrongdoing by the industry, alleging "mounting evidence of anti-consumer behavior" by the companies.
"The bottom line is this: gasoline prices at the pump remain high, even though oil and gas companies' costs are declining," Biden said. "The Federal Trade Commission has authority to consider whether illegal conduct is costing families at the pump. I believe you should do so immediately."
A gallon of gas, on average, was $3.41 nationwide on Tuesday, according to AAA – up from $2.11 a year ago.
Energy costs have played a large role in a recent inflation surge, skyrocketing 4.8% from September to October, with price increases widespread across the sector. The cost for gasoline (6.1%), heating oil (12.3%) and natural gas (6.2%) all jumped last month from September.
But Biden wrote in the letter that while prices at the pump typically respond to changes in the prices of unfinished gasoline, prices have actually increased 3% over the last month, while the cost of refined fuel has gone down about 5% in the same 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," he wrote. "Meanwhile, the largest oil and gas companies in America are generating significant profits off higher energy prices."
He noted the two largest oil and gas companies in the U.S. are on track to nearly double their net income over 2019, the last full year before the pandemic. Biden did not identify the largest oil and gas companies by name, but the biggest in the U.S. based on market capitalization are ExxonMobil and Chevron. Both companies, he said, are planning to re-purchase billions of dollars of their own stock this year or next.
"I do not accept hard-working Americans paying more for gas because of anti-competitive or otherwise potentially illegal conduct," Biden wrote. "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 FTC is an independent agency that operates beyond the purview of the White House. It has the power the open investigations into potential anti-competitive and antitrust behavior by companies.