Biden calls for probe into possible 'illegal conduct' in oil and gas markets as fuel prices soar

On Wednesday, President Joe Biden called upon the Federal Trade Commission to investigate the possibility of "anti-consumer behavior" and "illegal conduct" and gas and oil markets, as Americans are forced to pay more at the gas pump.

The letter sent to Chair Lina Khan comes as fuel prices have soared to an average of $3.40 per gallon, and more than 48 million Americans prepare to travel for Thanksgiving gatherings, according to the American Automobile Association.

In the letter, Biden writes: "I am writing to call your attention to mounting evidence of anti-consumer behavior by oil and gas companies. The bottom line is this: gasoline prices at the pump remain high, even though oil and gas companies' costs are declining. The Federal Trade Commission has authority to consider whether illegal conduct is costing families at the pump. I believe you should do so immediately."

Earlier this year, the administration had asked the commission to  "consider monitoring the US gasoline market and addressing any illegal conduct occurring therein." The commission in response increased their oversight of mergers in the gas and oil sector.

Biden stated that the prices at the pump, when compared to lowered costs for these companies does not make sense.

"However, prices at the pump have continued to rise, even as refined fuel costs go down and industry profits go up. Usually, prices at the pump correspond to movements in the price of unfinished gasoline which is the main ingredient in the gas people buy at the gas station," wrote Biden.

"But in the last month, the price of unfinished gasoline is down more than five percent while gas prices at the pump are up three percent in that 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 continued.

Biden also noted that "the largest oil and gas companies in  America are generating significant profits off higher energy prices."

He stated that the two largest oil and gas companies in the United States "are on track to nearly double their net income over 2019 — the last full year before the pandemic."

"I do not accept hard-working Americans paying more for gas because of anti-competitive or otherwise potentially illegal conduct, 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," he concluded.

According to ABC News, Biden's letter has prompted pushback from the American Petroleum Institute, which argues that the spike in prices was a result of bad administration policies and a market shift.

"This is a distraction from the fundamental market shift that is taking place and the ill-advised government decisions that are exacerbating this challenging situation. Demand has returned as the economy comes back and is outpacing supply," said Frank Macchiarola, API's senior vice president of policy, economics and regulatory affairs.

"Rather than launching investigations on markets that are regulated and closely monitored on a daily basis or pleading with OPEC to increase supply, we should be encouraging the safe and responsible development of American-made oil and natural gas," he added.