Biden accuses big oil companies of manipulating gas prices

oil markets

Oil and gas prices have been steadily rising over the past few weeks. Over in Europe, some analysts predict that the continent will run out of gas altogether as the winter season reaches its peak. But even in America, where natural gas production is continuing to grow, we’ve seen prices steadily rise at the pump. In response to the issue, President Biden announced today that he has ordered an investigation into big energy companies and whether they were manipulating the market for their own benefit.

The Biden administration said that, despite oil profits continuing to grow and supplies remaining steady, prices for ordinary Americans is continuing to skyrocket. In particular, the President called upon the Federal Trade Commission (FTC) to look into the topic and see whether there’s any illegal collusion going on between the big energy companies.

Outside Washington, regular analysts are skeptical that the FTC will find anything concrete to back up Biden’s allegations. In contrast, Biden wrote that there is “mounting evidence” for anti-consumer behavior going on, at least on some level. He added that gas prices were up 3% from last month, despite the fact that unfinished gas was down over 5%.

This unexplained large gap between the price of unfinished gasoline and the average price at the pump is well above the pre-pandemic average. Meanwhile, the largest oil-and-gas companies in America are generating significant profits off higher energy prices,” wrote Biden, encouraging the FTC to do everything in its power to see if anything’s amiss in the energy markets. “The FTC is concerned about this issue, and we are looking into it,” added FTC spokeswoman Lindsay Kryzak.

Private analysts, such as those of Rapidan Energy, first tried analyzing the disparity between normal and unfinished gas prices. In their conclusion, this difference in price between the two wasn’t unnormal. The American Petroleum Institute, an oil and gas lobbying group, said that Biden’s letter was just a distraction from a larger shift going on in the market right now.

In contrast, other analysts are arguing that there are other, simpler ways to lower prices. This includes drastically increasing U.S. production to even out supply and demand. Additionally, Biden could release oil from the Strategic Petroleum Reserve to ease supply pressures as well.

Oil prices have been staying the same over the past few weeks, failing to pierce past the $90 and $100 per barrel that many bullish analysts were expecting. Instead, we’ve seen prices even fall down to $79 at some points. Yet despite prices slowing down to a crawl, regular Americans have seen prices at the pump steadily rise. In comparison to last year, gas prices have gone up as much as 60% in some places.

However, considering both parties have called for similar investigations in the past, it’s likely Biden won’t look at these options until after any investigations are concluded. The FTC looked into price gouging in the market back following Hurricane Katrina in 2005. At the time, the agency found no evidence of any widespread collusion or market manipulation.  FTC investigations into the energy market have been a thing going back as far as the post-WW1 years. Whether they’ll find something this time seems rather unlikely.