White House calls for probe of ‘divergences’ between oil price and gasoline costs
The White House on Wednesday called for a probe into gasoline prices, citing “divergences” between oil prices and what people are paying at the pump.
National Economic Council Director Brian Deese wrote a letter to Federal Trade Commission (FTC) Chair Lina Khan asking her to look into any potential illegal conduct or anti-competitive practices that have occurred.
“During this summer driving season, there have been divergences between oil prices and the cost of gasoline at the pump,” Deese wrote. “While many factors can affect gas prices, the president wants to ensure that consumers are not paying more for gas because of anti-competitive or other illegal practices.”
He asked the FTC to look into what he described as an “asymmetrical phenomenon” in which gasoline prices rise during oil price spikes more quickly than they fall in price drops.
FTC spokesperson Betsy Lordan confirmed that the commission received Deese’s letter but declined to comment on its contents “at this time.”
Lordan did note that the agency would need to work with others including the Justice Department and state attorneys general for any such probe.
The letter comes as both oil and gasoline prices have increased in recent months, with loosened coronavirus restrictions leading to more travel.
New data from the Labor Department on Wednesday showed that gas prices are up more than energy prices over the past year, with gasoline jumping 42 percent and energy climbing 24 percent.
Meanwhile, White House national security adviser Jake Sullivan called on the group of oil-producing countries known as OPEC+ to increase their production amid pandemic-related cuts.
“Higher gasoline costs, if left unchecked, risk harming the ongoing global recovery,” Sullivan said in a statement.
“While OPEC+ recently agreed to production increases, these increases will not fully offset previous production cuts that OPEC+ imposed during the pandemic until well into 2022,” he continued. “At a critical moment in the global recovery, this is simply not enough.”
The U.S. is not a party to OPEC+.
Industry analysts told The Hill that they don’t think an FTC probe would reveal any irregularities.
“I think they’re jawboning,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service. “I wouldn’t want to say this was about PR, but I don’t think the investigations are going to reveal much.”
Instead, he cited high labor costs, a driver shortage and refinery closures as contributing factors.
Patrick De Haan, head of petroleum analysis at GasBuddy, expressed skepticism about the administration’s efforts to persuade OPEC+.
“You’re not going to win Saudi Arabia over to increase oil production by what the statement says,” he said.
“You don’t issue a statement calling on OPEC released to the U.S. public without going through your back channels and talking directly with Saudi Arabia,” Haan added. “I don’t think that there’s anything the U.S. has done that has swayed OPEC one way or another.”
A major oil and gas trade group pushed back as well, seeking to blame the administration for rising prices.
“This is a distraction from the fundamental market shift that is taking place and the ill-advised government decisions that are exacerbating the situation,” Frank Macchiarola, the senior vice president of policy, economics and regulatory affairs at the American Petroleum Institute, said in a statement.
“Rather than requesting investigations on markets that are regulated and monitored on a daily basis or pleading with OPEC to increase supply—let’s lift restrictions on US energy right away,” he added.
Analysts have said in the past that high prices have more to do with economic reopening and demand than specific policies.
A gallon of gasoline was averaging $3.19 on Wednesday morning, while U.S. crude oil prices hovered around $68 per barrel.
Republicans have repeatedly hammered Democrats over rising gas prices and inflation in general, seeking to tie them to President Biden’s economic and energy agenda.
Democrats counter that the higher prices are a reflection of economic growth, and have pointed to increased wages and job availability.
–Updated at 12:38 p.m.