President Joe Biden is accusing oil companies of price fixing as Americans across the country struggle with soaring gas prices.
In a Wednesday letter to the Federal Trade Commission, Biden directed the agency to investigate "mounting evidence of anti-consumer behavior by oil and gas companies." Even though the FTC several months ago increased regulatory oversight of the oil and gas sector—which has yet to result in any lawsuits—Biden is demanding further investigations into whether "illegal conduct is costing families at the pump."
"The two largest oil companies in the United States, as measured by market capitalization, are on track to nearly double their net income over 2019—the last full year before the pandemic," Biden's letter reads. "They have announced plans to engage in billions of dollars of stock buybacks and dividends this year or next."
Gas prices in the United States reached a seven-year high in November, with the average gallon of gas costing $3.41. One year ago, gas cost, on average, $1.29 less. Based on data from the American Automobile Association, Americans are spending roughly $19.65 more to fill up their cars than they did a year ago.
While the president alleges illegal activity by oil and gas companies, market analysts consistently point to a worldwide spike in demand as the primary driver of higher gas prices. Higher costs are not limited to the United States, with heating oil prices in the United Kingdom set to increase by 12 percent this winter when compared with last year. Biden's letter comes just days after White House Press Secretary Jen Psaki said higher gas prices show why Americans should transition to more "clean energy options."
Damien Courvalin, a senior commodity strategist at Goldman Sachs, warned that, without more investment in production from oil companies, gas prices could stay higher for several years. Democrats' demands that oil companies stop drilling activity, Courvalin said in an interview last month, will cause "much higher energy prices in the coming years."
"Demand is rebounding further and we need to really start to see that investment," he said.
Biden is weighing whether to shut down the Great Lakes' Line 5 pipeline, which each year pumps millions of gallons of oil into the United States. Biden said on that campaign trail that he would stop oil companies from constructing any refineries in the United States.
"No more subsidies for the fossil-fuel industry," he said during a presidential debate. "No more drilling on federal lands. No more drilling, including offshore. No ability for the oil industry to continue to drill, period. Ends."