Baldwin demands Justice Department take action against oil price gouging

Democratic U.S. Sen. Tammy Baldwin is urging the Department of Justice to take action to crack down on price gouging by oil and gas companies. A recent Federal Trade Commission probe found evidence that energy costs for consumers increased in part due to price fixing.

Baldwin is facing a competitive reelection race this November. Her likely opponent, wealthy bank executive Eric Hovde, is a strong supporter of the oil and gas industry and pro-industry policies.

In a May 30 letter to Attorney General Merrick Garland and Assistant Attorney General Jonathan Kanter, who heads the Justice Department’s Antitrust Division, 23 Democratic senators asked for action in light of “serious concerns about alleged collusion and price fixing in the oil industry.” 

“While investigating ExxonMobil’s (Exxon) proposed $60 billion acquisition of Pioneer Natural Resources (Pioneer) – the largest oil-and-gas deal of the 21st century – the Federal Trade Commission (FTC) uncovered evidence that founder and former Pioneer CEO Scott Sheffield colluded with the Organization of Petroleum Exporting Companies (OPEC) to ‘reduce output of oil and gas, which would result in Americans paying higher prices at the pump, to inflate profits for his company,’” the letter says. “We therefore urge the Department of Justice (DOJ) to investigate the oil industry, to hold accountable any liable actors, and to end any illegal activities.”

In November 2023, a number of Senate Democrats asked the FTC to investigate Exxon Mobil’s acquisition of Pioneer Natural Resources and other proposed industry mergers that they warned “are likely to harm competition, risking increased consumer prices and reduced output throughout the United States.” 

The FTC approved Exxon Mobil’s purchase of Pioneer on May 2, but issued an order banning Sheffield from joining Exxon Mobil’s board. “Mr. Sheffield’s past conduct makes it crystal clear that he should be nowhere near Exxon’s boardroom. American consumers shouldn’t pay unfair prices at the pump simply to pad a corporate executive’s pocketbook,” said Kyle Mach, the deputy director of the FTC’s Bureau of Competition. 

Sheffield and Pioneer have denied any wrongdoing. 

The letter from the senators comes as former President Donald Trump has reportedly been promising wealthy oil executives that if they raise $1 billion for his campaign, he will eliminate environmental and safety regulations governing oil and gas drilling and automobile emissions in his second term. 

A May 2023 report by the Federal Reserve Bank of Kansas City said that corporate profits were the main driver of inflation between the summer of 2020 and the summer of 2021, the first year of economic recovery from the COVID pandemic, and a lesser driver in the second year. 

In February, Baldwin and other congressional Democrats introduced the Price Gouging Prevention Act, a bill to tighten a federal ban on excessive price increases by corporations. The bill is awaiting action in committee. 

A similar bill passed in the House in 2022, mostly along party lines. Wisconsin Democratic Reps. Mark Pocan and Gwen Moore voted in favor; Republican Reps. Scott Fitzgerald, Glenn Grothman, Bryan Steil, and Tom Tiffany voted against.