US oil companies colluded with Saudi Arabia to keep oil prices high.
How about some arrests, regulators?
I’m at the Google antitrust closing arguments, and I’ll have some thoughts on that soon. But today’s piece is about some bombshell evidence that just came out on a giant post-Covid conspiracy in the oil industry. And I do mean giant, because there’s now evidence that price-fixing in the oil industry alone may single-handedly be responsible for a little over a quarter of the total inflationary increase in 2021.
………
Last Sunday, I wrote a piece alleging that U.S. shale oil producers colluded with the Saudi government from 2021-2023 to drive up gas prices. That essay was based on some reporting I had done, as well as a complaint from a savvy Kansas City class action law firm, Sharp Law, with special expertise in oil. The theory was that American producers, after a bitter price war from 2014-2016, got tired of competing on price with the Organization of Petroleum Exporting Countries, or the OPEC oil cartel, and at some point from 2017-2021, decided to join the cartel and cut supply to the market. This action had the affect of raising oil prices, costing oil consumers something on the order of $200 billion a year.
Yesterday, the Federal Trade Commission released evidence confirming that collusion played a serious role in hiking oil prices at that time. Pioneer Natural Resources CEO Scott Sheffield, a leader in the fracking field, “exchanged hundreds of text messages with OPEC representatives and officials discussing crude oil market dynamics, pricing and output.” Sheffield was explicit about his goal, saying that “if Texas leads the way, maybe we can get OPEC to cut production. Maybe Saudi and Russia will follow. That was our plan,” he said, adding: “I was using the tactics of OPEC+ to get a bigger OPEC+ done.” He talked to shareholders, publicly threatened rivals, and ultimately achieved output cuts across the industry regardless of price. “Even if oil gets to $200/barrel,” he said, “the independent producers are going to be disciplined.”
The independent producers should be disciplined. Jail time would be nice, but flogging would be even better.
0 comments :
Post a Comment