Hang the Oil and Gas CEOs

Chuck Schumer and Senate Democrats call for prosecuting fossil-fuel executives

WSJ editorial. 

"Donald Trump likes to say that Democrats aren’t only coming after him—they’re also coming after you. He has a point. Look at how Senate Democrats are demanding that the Biden Administration prosecute oil and gas executives for high gasoline prices caused in part by President Biden’s policies.

Senate Majority Leader Chuck Schumer, joined by 22 fellow Democrats, sent a letter on Thursday to the Justice Department accusing U.S. oil producers of colluding to keep prices high and inflate their profits. “Only the DOJ can prosecute and fully redress the alleged anticompetitive behavior in the oil sector,” the Senators write.

On what evidence? Their letter cites the Federal Trade Commission’s recent allegation that former Pioneer Natural Resources CEO Scott Sheffield attempted to collude with the Organization of the Petroleum Exporting Countries to restrain production. We explained recently how the FTC twisted Mr. Sheffield’s public statements that producers would show “capital discipline.”

His 23-page response this week makes the agency’s blackball look even slimier. The FTC claimed that Mr. Sheffield had regular contact with OPEC through which he learned the machinations of OPEC and gleaned insight to non-public information regarding the existence of internal OPEC deals. His putative OPEC contact? A U.S. analyst who studied the industry.

His exchanges with OPEC officials, he adds, were “blast text messages containing public information like news articles that went to many recipients.” Never did he and foreign officials “exchange competitively sensitive information.” The FTC furnished no evidence that they had. Instead, the agency relied on innuendo.

FTC Chair Lina Khan claimed in a press release to have “uncovered troubling evidence” of Mr. Sheffield trying to “persuade his rivals to join him in colluding to restrict output and raise prices.” The two communications the FTC cited were redacted. Mr. Sheffield says one was with his son and the other was with a small producer who wished him well upon his return as CEO in 2019.

Democratic commissioners appear to have smeared Mr. Sheffield to advance a phony political narrative. Their goal? Deflect blame from the President’s policies, which have hampered U.S. oil production and contributed to higher prices. They may have also targeted Mr. Sheffield because he publicly criticized the Administration’s war on U.S. oil producers.

Now Senate Democrats are using the FTC’s unsubstantiated claims to call for criminal prosecutions. The FTC “reports are alarming and lend credence to the fear that corporate avarice is keeping prices artificially high,” they write. “This alleged collusion with OPEC may have served to enrich countries like Iran and Russia that are actively seeking to undermine the United States and our allies.”

Hold on. To tamp down gas prices, Mr. Biden has looked the other way as Iran and Russia dodge oil sanctions, delivering a windfall to fund their war machines. His Administration has urged Ukraine not to target Russian refineries, lest this reduce global supply and raise prices. Who’s abetting America’s enemies?

Meanwhile the Administration has introduced a torrent of regulation to reduce U.S. production, including last month banning new development in much of Alaska’s National Petroleum Reserve. To counteract these policies, it has released nearly 270 million barrels from the Strategic Petroleum Reserve. Who’s trying to manipulate oil prices?

Yet despite the Administration’s efforts, U.S. oil production exceeds its pre-pandemic peak and has increased by two million barrels a day—about 17%—since Russia invaded Ukraine. Much of the new production has occurred on private land in the Permian Basin by companies such as Pioneer, which has more than doubled its daily output since 2019.

U.S. producers have countered OPEC’s supply cuts. Gasoline prices now average $3.70 a gallon nationwide, up a buck or so since the Trump Presidency. The reason is that global demand still outpaces supply. OPEC forecasts that demand will keep rising over the next two decades as poorer countries develop.

Higher interest rates and inflation are increasing the cost of production and causing investors to demand a higher return on capital. Companies are thus pumping fewer profits back into new production than they did a decade ago. Still, American production could increase more if Mr. Biden halted his assault on the industry.

The Senators point to no evidence of wrongdoing, let alone criminal acts, other than the FTC’s dubious allegations. But Democrats need an inflation scapegoat heading into the November election. Today’s Democratic justice: Choose a political target, then look for a crime."