[Asia Economy Reporter Park Byung-hee] U.S. President Joe Biden has instructed the Federal Trade Commission (FTC) to investigate whether there have been any illegal activities by oil and gas companies related to high gasoline prices, the Wall Street Journal (WSJ) reported on the 17th (local time). Facing a decline in approval ratings amid recent inflation, President Biden appears to be taking direct action to control gasoline prices.
In a letter sent to Lina Khan, chair of the FTC, President Biden pointed out, "There is increasing evidence that oil and gas companies are acting against consumers," noting that "while the price of unrefined gasoline has dropped more than 5% compared to a month ago, retail gasoline prices have risen by about 3%." Unrefined gasoline refers to gasoline that has not completed the blending process and is not usable for vehicles.
President Biden emphasized, "The price gap is much larger than before the COVID-19 pandemic," adding that it is "difficult to explain." He also stated, "Oil and gas companies are making significant profits from rising energy prices."
The industry has responded skeptically. Market research firm ClearView Energy Partners noted that in the past 10 years, there have been 13 instances where retail gasoline prices rose while unrefined gasoline prices fell over a one-month period like now, and they expect it will be difficult to find evidence proving price manipulation as in previous investigations.
Past presidents have also typically ordered investigations when gasoline prices rose and approval ratings fell. However, WSJ reported that cases where evidence was found and federal sanctions were imposed on companies are rare.
According to the U.S. Energy Information Administration (EIA), the average gasoline price in the U.S. in October was $3.38 per gallon, already surpassing pre-COVID-19 pandemic levels. Gasoline prices have risen more than 50% this year.
Market experts argue that the rise in gasoline prices is a natural phenomenon resulting from the increase in international crude oil prices.
President Biden is also reported to have requested China to release strategic petroleum reserves to lower crude oil prices. The Hong Kong South China Morning Post (SCMP), citing anonymous sources, reported that during a virtual summit with Chinese President Xi Jinping, President Biden requested that the U.S. and China jointly release strategic petroleum reserves. President Biden has also been consistently urging the Organization of the Petroleum Exporting Countries (OPEC) to increase production.
Following the report of Biden's request to release strategic reserves, international oil prices fell that day. The New York Mercantile Exchange (NYMEX) December delivery West Texas Intermediate crude oil futures closed at $78.36 per barrel, down $2.40 (2.97%) from the previous trading day.
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