Biden Questions Oil Companies' Math

President wants investigation into why pump prices are up when costs are down
By Bob Cronin,  Newser Staff
Posted Nov 17, 2021 4:52 PM CST
Biden Questions Oil Companies' Math
A pump is marked out of order at a gas station last week in Beverly Hills, Calif.   (AP Photo/Damian Dovarganes)

President Biden wonders why the cost of producing gasoline is dropping while prices at the pump are rising. Maybe "illegal conduct" is to blame, he wrote the chair of the Federal Trade Commission on Wednesday, asking Lina Khan to investigate oil and gas companies and "bring all of the commission's tools to bear if you uncover any wrongdoing." The president said prices at the pump usually correspond to costs, Politico reports. "But in the last month the price of unfinished gasoline is down more than 5 percent while gas prices at the pump are up 3 percent," Biden wrote.

The FTC confirmed it's looking into the issue, but outside analysts were doubtful that an investigation would discover wrongdoing, per the Wall Street Journal. One research firm analyzed the differences between cost and prices and found the gap was within a normal range. Another found that though the two figures usually have been closely tied, they sometimes went in opposite directions—13 times in the past decade, retail gas went up while monthly prices for unfinished gasoline dropped. The American Petroleum Institute said Biden is looking at the wrong issues.

"Rather than launching investigations on markets that are regulated and closely monitored on a daily basis or pleading with OPEC to increase supply," a statement said, "we should be encouraging the safe and responsible development of American-made oil and natural gas." There was no immediate comment from Exxon Mobil and Chevron, the two largest companies, which Biden referred to without naming. The Energy Information Administration reports that US gas prices averaged $3.38 a gallon last month, while oil prices averaged $81.48 a barrel. Pump prices are 60% higher now than a year ago, the agency said. Analysts say there's not much a president can do to force gas prices down quickly. (Inflation hasn't been this bad since 1990.)

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