Did the Oil Industry Rig Prices?

What’s happening: Evidence has emerged suggesting that certain American oil companies conspired with the Organization of the Petroleum Exporting Countries (OPEC) in recent years. The conspiracy may be responsible for 27 percent of all inflation in 2021.

Why it matters: One economist calculated that oil price increases may have cost the average American family an extra $3,000 in 2023.

The alleged conspiracy: The Federal Trade Commission (FTC) recently banned Scott Sheffield — former CEO of oil producer Pioneer — from sitting on Exxon’s board of directors, claiming that he attempted to conspire with OPEC. Claims were backed by text messages in which Sheffield discussed how Texas oil companies could get Saudis to cut production.

• The numbers: The top 25 oil industry companies collectively netted a record $205 billion in 2021. Sheffield discussed how they could spike prices to $200 per barrel.

Keep in mind: America produced more crude oil in 2023 than any country on the planet, effectively becoming energy independent. But that status doesn’t reduce price per gallon at the pump when domestic producers conspire with foreign producers to inflate prices.

A different perspective: Some economists argue that price fixing is beneficial because it helps stabilize prices and avoids boom-and-bust cycles. They also note it’s unlikely that Sheffield acting alone could have had a significant impact on prices, given how widely oil production is distributed.