President Biden Directs FTC to Investigate Potential 'Illegal Conduct' by Oil & Gas Companies
The Merchants Payments Coalition also raises concerns about the credit card industry and its role in elevated pump prices.
WASHIGNTON, D.C. — Increasing gas prices continue to be a concern for not only motorists, but government officials and retailers.
On Nov. 17, President Joe Biden asked the Federal Trade Commission (FTC) to look into possible "illegal conduct" in the market that may be keeping prices at the pump elevated, Reuters reported.
According to the report, retail gasoline prices recently reached seven-year highs as consumer demand has recovered while oil supply remains below pre-pandemic peaks.
"The Federal Trade Commission has authority to consider whether illegal conduct is costing families at the pump. I believe you should do so immediately," Biden wrote in a letter to FTC Chair Lina Khan.
An FTC spokesperson told the news outlet the commission was also concerned about the issues raised in the White House letter and was looking into the situation.
In his letter, Biden noted the two largest U.S. oil and gas companies were on track to nearly double their net income compared to 2019. The two largest oil and gas companies in the U.S. by market capitalization, Exxon and Chevron, respectively, didn't immediately reply to a Reuters' request for comment.
"I do not accept hard-working Americans paying more for gas because of anti-competitive or otherwise potentially illegal conduct," Biden wrote. "I therefore ask that the commission further examine what is happening with oil and gas markets, and that you bring all of the commission's tools to bear if you uncover any wrongdoing."
This is not the first time the administration has raised concerns about high gas prices. In August, Brian Deese, director of the National Economic Council, sent a letter to Khan on questioning why "gas prices tend to rise more quickly to adjust to spikes in oil prices than they fall when the price of oil declines."
In response, Khan said the commission would seek to deter "unlawful" mergers in the oil and gas industry. Among the steps the FTC intended to take, Khan said the commission will start an investigation of abuses in the "franchise market" for retail fuel stations.
Another Call for Scrutiny
The Merchants Payments Coalition (MPC) also raised concerns about the cost to fill up, asking the FTC to investigate the credit card industry and its role in elevated pump prices. According to the coalition, swipe fees charged to process transactions have contributed to increases in gasoline prices.
"Card fees are up nearly 20 percent for gasoline retailers this year," said Doug Kantor, MPC Executive Committee member and NACS general counsel. "The card industry is making more right now from gas sales than local gas station owners. That's not right."
The national average for a gallon of regular gas is currently $3.41 per gallon, according to AAA. With the swipe fee that banks charge merchants to process Visa and Mastercard credit card transactions averaging 2.22 percent, that amounts to 7.6 cents per gallon, up from 4.7 cents per gallon a year ago when gasoline averaged $2.12 per gallon. Including those and other expenses, fuel industry pretax profits are currently less than 6 cents per gallon, MPC said.
Gas stations paid $10.7 billion in swipe fees in 2020 and higher gas prices have increased swipe fees paid so far this year by 19.5 percent. That puts 2021 on pace to total more than $12.5 billion, according to NACS.