Federal regulators are alleging a major oil company CEO conspired with foreign governments to keep oil and gas prices high.
On Monday, the Federal Trade Commission (FTC) filed a complaint against John B. Hess, CEO of Hess Corporation, accusing him of secretly communicating with the Organization of Petroleum Exporting Countries (OPEC).
Hess’s company had sought a $53 billion merger with oil giant Chevron — a deal that the FTC ruled could go forward only if Hess himself was not involved with the subsequent company.
The record U.S. oil and gas production allowed by tools like fracking and directional drilling have undercut the “artificially low production levels and associated artificially high prices OPEC oil producers seek to set,” the agency said.
Monday’s accusations make Hess the second major oil company CEO to be accused of illicit conspiracy with OPEC this summer.
Federal regulators are accusing the CEO of a significant oil company of plotting with foreign governments to maintain high prices for gas and oil.
A complaint against John B. was filed by the Federal Trade Commission (FTC) on Monday. the CEO of Hess Corporation, accusing him of speaking with the Organization of Petroleum Exporting Countries (OPEC) in secret.
The FTC determined that Hess’s company could only proceed with a $53 billion merger with oil giant Chevron if Hess remained unaffiliated with the resulting company.
Hess released a statement saying, “We are extremely pleased that our merger with Chevron has cleared this significant regulatory hurdle.”.
“This transaction is still a great value for the shareholders of Hess and Chevron, and it will establish a leading integrated energy company that is well-positioned for the energy transition. “.
Hess won’t be appointed to the board of Chevron, but he will continue to advise the company on business matters pertaining to its operations in Guyana.
He would “meaningfully increase” the risk of the kind of backdoor coordination between rivals that is prohibited by federal antitrust law, according to the FTC’s complaint, which claimed that his direct involvement in the new conglomerate would “heighten the risk of harm” to market competition.
In an effort to raise prices, the FTC claimed that Hess encouraged OPEC officials to advocate both openly and privately for “inventory management,” or less fracking and pumping.
According to the Federal Trade Commission, this objective contradicts the main selling point of the shale boom for American consumers.
The document U. s. According to the agency, the “artificially low production levels and associated artificially high prices OPEC oil producers seek to set” have been undermined by the increased production of oil and gas made possible by techniques like fracking and directional drilling.
As the FTC pointed out, OPEC controls half of the world’s oil production, which gives it the ability to influence or even set prices globally. This would be against the law if done within the U.S. S.
Given that the U. S. global oil prices were smashed by the fracking boom, “OPEC officials had an incentive to coordinate with these [U. S. rivals instead of going up against them,” the agency claimed.
In remarks contained in the filing, Hess lauded OPEC’s price-regulating pumping. During a 2021 Hess earnings call, he stated that OPEC, in his opinion, had done an excellent job of managing the oil market and that the cartel’s leadership had done a “masterful job [in] giving the market what it needs, but not oversupplying it.”. “.
Redacted private correspondence that Hess is said to have had with Saudi oil industry leaders and the OPEC secretary is also included in the complaint.
Hess is now the second significant oil company CEO to face charges of engaging in an illegal conspiracy with OPEC since Monday.
The Chevron-Hess agreement bears similarities to an FTC decree from May involving Pioneer Natural Resources, another prominent player in the fracking industry, whose CEO the agency accused of engaging in a price-fixing conspiracy with OPEC.
Melissa Holyoak, an FTC commissioner, contended in a dissenting opinion from the agency’s ruling on Monday that there was “no reason to believe the law has been violated” in the Exxon-Pioneer and Chevron-Hess cases. “.
“Means whatever the Majority needs it to mean to appease political demands,” Holyoak wrote of the 1914 antitrust law known as the Clayton Act, which the FTC claims Hess violated.
Sadly for Mr. Hess, the CEO of Hess Corporation, every fairy tale writer has to create a villain, and today’s deed wrongfully attached that title to him. “.
Hess Corporation representatives responded to the complaint in a press release, claiming it is “without merit” and that the company has led the industry in reinvesting its profits into drilling operations, which is arguably what supplies the oil.
“Unfortunate that our Board of Directors will not get the benefit of his decades of global experience,” said Chevron CEO Mike Wirth in a statement about the FTC, excluding Hess’s direct involvement. “.
The FTC decided that the Exxon-Pioneer merger could only proceed if Pioneer’s current leadership was forced out, similar to the Chevron-Hess case.
Scott Sheffield, the founder and CEO of Pioneer, was accused by the FTC of engaging in “collusive activity” that drove up oil prices, forcing American businesses and consumers to pay more for heating oil, jet fuel, diesel fuel, and gasoline. Sheffield was seeking to sell his company to Exxon for a sum of $645+ billion. ”.
Sheffield has refuted the claims.
Revisioned at 3:36 p.m. me.
