Originally Published: 22 MAY 24 07:00 ET

By Matt Egan, CNN

New York (CNN) — Congressional Democrats are investigating whether leading US oil companies have illegally colluded with one another and with OPEC to inflate prices at the pump, CNN has learned.

Rep. Frank Pallone Jr., the ranking member of the House Committee on Energy and Commerce, sent a letter Tuesday night to ExxonMobil, Chevron, Hess, BP America and three other fossil fuel companies demanding a trove of documents and communications.

“If US oil companies are colluding with each other and foreign cartels to manipulate global oil markets and harm American consumers who then pay more at the pump, Congress and the American people deserve to know,” Pallone, a New Jersey Democrat, wrote in a letter to oil CEOs. The companies have until June 5 to respond to the committee.

The investigation comes after a stunning accusation from federal regulators against Scott Sheffield, the longtime CEO of a leading Texas producer. The Federal Trade Commission earlier this month accused Sheffield, the founder of Pioneer Natural Resources, of conspiring with OPEC and its allies to boost prices.

The FTC said Sheffield sent hundreds of text messages, had multiple WhatsApp conversations and in-person meetings, and made public statements to try to “align oil production” in the Permian Basin in Texas with that of OPEC and OPEC+, a wider producer group that includes Russia.

“I am concerned that Mr. Sheffield’s behavior may represent common practices across the industry,” Pallone wrote. “Even more troubling, Mr. Sheffield appears to have attempted to encourage other US oil producers to follow his and Pioneer’s lead in colluding with a cartel to drive up energy costs at Americans expense.”

OPEC vs. the free market

Although OPEC and OPEC+ exist to coordinate production among members, US oil production is supposed to be decided by the free market.

Oil CEOs are not allowed to decide whether to raise or lower production because such conduct is prohibited by federal law, which bans price fixing and actions that might restrict competition.

“OPEC and OPEC+ have not been able to impose long-term devastating costs upon American consumers in recent years because oil producers here have become the crude oil market’s ‘swing producers’ and must adhere to the antitrust and competition laws of the United States,” Pallone wrote. “Without those protections, American consumers would be at the mercy of OPEC and OPEC+ member nations, including Russia.”

In addition to Exxon, Chevron, BP America and Hess, the investigation is targeting Shell USA, Occidental and Devon Energy.

CNN has reached out to the companies targeted in the investigation for comment.

Pallone argued that public data suggests US oil producers did not ramp up drilling during the period that Sheffield was trying to influence his rivals.

Pallone is demanding the oil companies turn over a series of documents, including: all communications between each company’s employees involved in production and representatives of OPEC or OPEC+; a list of meetings between each company and representatives of the oil cartels; all communications between each company and representatives of competitors that “describe or allude to” production; nonpublic communications or meetings executives had with shareholders on oil production; and a description of efforts to influence federal or state governments to “artificially limit” oil production.

Pallone sent Exxon additional document demands, including communications between Pioneer employees who were involved in developing production plans and representatives of OPEC and OPEC+.

Sheffield barred from Exxon

Earlier this month, the FTC gave the green light for Pioneer to be sold to ExxonMobil for $60 billion — but only under an agreement that prevents Sheffield from sitting on Exxon’s board or serving as an adviser.

Sheffield was among the oil CEOs who testified before Pallone’s committee during an April 2022 hearing on Big Oil and gas prices.

Exxon said it learned of the allegations against Sheffield from the FTC and said the behavior described is “entirely inconsistent with how we do business.”

Pioneer released a statement earlier this month defending Sheffield and arguing it was “neither the intent nor an effect of his communications to circumvent the laws and principles protecting market competition.”

Pioneer said it disagreed with and was “surprised” by the FTC’s complaint, saying it “reflects a fundamental misunderstanding” of oil markets and “misreads the nature and intents of Mr. Sheffield’s actions.”

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Exxon Gas Station

**This image is for use with this specific article only** Gas prices are displayed on a gas pump at an Exxon gas station. Congressional Democrats are investigating whether leading US oil companies have illegally colluded with one another and with OPEC to inflate prices at the pump.

Stefani Reynolds/AFP/Getty Images via CNN Newsource

22 May 24