Scott Sheffield, the founder and former CEO of Pioneer Natural Resources, faces serious allegations from the Federal Trade Commission (FTC) for purportedly attempting to collude with the Organization of the Petroleum Exporting Countries (OPEC) to manipulate oil prices. According to the FTC, Sheffield’s communications with OPEC officials aimed to “align oil production” in the Permian Basin with OPEC and OPEC+, which would contravene the principles of a free market that dictate US oil production.
The FTC complaint detailed how Sheffield engaged in hundreds of text message exchanges, in-person meetings, and public statements that suggested a concerted effort to orchestrate oil output and pricing with the oil cartel led by Saudi Arabia. “Mr. Sheffield’s communications were designed to pad Pioneer’s bottom line — as well as those of oil companies in OPEC and OPEC+ member states — at the expense of US households and businesses,” the FTC complaint said.
Amidst these allegations, Exxon Mobil’s acquisition of Pioneer for $60 billion has been approved by the FTC under strict conditions. As part of the merger approval, Sheffield is prohibited from joining Exxon Mobil’s board or acting as an advisor. The decision underscores the severity of the claims and the potential impact on market competition. “Mr. Sheffield’s past conduct makes it crystal clear that he should be nowhere near Exxon’s boardroom,” commented Kyle Mach, deputy director of the FTC’s Bureau of Competition.
The FTC highlighted Sheffield’s attempts during the outset of the Covid pandemic in 2020 to encourage the Railroad Commission of Texas to impose output restrictions. This action, if successful, could have raised crude oil prices above market levels. The FTC cited statements from Sheffield where he indicated a strategy to influence global oil policies, “If Texas leads the way, maybe we can get OPEC to cut production. Maybe Saudi Arabia and Russia will follow. That was our plan.”
Exxon Mobil has responded to the situation by stating that these allegations “are entirely inconsistent with how we do business.” The oil giant has provided over a million documents to the FTC, noting that no concerns were raised regarding its business practices.
While Pioneer and Sheffield have not contested the FTC’s findings, they have expressed disagreement with the complaint, stating it reflects a “fundamental misunderstanding of the US and global oil markets and misreads the nature and intent of Mr. Sheffield’s actions.”
The FTC’s decision has been informed by an ongoing debate over the role of antitrust laws in regulating industry giants and maintaining a competitive market. The allegations also carry potential criminal implications as the FTC has referred the case to the Justice Department. FTC spokesperson Douglas Farrar has underlined the seriousness of these potential offenses, stating, “The FTC has a responsibility to refer potentially criminal behavior and takes that obligation very seriously.”
Relevant articles:
– American oil tycoon accused of trying to conspire with OPEC to inflate prices, cnn.com, 05/03/2024
– Former US oil executive accused of trying to collude with Opec, The National, 05/02/2024
– Former Pioneer CEO Facing Potential Criminal Charges For Colluding With OPEC, PYMNTS.com, 05/02/2024