More evidence of Biden’s weak position: The Federal Trade Commission’s mission is to investigate oil and gas companies to control high prices

[ad_1]

This is Naked Capitalism Fundraising Week. 1,385 donors have invested in our efforts to fight corruption and predatory behavior, especially in the financial sector.Please join us and participate through our Donation page, Which shows how to donate via check, credit card, debit card, or PayPal.read Why we do this fundraising event, What we achieved last year, And our current goals, More original reports.

Lordie, Biden sent the FTC to try to intimidate oil and gas companies to reduce oil prices. There are so many mistakes that it is difficult to know where to start.

This move is an acknowledgment of weakness. First of all, it does not look like a president. In a bad past like LBJ or Nixon, CEOs would be stunned. They will be told to come to the White House to criticize. Although this may or may not work (criminals may make some eye-washing concessions), the spectacle of the President calling on the executives of criminals to “self-blame” is a good visual effect. The president is wrestling with big bad things! Godzilla v. Mothra!

I think one reason why the president no longer takes this path is that the CEO may not appear. This is the price of the country moving to the right is that American companies have gained more respect than it deserves.

Second, dispatching FTC after Big Energy will not only almost certainly not work, but it is also unlikely to produce many useful news reports after this opening salvo. The question raised in the White House letter and news summary is that the price of oil has fallen by 5% in the past month, while the price of natural gas at gas stations has risen by 3%. The government charged “potentially illegal activities” and asked the FTC to investigate.

Biden’s approval rating is terrible. One contributing factor is that consumers have seen significant increases in the prices of their most commonly purchased food and gasoline. But just because prices have risen does not mean that the rise is unreasonable. An important reason for the increase is that the price plummet caused by the Covid lockup led to an increase in oil prices, and then some declines. Muhamed bin Salman also abandoned his good idea of ??trying to punish Russia by injecting oil into the market. Therefore, OPEC’s improved price discipline also played a role.

Another factor on the edge is U.S. oil production is about 12% lower than the peak before the epidemic.

Biden’s case, in terms of what he owns, seems to be that oil companies, especially his best friends Exxon Mobil and Chevron, are making big money and repurchasing stock, rather than being good to consumers and not going to the market. Fee.

So why didn’t Biden send FTC after the pharmaceutical company Who spends more on repurchase (And marketing) instead of R&D, and keep raising prices to the moon, but they complain that they need to charge high prices for all R&D that they mainly don’t do. Costs and applied research, but there are almost no requirements for all these subsidies). Are the drugs protected by patents? Or are healthcare companies spending more on lobbying than any other industry for a long time?

Some reasons why any FTC action may go nowhere:

Obviously lack of feasible legal theoryThe letter from the White House scoffed at anti-competitive behavior. The FTC has a very high threshold for this, which means bad behaviors such as price manipulation and exclusive trading contracts. There is zero evidence that any such things are happening here. But Brian Deese of the National Economic Council wrote to FTC Chairman Lina Khan in August, asking the agency to take action against any collusion in the US gasoline market.1

Past efforts to get the FTC to bully large oil companies to lower prices failed.

No long-term abuse. The divergence between falling oil prices and rising oil prices lasted only about a month. That doesn’t prove much. Energy players may have reasons to maintain this disagreement, such as the scarcity of truck drivers that affect deliveries to retailers.

In fact, the Wall Street Journal pointed out Although this model is atypical, it is by no means unheard of:

Independent research firm ClearView Energy Partners found that in the past 10 years, retail gasoline prices are closely related to unfinished gasoline prices, but sometimes they diverge. The company has found 13 times in the past ten years that the monthly price of unfinished gasoline has fallen and the price of retail gasoline has risen…

The research and consulting firm Rapidan Energy Group analyzed the difference between the unfinished gasoline and retail gasoline prices cited by Mr. Biden in the letter and stated that the difference did not exceed the normal range. According to the US Energy Information Administration, raw gasoline needs to be mixed with other liquids to be suitable for spark ignition engines.

The Peanut Gallery of the Financial Times is mean. E.g:

1965 cough cough
What exactly is a complaint? Under the pressure of asset stranding and ROCE, that big oil took out the shale oil/natural gas and took away its drill bits and small bits of cash and returned the proceeds to investors? The idea of ??declining supply but having enough supply to lower prices is really interesting.

Captain Planet
Therefore, decades ago, the United States rejected public transportation in favor of automobiles. It then used taxpayer money to build the largest road network on the planet, but it also restricted its own oil production.

Therefore, the price depends to a large extent on the decision of the US “partner”.

Does the right hand know what the left hand is doing? Confusing things.

Pristava
Finally, some capitalists in the FT commentary area. Where are the usual ESG staff? They should be happy when the price of gasoline is $5.00 per gallon. How about 10 dollars? After all, high prices should accelerate the demand for alternative “clean” energy. But when these fashionable people are hit in their wallets, idealism disappears.

I fully support the transition to the alternative, but this change will be gradual. The production of fossil fuels in the United States involves environmental regulation. It is doubtful whether the production of fossil fuels in Saudi Arabia or Russia requires extensive environmental review. However, President Biden will do his best to stop U.S. production and transportation, while pleading with the Middle East’s worst energy polluters to increase supplies.

Hypocrisy is maddening.

No impact in the short term. What Biden did was to start an investigation. Even if the Federal Trade Commission can really file a complaint, it will take a long time for Biden to be relieved as soon as possible.

A different set of questions is that if you want to save the planet, high-priced natural gas is exactly what you want. Carbon tax is a hot topic at COP26, and moving in this direction will increase the price of fossil fuels, including natural gas. Therefore, Biden is engaged in climate cake doctrine, hoping to win points for climate change activists by canceling the Keystone XL pipeline’s permit and restricting drilling on federal land (despite the subsequent huge amount of new drilling through approval of drilling in the Gulf after COP26). Lease to reverse the policy of Mexico).

Therefore, it is clear that Biden’s energy/climate policy is passive and he is unwilling to take even mild and tough measures to get consumers out of their beloved natural gas, while trying to alleviate the suffering of poor and low-income families. If he wants those big bad oil companies to be his whip, he needs to be able to cause pain, not just hum.
____

1 Without going into details, manufacturers/sellers in the market can signal that the price is below the collusion level in various ways. A bank or airline can raise the price. Others may or may not follow. There may be more complex models. For example, some large market participants may have to verify the price increase to change the current price, but this is not the process of men having a meeting with Scotch in a smoky meeting room. This is done by disclosing price changes and the knowledge that everyone in the game is watching the action.



[ad_2]

Source link