The founder and former CEO of Pioneer Natural Resources, Scott Sheffield, was accused by federal regulators of colluding with OPEC and its allies to manipulate oil prices. The Federal Trade Commission alleged that Sheffield exchanged messages with OPEC officials about pricing, production, and market dynamics. Sheffield used various means, including WhatsApp conversations and in-person meetings, to try to align oil production in the Permian Basin with that of OPEC and OPEC+. Regulators claimed that Sheffield’s actions were intended to benefit his company and others in OPEC member states, at the expense of US consumers.
Unlike in OPEC nations, US oil production is meant to be determined by the free market and not through coordination among major players. Sheffield, who retired as CEO of Pioneer in December 2023, led the biggest oil producer in the Permian Basin, a region that has contributed to the US becoming the top producer of oil and gas in the world. The FTC approved the sale of Pioneer to ExxonMobil for $60 billion but imposed restrictions to prevent Sheffield from joining Exxon’s board or serving as an advisor, based on his alleged anticompetitive behavior.
The FTC accused Sheffield of attempting to organize output reductions among US producers and OPEC and OPEC+. Sheffield was alleged to have lobbied the Railroad Commission of Texas to impose restrictions on Permian oil production during the early stages of the Covid pandemic in 2020, in a move that would have driven oil prices higher. Global oil prices had plummeted by around 50% at the time due to reduced demand caused by lockdowns. Pioneer defended Sheffield, stating that his communications were not intended to circumvent market competition laws and that they disagreed with the FTC’s complaint.
Pioneer and Sheffield expressed surprise at the FTC’s complaint but indicated they would not challenge the findings and would not hinder the merger with Exxon from closing. Exxon responded to the allegations by stating that they were inconsistent with their business practices and that they had not been previously alerted to any concerns regarding their practices. In response to the FTC’s concerns, Exxon decided not to add Sheffield to its board. The company expected the acquisition of Pioneer to be finalized on the following day.
The allegations against Sheffield and the restrictions imposed by the FTC shed light on the attempts to coordinate oil production and prices between US producers and OPEC, which can have significant implications for consumers and the global oil market. The actions of individuals like Sheffield highlight the challenges of ensuring fair competition and market integrity, particularly in industries as critical as the oil and gas sector. The outcome of this case will likely have implications for future regulatory actions and enforcement in the energy industry.
