A lawsuit in a U.S. court is accusing American oil and gas producers, including Hess, Pioneer Natural Resources and Occidental Petroleum, of price-fixing by conspiring to reduce production.
A total of nine companies are listed in the lawsuit filed by residents of Nevada, Hawaii and Maine, Reuters reports.
The lawsuit was filed in a federal court in Las Vegas.
The lawsuit alleges that these companies have for years “collectively coordinated their production decisions, leading to production growth rates lower than would be seen in a competitive market”.
Continental Resources, Diamondback Energy, Chesapeake Energy, Permian Resources and EOG Resources are also named in the lawsuit.
In a Tuesday statement carried by Reuters, the Plaintiffs’ lawyer said the companies in question used the past three years to follow an approach of production discipline, which guaranteed that Americans would pay higher gas prices at the pump.
“Defendants’ production restraint agreement worked,” the lawsuit said. “Defendants are reaping the rewards in the form of massive revenue increases, while not reinvesting that additional revenue into new production,” Reuters cited the lawsuit as saying. The lawsuit specifically targets independent shale producers in the U.S., excluding Big Oil players such as Exxon Mobil and Chevron, according to Reuters.
The class-action lawsuit is demanding a court order against anti-competitive business practices and monetary compensation for millions of gas purchasers in multiple states.
While American shale producers have practiced a high-level of production discipline since the 2014 boom turned to bust and shareholders demanded a pay out, 2023 saw record U.S. crude oil production of over 13.2 million barrels per day.
That record production has weakened OPEC’s influence on the market, and this week’s class-action lawsuit essentially alleges that American shale producers are behaving like a new cartel.
By Charles Kennedy for Oilprice.com
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