US Judge Rules Shale Oil Antitrust Case Can Proceed Against Major Producers

(Reuters) – Diamondback Energy, Occidental Petroleum and several other U.S. oil producers failed to persuade a federal judge to dismiss a series of lawsuits alleging they conspired to curb output, leading to higher prices for crude oil and related products such as gasoline, diesel fuel and home heating oil.

Here are the details:

• U.S. District Judge Matthew Garcia in New Mexico said in an order on Monday that plaintiffs in the antitrust litigation had plausibly alleged that the producers conspired to reduce shale oil production to illegally fix prices. Garcia said, “A conspiracy may be inferred from market conditions and defendants’ production decisions, communications, and public statements.”
• Shale oil, a type of crude oil, is extracted through hydraulic fracturing, or “fracking.” It is a key part of gasoline, diesel, heating oil and other products. The plaintiffs allege that limiting shale production contributed ultimately to higher fuel prices.
• The cases were brought by a mix of commercial and government consumer plaintiffs beginning in 2024 and grouped together in Garcia’s court.
• Diamondback, Occidental and other defendants have denied any wrongdoing.
• Garcia rejected the producers’ arguments that resolving the plaintiffs’ claims would require the court to rule on political and foreign policy questions that are best addressed outside of the courts. “The core question here is whether domestic corporations and individuals conspired to coordinate production cuts,” the judge wrote. “The nation’s antitrust laws provide workable standards to resolve that question.”
• The plaintiffs, Garcia said, “identify interactions that extend beyond the exchange of standard industry information and give some support for an inference of an agreement.”
• In their joint request seeking dismissal, the oil producers told Garcia that the plaintiffs had failed to show any direct or circumstantial evidence of a conspiracy. “The complaint alleges that defendants’ shale oil production decisions were not parallel, with many of these producers expanding production during the alleged conspiracy,” they said.
• Garcia trimmed some state-law-based claims, delivering a partial win to the oil producers.

Reporting by Mike Scarcella

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