Federal law enforcement officials have created a special working group to focus specifically on fraud in the energy markets, from consumer gasoline markets to oil futures.
The Oil and Gas Price Fraud Working Group will tap the expertise of a wide range of agencies and groups. It will monitor oil and gas markets for potential violations of criminal or civil laws, Attorney General Eric Holder said in a statement today.
“Rapidly rising gasoline prices are pinching the pockets of consumers across the country,” Holder said.
“We will be vigilant in monitoring the oil and gas markets for any wrongdoing so that consumers can be confident they are not paying higher prices as a result of illegal activity. If illegal conduct is responsible for increasing gas prices, state and federal authorities should take swift action.”
The group will include representatives from:
- the Justice Department
- the National Association of Attorneys General
- the Commodity Futures Trading Commission
- the Federal Trade Commission
- the Treasury Department
- the Federal Reserve Board
- the Securities and Exchange Commission
- the Agriculture Department
- the Energy Department
State AGs, the FTC and others already have oversight authority into gasoline markets, but there are regular calls for more “price gouging” investigations whenever gas prices stay high for extended periods of time.
The gas price spikes that followed oil price spikes in 2008 led the Federal Trade Commission to issue new rules to prevent oil market manipulation.
Those rules give the commission the power to levy fines of up to $1 million per violation per day for market players who make misleading statements or intentionally omit information that could affect prices.
According to a memo Holder sent to the agencies, the group will:
- Explore if there is ”evidence of manipulation of oil and gas prices, collusion, fraud, or misrepresentations at the retail or wholesale levels” that harmed consumers or the federal government as a purchaser of oil and gas;
- Look at activity in the oil markets, including taking a look at investor practices, supply and demand, and the role of speculators and index traders.
This last part is a nod to growing anger over the role speculators play in oil markets, which President Obama referred to this week as a primary driver behind higher oil prices.
To date it doesn’t appear there have been any such issues found, according to the memo:
Based upon our work and research to date, it is evident that there are regional differences in gasoline prices, as well as differences in the statutory and other legal tools at the government’s disposal.
It is also clear that there are lawful reasons for increases in gas prices, given supply and demand.
Nonetheless, where consumers are harmed by unlawful conduct that has the effect of increasing gas prices, state and federal authorities should take swift action.”
Craig Pirrong, a finance professor at the University of Houston who specializes in commodity prices, says the task force is hardly needed, since the agencies already have the tools to monitor for fraud and take action.
“This is a transparently political fishing expedition that insinuates that fraud or manipulation is distorting oil prices without providing even the flimsiest factual basis for such a suspicion,” Pirrong said. “This is part of a broad effort by the administration to deflect criticism with regard to gasoline prices.”
Here’s the memo:
Well, election year politics are already in motion.
How many votes is this charade worth ?
blah blah blah blah….we all know the gasoline prices are high only because of speculation. Just more smoke and mirrors from the Obama administration…..go back to sleep, there is nothing to see here.
Check the gas stations, when the price of crude oil goes up, they immediately rise gas prices at the pump. Even-tough the oil that is already at the refineries and being distributed was not purchased at that price. Similarly, when the price crude goes down, they take up to 2 weeks to lower their prices. Has anybody noticed this?
Good. The speculators need to be held in check.
Hope and Change? Or Smoke and Mirrors?
it’s about time they do some investigating…probably won’t find anything since everyone on politics are in the back pockets of the oil speculators and the oil companies….but we’ll see if anything comes to light.
Right here is your high GAZZ PRICES.
I AM TELLING YOU FOLKS – LIVING UNDER THIS COMMUNISM IS THE BEST THING since sliced bread. Getting to 5 dollar GAZZ has been a struggle but i know we would make it. Obama promised us energy prices would soar because of his cap and trade but he has had to switch gears and use regulation and hence he appointed our well renowned communist Harvard law professor regulation CZAR Cass Sunstein.
Here he is in his own words on energy soaring prices.
http://www.youtube.com/watch?v=CNSZ62xiD4M
How about getting a handle on oil speculators?
Another study group? well, all that does is make the oil companies pay off a few more corrupt petty government types. Eric Holder should be the one being investigated. Not prosecuting the WallSt swindlers. He’ll spend any amount of money, and expend thousands of man hours chasing down anyone who steals from a JP Morgan, or a goldman-Sachs…but prosecute a ceo or board of those places? Not a chance.
Just what we need…yet another group of stupids. Sounds like the Obama adminstration.
We already have this in place. It will be just another in a very long list of redundant government agencies.
It is also clear that there are lawful reasons for increases in gas prices, given supply and demand.
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If it is so “clear”, then why did the Minister of Oil in Saudi Arabia talk about how there is a glut of oil on the market right now? How does a glut translate into higher prices????
What a joke, instead of instituting policies that will help bring down the price of oil the administration creates another “special working group” with our dollars.
Since this country imports the majority of its daily transportation fuels on a daily basis such actions seem moot.
This is insane, better stated a smoke screen. It’s simple, investors are hedging everything that can be quantified (gold, crops, OIL, etc) to protect themselves from a broken promise (the dollar) when the bottom falls out.
Holder would get credibility if he investigates just how much in oil contracts the Feds have bought, and then artificially inflated it by false statements or other manipulations. So, if he finds skulduggery in the US government, would he prosecute or give an “all’s good, nothing to see here” proclamation and then attack Wall street again?
And in other news, the government has created a new organization to monitor weather reporters who may be leading people to believe that Texas has a drought. When asked if maybe the lack of rain could be causing an actual drought, the head of the new organization said, “No. That’s ridiculous.”
With the stroke of a pen obama can order the SEC or the Commodities Exchange to increase the margins the speculators have to pay.
If they have to pay 50% up front the problem would go away.
But obama and his energy czar have always said prices need to go up to reduce the amount of gas we use….and maybe sell a few more Chevy Volts
wouldn’t it be great if this old world really operated so simply that someone could lower gas prices by the stroke of a pen? The price of oil goes up, and it’s because of greedy fat cats that don’t care about the poor people. Yet every one of those poor people that complain about the price of gas would not hesitate for a second to raise their own income, regardless of the effect on others. Keep complaining, it’s never going to get any better, at least not as long as people are involved.
Howdy Neighbor:
Obama just doesn’t get it. The head of Shell US is pleading with Americans to use less energy.
http://amfix.blogs.cnn.com/2011/04/15/shell-oil-president-were-going-to-need-significant-efficiency-gains-in-energy-usage/
Please get new windows (you did that)
Please change out appliances like old dishwashers (you did that… on the level 2 of the whack an energy mole game).
Insulation, increased SEER AC, ductwork, run tackle block… hybrid (well, okay, the payout is pretty slim on that last one but is better than the coal fired car).
Please conserve energy.
Please, pretty please?
At least Carter had the guts to give the cardomen (spelling) sweater speech and ask Americans to sacrifice some.
This time there ain’t no choice folks…
Incredible to me, that so many people don’t get it.
I’ve said it here before, but will repeat, its not that investors are betting on oil , its that that a majority of them are taking long positions.
So why are investors taking long positions ? Answer that and then you can see what it will take to bring the price down.
And IMO, the only thing that will bring the price down is an increase in supply from NON OPEC sources. Period.
And some of you commenters, really have your head up your butt, how can the US Govt control speculation on a commodities market in London, or Dubai, or Singapore. You people are suckers, they prey on your ignorance.
Dollar:
You are correct about supply but unfortunately supply from NON OPEC sources isn’t going to get us where we need to get to.
The only way to attack the price pressure is supply and demand.
When oil companies start saying “please use less of our product” you should know something serious is going on.
Personally I like the old Chevron “I will use less energy” thing myself.
Supply/demand supply/demand 101. We need to work on both.
Or as the XOM chairman (it might have been Rex Tillerson but maybe the one before) said in the 2008 incarnation of the congressional silly witch hunts, “If you don’t like the price of oil stop using so much of it”.
We need only look in the mirror dollar
Yeah but EM, the more we reduce demand, the more OPEC cuts production, so they continually keep demand/supply tight.
I absolutely agree that we need to treat oil/gas with great respect. We have wasted too much in the past on low mileage trucks and SUV’s, when there is no purpose served by those gas guzzling vehicles. If a person has a boat or an RV to tow, I can see the need. But when soccer moms are burning 8mpg, that is a waste, or people who do nothing but commute to work in a gas guzzling vehicle.
But as far as reducing price, reducing demand will get us nowhere, OPEC will make sure that. I really think OPEC relishes that, as it extends their reserves and they can still name their price.
This effort by the Obama’s administration is pr stunt. Similar efforts have been taken before by both Republican and Democratic predecessors and all turned out to be fruitless. Commodity manipulation has been an open secret on wall street and to anyone with intelligence, except for Repubitards and Teabaggers(btw, a product of incest). The government bodies, SEC and Commodity Futures Trading Commission for example, have crackdown because of stiff resistant from banks, lobbyist who work for them, and practically everyone who works in the financial sector.
EM & $ – Mark this day down. Agree with both of you about supply & demand, the global nature, & the futility of blaming this on speculators in the US. Like your quote said: …stop using so much of it.
I thought this was the “Fuel Fix” Column, not “Adopt a Speculator”..
Does anyone rememeber when Oil $147/bbl? When 54 barrels were traded for evry 1 consumed.. AAAAAAAhhh the good old Days….
Don’t think we can ever swing supply control away from OPEC since they have 3/4 of world’s reserves. However, it is vital that we support non-OPEC sources and quit attacking them so the liberals can get votes. For example, Canadian oil sands, if they ever build that proposed pipeline from Alberta to the west coast of B.C. and open up a seller’s market in the Far East, we are screwed six ways from Sunday on supply and prices. The ironic thing is any oil we conserve by using less will only be gobbled up by China. We need a government that understands markets, not one that understands witch hunts.
I see some hope in escaping paying the global price for oil, when I look at the current spread between WTI and Brent. For the first time ever, there is a large diff in the prices.
Currently, the refineries on the coasts are paying global price for oil, which Brent is now the global benchmark, while refineries in the midwest and southern plains are paying WTI prices.
With more tar sand, Bakken, Eagle Ford, Niobrara, and similar shale fields on the way, and when the transportation issues are resolved, it could be possible for WTI to completely separate from the movements of Brent.
And hardcoredemocrat , there is a distinct difference between market manipulation and speculation.
The common theme, that speculators are driving the price up, does not hold up to close inspection. Because in the futures market, for every investor taking a long position, on the other side of that futures contract there has to be an investor going short.
So who are these people taking short positions ? Did they just not get the memo from Goldman Sachs that everyone is suppose to go long oil ? Are they just some dummies who are out of the loop and playing the role of foil for the longs ?
These people taking short positions are not rummies and they are investing huge amounts of money.
And no one will invest in a market that they believe is rigged. Why would they want to work at developing a hedging or investing strategy, and then throw their money into a rigged market ? The only ones who profit from that, would be insiders who knew it was rigged. And that is not happening.
If these markets could be manipulated, then the investors themselves would not tolerate that, as they have more at stake than anyone else.
Ha! Ha! If these fools don’t know what is causing the rise in oil prices, we need to have their heads examined. Money policies and oil traders that never possess the oil are the culprits along with the Obama Agenda that leaves billions of barrels of oil in our ground in the US.
Just what we need……more obama buddies and czars doing nothing on the taxpayer dime.
Federal law enforcement officials have created a special working group to focus specifically on fraud in the energy markets, from consumer gasoline markets to oil futures.
————-
Smoke & Mirrors from Obama. He’s done nothing to create oil reserves and aid in more sources of energy. This new government body is another group the taxpayer is funding but for no other purpose than to aid Obama cover up his diabolical scheme to raise oil prices and force us off oil. Obama is not the working man/woman’s friend but more a friend to King Fahd and others of OPEC.
Obama’s a sick joke!
txloanguy, hey, you and I completed a contract, say I agree to buy from you in three months , 10,000 bbls of oil @ $115 per bbl.
And in three months, the spot price of oil on settlement day, was $120.
So on that day, you write me a check for my profit of $5 per bbl X 10,000, and we tear up the contract.
How does that impact the price of oil ?
We could execute this deal without even going through an exchange.
This wouldn’t be much different from betting on a college football game, and last I looked, betting on football did not impact the outcome of the game, unless the mafia was involved.
Yes they will watch it go up. That is about it. No shortages just because of the wars in Irag Afganistan, Lybia it has been rising ever since and will continue to do that. If shortage why all the drilling in Texas. Just do not understand and whose land are they drilling on the rich. One owner of oil company has three rigs drilling now. What a shame.