President Obama has called for an investigation into potential price manipulation, collusion, fraud, or misrepresentation in energy markets, which could be causing prices to unduly increase. A task force organized in response to the president’s call for action met for the first time on Monday.
The Oil and Gas Price Fraud Working Group, set up by Attorney General Eric Holder, includes representation from the Department of Justice, the Departments of Agriculture and Energy, and all of the relevant financial and trade regulatory bodies.
“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,” stated Holder in a press release April 21, the day the task force was formed.
Obama called for the Justice Department to set up the task force after gas prices reached $4 a gallon in parts of the country in mid-April.
Obama has frequently repeated that there is no “silver bullet” that can bring down gas prices quickly. His approach is to reduce oil dependance by investing in clean, alternative energy solutions.
At the same time, he told Americans in his weekly address to the nation, "We are going to make sure that no one is taking advantage of the American people for their own short-term gain."
Years of Questions
The assertion that financial market speculation could be driving up gas prices is not without warrant and evidence has been building for years. The major hurdle has been a lack of regulatory requirements over the commodity futures markets, which shuts regulators out from obtaining the data necessary to protect the public.
In 2006, a bipartisan U.S. Senate investigation found “large speculative buying or selling of futures contracts can distort market signals regarding supply and demand in the physical market or lead to excessive price volatility; either of which can cause a cascade of consequences detrimental to the overall economy.”
The report also referred to “several analysts” who have “estimated that speculative purchases of oil futures have added as much as $20–$25 per barrel to the current price of crude oil.”
