Oil, Gas Prices to Be Monitored by U.S. for Manipulation
April 21, 2011, 2:46 PM EDTBy Justin Blum
(Updates with comments from Obama in sixth paragraph.)
April 21 (Bloomberg) -- The Obama administration created a working group to explore whether oil and gasoline prices are being driven higher by illegal manipulation, the Justice Department said.
The working group, which includes representatives of federal agencies and state attorneys general, will check for fraud, collusion or misrepresentation at the retail and wholesale level, the department said in a statement today. The group also will examine investor practices and the role of speculators and index traders in oil futures markets.
“Rapidly rising gasoline prices are pinching the pockets of consumers across the country,” Attorney General Eric Holder said in the statement. “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.”
With a presidential election 19 months away, President Barack Obama faces increasing political pressure over rising gasoline prices. Crude oil futures have increased 22 percent and gasoline surged 34 percent this year as Middle East unrest reduced supply and the global economic rebound bolstered fuel demand. Both futures contracts touched the highest levels this month since the records reached in 2008.
The average price nationwide of regular gasoline at the pump was $3.84 a gallon yesterday, the highest since Sept. 16, 2008, AAA said on its website.
‘Short-Term Gain’
Obama, in remarks prepared for delivery today at a town hall meeting in Reno, Nevada, said that the administration will “make sure that no one is taking advantage of the American people for their own short-term gain.”
The energy market working group is part of a financial fraud enforcement task force. In a memo to the task force, Holder said Obama asked him to work with federal agencies and state attorneys general to ensure laws weren’t being violated on oil and gas prices.
Holder also wrote that it is “clear that there are lawful reasons for increases in gas prices, given supply and demand.” In cases in which there is illegal conduct, state and federal officials should take “swift action,” he wrote.
The president’s job approval rating, which started rising after he reached a deal on tax cuts with congressional Republicans in December, reversed course in late January as turmoil in the Middle East began driving up gasoline prices.
A Washington Post-ABC News poll released April 19 found that 47 percent of Americans approve of Obama’s job performance, down seven percentage points since January. Even with signs of improvement in economic indicators, 44 percent of Americans said they believed that the economy is deteriorating, the worst reading for the poll in two years.
--With assistance from Mark Shenk in New York and Mike Dorning in Washington. Editors: Jim Rubin, Brigitte Greenberg.
To contact the reporter on this story: Justin Blum in Washington at jblum4@bloomberg.net
To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net
