The Obama administration is exploring whether rising oil and gasoline prices are being driven higher by illegal manipulation.
Representatives of the Justice Department, other federal agencies and state attorneys general will monitor for fraud, collusion or misrepresentation at the retail and wholesale level, the department said in a statement yesterday. The group also will examine the role of speculators and traders in oil futures markets.
“The attorney general’s putting together a team whose job it us to root out any cases of fraud or manipulation in the oil markets that might affect gas prices, and that includes the role of traders and speculators,” President Barack Obama said yesterday in Reno, Nevada. “We are going to make sure that no one is taking advantage of American consumers for their own short-term gain.”
With the 2012 presidential campaign looming, Obama faces increasing political pressure over rising gasoline prices. Previous administrations have conducted similar inquiries after gasoline price spikes.
Gasoline climbed to a 33-month high yesterday, and crude oil prices were up 23 percent this year as Middle East unrest reduced supply and the global economic rebound bolstered fuel demand.
The average price nationwide of regular gasoline at the pump was $3.84 a gallon on April 20, the highest since Sept. 16, 2008, national motoring organization AAA said on its website.
‘A Political Action’
Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington, said the Obama administration’s announcement “seems like a political action.”
“They are going to investigate whether any fraud and manipulation has occurred, not that there was any evidence that it had taken place,” he said in an interview. “I suspect they won’t find any sign of major fraud or manipulation.”
The Justice Department created a working group of its financial fraud enforcement task force to examine the possibility of wrongdoing in energy markets.
Attorney General Eric Holder wrote in a memo to the task force that 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.
“Rapidly rising gasoline prices are pinching the pockets of consumers across the country,” Holder said in the Justice Department 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.”
Obama’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 in the poll in two years.