Exclamation FTC to Probe U.S. Oil-Market Manipulation

Greyfoxx

Well-Known Member
By James Rowley

May 1 (Bloomberg) -- The U.S. Federal Trade Commission will investigate allegations that market manipulation has contributed to a 24 percent increase in gasoline prices in the last year.
The FTC said in a statement the probe will exercise new authority granted last year by Congress to study whether regulations are needed to prevent manipulation. The FTC said it will complete a formal ``rulemaking process'' by year's end. The first step is seeking public comments.
``We understand that consumers are being hurt by high gas prices, and the commission remains vigilant in using its full authority to prevent unlawful behavior,'' FTC Chairman William E. Kovacic said in a statement.
The FTC's action came amid mounting pressure on the agency from Democratic lawmakers to use the authority granted in the energy legislation to craft regulations.
Last week, House Speaker Nancy Pelosi and other Democratic leaders told Kovacic in a letter that the agency had ``failed to exercise its power to protect consumers from skyrocketing energy costs.''
At a Senate Commerce Committee hearing last month, Washington Democrat Maria Cantwell, who pushed the market- manipulation provision of the energy legislation, extracted a pledge from Kovacic that the agency would begin a rulemaking procedure that might lead to adoption of regulations.
Public Comments
The first step is to solicit public comments over the next 30 days to determine ``what types of conduct that is happening out there'' may be ``covered with this rule,'' David Wales, deputy director of the FTC's Bureau of Competition, said in an interview.
``We are trying to look for manipulation that harms consumers'' and determine ``if people would be better off if we regulated'' certain marketplace conduct, Wales said.
The comment period gives the public an opportunity to tell the FTC ``whether we should have a rule and what it would look like,'' Wales said.
In an April 16 interview, Cantwell said such a government inquiry would prompt commodity speculators and brokers to curb behavior that she contends is helping drive up the price of gasoline, now more than $3.50 a gallon nationwide and more than $3.80 a gallon on the West Coast.
With a continuing regulatory investigation, traders would ask themselves ``hard questions'' about whether they were ``holding supply off the coast just until the price goes up another dollar,'' Cantwell said in the interview.
Analysts' Views
Oil industry analysts have questioned whether traders have significant power to raise prices and argue that speculative purchases are a symptom, not a cause, of high oil prices, which are set on the world market. James Lucier, a political analyst at Capital Alpha Partners, citing traders, has estimated that financial speculation contributes to no more than 10 to 15 percent of oil prices.
During previous price increases over the last decade, the FTC's investigations haven't uncovered evidence of widespread anticompetitive practices.
``There are a lot of components that go into the cost of gasoline,'' and ``many of them are not related to antitrust or what could possibly be in the realm of market manipulation,'' Wales said.
``The price of crude oil is a big component,'' he said. Even if the FTC were to find anticompetitive conduct, ``no one has been able to quantify'' how much such behavior ``would increase the cost.''
No Definition
Still, ``if we do find unlawful behavior we will go after it,'' Wales said.
Wales said the commission will ``ultimately decide'' whether to issue regulations, and it could decide to do nothing.
The new law doesn't define market manipulation, stating only that it would be illegal for traders in the wholesale market for crude, gasoline or petroleum products to use any ``manipulative or deceptive device or contrivance'' that violates ``rules and regulations'' adopted by the FTC.
The FTC will also study how to enforce a provision of the law that bars traders from deliberately providing the government with false or misleading data about the oil and gasoline markets.
The FTC includes two Republicans, Kovacic and J. Thomas Rosch; a Democrat, Jon Leibowitz, and independent Pamela Jones Harbour. Rosch, who has taken a more aggressive stance on antitrust enforcement than Kovacic, has often voted with Leibowitz and Harbour on specific cases.
There is one vacancy on the commission, and Bush is not likely to nominate another commissioner to fill it because of a standoff with the Democratic-controlled Congress over appointments to government agencies.
Rubin, Laurie Asseo.
To contact the reporter on this story: James Rowley at Bloomberg News

Greyfoxx here; I have been rising hell with the powers to be about going after traders and oil companies using the RICO LAWS related to Racketeering activities for the last six years. I've written letters to twelve Congressmen, letters to editors of eight major newspapers, letters to the FTC. Last year when Congress gave the FTC power to go after the Speculator I thought we would see relief at the pump. Don't count chickens yet, but maybe, just maybe this will put the fear of god into these scum-bags and if nothing else crude prices will come down, And just maybe we see some of the oil in the Bakken oil fields come on line ASAP.

Maybe this should have it's own Thread?
 
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