Looking past the current prices at the pump, lawmakers pressed the president and the U.S. attorney general to form a task force to make sure oil markets aren’t being illegally manipulated.
Sen. Maria Cantwell, D-WA, and Rep. Jay Inslee, D-WA, pointed out in letters to the president and attorney general that the price of oil and gas can no longer be explained or predicted by “normal market dynamics or their historic understanding of supply and demand fundamentals.”
The pair reminded the president and the attorney general that an official from Exxon Mobil testified under oath in a congressional hearing that the price of crude oil should be about $50 to $55 per barrel based on supply and demand fundamentals. Yet, oil is trading well above the $100 per barrel mark with little relief in sight.
“With prices for (oil and gas) more than tripling since 2002, families, businesses and hard-working Americans are struggling to make ends meet with the ever shrinking disposable incomes,” the pair wrote in the letters.
Manipulation in the oil and gas markets has been exposed in the past, according to the pair. The Federal Trade Commission found 15 examples of pricing at the refining, wholesale or retail level that fit the definition of price gouging.
Also, in July 2007, Marathon Oil Corp., agreed to pay a $1 million fine to settle charges that one of its subsidiaries attempted to manipulate crude oil prices in 2003.
“We learned that consumers are best protected when energy markets are subject to aggressive regulation and enforcement,” the pair wrote in the letters. “And, unless there is a cop on the beat vigilantly policing energy markets, sophisticated companies can fleece consumer pocketbooks without fear of penalty.”
Earlier in April, Cantwell, along with four other senators, encouraged the FTC to step up and implement a new power granted by Congress to tackle manipulation in the oil and gas markets.
Cantwell along with Sens. Byron Dorgan, D-ND, Olympia Snowe, R-ME, Daniel Inouye, D-HI, and Gordon Smith, R-OR, sent a letter to the chairman and commissioners of the FTC calling for the agency to complete a rulemaking to implement the new power by the end of the year.
The Energy Independence and Security Act of 2007 gave the FTC authority similar to anti-manipulation authority utilized by the Securities and Exchange Commission and the Federal Energy Regulatory Commission. The provision also empowers the FTC to levy civil penalties of up to $1 million per day
“Utilized effectively, we believe this new authority will substantially augment consumer protections, help lower and stabilize prices, increase market transparency, and provide drivers the confidence that retail gasoline and diesel prices are free from the influence of anticompetitive practices and the exercise of market power, which might rightly be considered manipulation,” the senators wrote.
– By Jami Jones, senior editor