Posted on 04/21/2011 1:19:52 PM PDT by MissesBush
NEW YORK - President Barack Obama said on Thursday the U.S. attorney general was assembling a team to root out any fraud and manipulation in the oil markets that might be contributing to higher U.S. gasoline prices.
Earlier, the Justice Department announced the working group, which will include representatives from the Commodity Futures Trading Commission, the Federal Trade Commission, the Federal Reserve Board, the Securities and Exchange Commission, as well as the Departments of Agriculture, Energy, Justice and Treasury.
Rising fuel costs have raised concerns about the strain on the economic recovery, with U.S. gasoline prices now averaging over $3.80 a gallon. Fuel costs that soared to over $4 a gallon in 2008 set off public outcry in the United States and caused motorists to scale back driving.
U.S. crude oil prices shot to over $113 a barrel this month, the highest level since September 2008, lifted in part by concerns about supplies due to unrest in Libya and the Middle East.
Following are comments from analysts:
CARL LARRY, PRESIDENT, OIL OUTLOOKS, HOUSTON, TEXAS
"Here's the interesting thing, they are going to have a hard time rooting out speculators when even Dodd-Frank can't determine what a speculator's limits should be.
"Oil is financially a free market so people are expected to make money at some time, so short term gains seems to be odd wording if they are thinking about levying higher taxes on capital gains in oil that may be an avenue, but it would get a bit messy for index funds.
"So an interesting idea, but hard to imagine a smart way to implement it that would make an immediate difference."
PHIL FLYNN AT PFGBEST IN CHICAGO
"This is political cover for a failed energy policy. People are angry at the prospect of $4 gasoline and Obama needs a scapegoat. Oil companies have been blamed too many times so now it's the turn of the speculators.
"Rather than searching for a boogeyman I can tell the President why oil prices are so high. There are obvious fundamental reasons for it: We've got the biggest threat to oil supplies since the Arab oil embargo while the U.S. dollar has plummeted as a result of the budget deficit and Federal Reserve policy.
"Really, if the president wants to investigate anyone to find why oil prices are so high he should be investigating the Federal Reserve. QE2 has weakened the currency and stoked inflation.
"I am concerned. This isn't the kind of investigation you expect in America, it sounds more like something out of Russia."
GUY CARUSO, FORMER EIA HEAD AND ENERGY ANALYST AT THE CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES
"Let it be noted that the 2012 campaign has begun, if there was any doubt."
"Obviously, it's always a good thing to have oversight and competent people looking at these things."
"I would be surprised if there was anything uncovered that was systematically affecting the price of gasoline. I'm not saying they wouldn't find somebody in Northwest Washington, DC charging $5 a gallon and they shouldn't be."
CHRISTINE TEZAK, ENERGY ANALYST AT ROBERT W. BAIRD & CO.
"It's easy and logical for the administration to promise increased vigilance and oversight, but it's not clear to me they will find anything."
"Importantly the AG's memo today admits 'It is also clear that there are lawful reasons for increases in gas prices, given supply and demand.' With the CFTC in a much more aggressive regulatory posture than in 2008, I'm hard pressed to see where the administration will be able to find "speculators" to hang the blame on."
"No easy answers there will mean will have to get back to the hard fundamentals - like understanding that oil is global and that as a nation we've chosen to be hooked on it, because we do prefer the easy least cost alternative!"
MICHAEL GREENBERGER, EX-CFTC DIRECTOR AND UNIVERSITY OF MARYLAND LAWSCHOOL PROFESSOR
"President Obama knows there is major outcry about rising oil and gasoline prices, and this group he's setting up is going to be all over the issue. They will have both the prosecutorial expertise and the market expertise to go after the kind of manipulation that may be going on in energy markets."
"I think it's an important step. It should have a deterrent effect on excessive speculation in the market. But it should also be coupled with implementation of Dodd-Frank in a way that strengthens position limits in energy markets."
"There are already several investigations into these markets, but we haven't seen the will or enforcement to accelerate them, and I think now that will happen."
"Brian Hunter, who was fined $30 million today (for natural gas market manipulation), is really the poster boy for the kind of things that may be going on in these markets and could be rooted out by this new group."
TIM EVANS, ENERGY ANALYST, CITI FUTURES PERSPECTIVE, NEW YORK
"You can almost set your watch on these kinds of things. Every time we see a significant rally in oil prices, people start calling their legislators and encouraging them to launch an investigation.
"Will they find evidence of manipulation? I have no idea. The vast majority of past investigations have found no evidence of wrongdoing. Many times somebody gets hurt by a price move, the CFTC investigates and they find it was a market doing what markets do and someone got caught short or got caught with a long position in a falling market and got hurt that way."
AMERICAN PETROLEUM INSTITUTE CHIEF ECONOMIST JOHN FELMY IN WASHINGTON DC
"Strong growth in oil demand around the world and tighter supplies in part caused by the Libyan conflict have produced the higher gasoline prices the administration is about to investigate."
"The administration's own experts in the Energy Information Administration have been saying as much, and the FTC which has been closely tracking gasoline prices and markets for more than a decade has said nothing to indicate fraud is a factor in today's higher prices."
"If the administration wants to help consumers, let it work to turn around the decline in U.S. oil production by eliminating the obstacles to increased development its own policies have created."
Like OJ looking for the murderer.
LOL, you get the best post of this thread award. Good one.
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