In April of 2011, with an attempt to address soaring gas prices and public concern, President Obama announced the creation of a special task force that would, according to the Justice Dept., "focus specifically on fraud in the energy markets." The Oil and Gas Price Fraud Working Group was formed and promises were made.
According to the DOJ's official announcement, the Task Force would "wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes and other laws prohibiting financial fraud" and be empowered with an "array of criminal and civil enforcement resources."
Nearly a year later, however, almost nothing has been done. Once again, US consumers face runaway prices at the gas pump and both oil speculation and alleged price manipulation continue unabated.
According to reporting by McClatchy's Kevin G. Hall today, the task force "has met only four or five times since its creation last April 21, and most of those meetings came at the time of its inception." And Hall continues:
Although the task force was announced during a time when Obama's poll numbers were sagging and he left the impression that it was investigative in nature, it's actually a subset of the Financial Fraud Enforcement Task Force, an independent entity.
Far from being a new sheriff in town, the oil and gasoline working group assembles regulators from several agencies with overlapping jurisdiction to discuss what they're looking into separately, see what information they can legally share and compare experiences.
An official from the Department of Justice, demanding anonymity because of a lack of authorization to speak to journalists on the matter, confirmed that the panel is acting as a clearinghouse, hoping that sharing information from one agency might push another forward.
That may prove little comfort for consumers, who are watching gasoline prices soar again and asking why.
Oil speculation has increased dramatically over the decades, and though segments of the Dodd-Frank financial reform bill were designed to address the problem by placing caps on the amount of contracts financial traders could control at any one time, none of those rules have been fully implemented. What's worse? Financial interests are now suing the CFTC to have those reforms nullified completely. Hall continues:
"There is currently ample supply and limited demand, which should not push prices to the places they are today," said Bart Chilton, a Democratic commissioner on the five-member Commodity Futures Trading Commission, which regulates the trading of futures — contracts for future deliveries of oil and other commodities. "Financial regulators are not price setters, but we are supposed to ensure prices are fair, and I am concerned that today they are not. There is a speculative premium being paid by consumers and businesses alike."
Financial-sector trade groups are suing the Commodity Futures Trading Commission, trying to block the implementation of congressionally mandated limits on how many contracts any one trader or company can control. Historically, financial speculators who never take delivery of oil made up about 30 percent of the trading in oil futures contracts; today they're about 65 percent of the market. That's led Chilton and other critics to think that the reversed ratio explains the high and volatile oil and gasoline prices.
"The only tool regulators have in their utility belt to address excessive speculation is the ability to limit the number of contracts that a trader may control. Most of us know what too much concentration can do, and it usually isn't very pretty," he told McClatchy. "Our position-limit rule has yet to be implemented, yet at the same time, Wall Street banks are taking the regulator to court to stop the rule from going forward. They want the ability to speculate with no limits. That's not good for markets, for our economy, or for consumers or businesses."