Investigate Manipulation in Oil and Gas Markets
Levin Joins Colleagues in Requesting Department of Justice Inquiry
U.S. Rep. Sander Levin today urged U.S. Attorney General Eric Holder to investigate manipulation of oil and gas markets. In a letter to the Attorney General signed by 41 other Democratic members, Levin noted that artificially high prices due to excessive speculation or mark manipulation function as a hidden tax on American consumers and can impede our ongoing economic recovery.
Earlier this week House Republicans rejected an amendment by Rep. Tierney to authorize funds for the Commodities Futures Trading Commission to effectively enforce oversight of the oil market to combat speculation and market manipulation that are driving up gas prices. Experts believe that Wall Street speculators may be to blame for as much as 20% of the increase in gas prices. The amendment failed on a mostly partisan vote of 160 to 261.
The Obama administration, meanwhile, this week proposed new rules to limit oil speculation, including requiring oil traders put up more of their own money for transactions, requesting more funds for market enforcement and monitoring activities, and calling for higher penalties for market manipulation.
A PDF copy of the letter is available here. Text is below:
Dear Attorney General Holder:
We write in support of President Obama’s recent announcement that the Oil and Gas Price Fraud Working Group has been reconstituted and strongly encourage you to use the Working Group to prosecute a vigorous inquiry into the extent to which excessive speculation or outright manipulation are driving up prices in today’s oil and gas markets.
The answer to this question is not academic. Artificially high prices due to excessive speculation or market manipulation function as a hidden tax on American consumers and can impede our ongoing economic recovery. In response to the recent run up in oil and gas prices, credible sources including CFTC Commissioner Bart Chilton and Forbes Magazine have both estimated that the current price of a gallon of gasoline includes a speculative premium of over 50 cents.
Rather than risking a repeat of 2008 – where speculators ran the price of a barrel of oil up to $147 and market manipulators were only identified and charged after the fact – the time to act is now. We urge you to use every investigatory and law enforcement tool at your disposal to ensure the proper functioning of our oil and gas markets.