President Obama on Thursday said the Justice Department will launch a new effort to probe oil markets for abuses that might be driving up gasoline prices.
The initiative comes as rising pump prices have shot up the political agenda, prompting daily GOP attacks on Obama’s energy policies, which Republicans say have stymied domestic production.
“Today, I’m going to go a step further. The attorney general’s putting together a team whose job it will be to root out any cases of fraud or manipulation in the oil markets that might affect gas prices — and that includes the role of traders and speculators,” Obama said.
“We are going to make sure that nobody is taking advantage of American consumers for their own short-term gain,” Obama said.
Oil and gasoline prices have risen alongside turmoil in North Africa and the Middle East. Average gasoline prices average $3.84 per gallon nationwide, compared to $3.55 a month ago and $2.86 at this time last year, according to AAA.
The Justice Department, in a separate statement on the effort Thursday, said the new “Oil and Gas Price Fraud Working Group” will “monitor oil and gas markets for potential violations of criminal or civil laws to safeguard against unlawful consumer harm.”
It will include officials from a slew of agencies, including Justice, the Commodity Futures Trading Commission (CFTC), the Federal Trade Commission, the Treasury, Energy and Agriculture departments, and others.
The working group’s mandate is broad. It will see if there is evidence of oil and gas price manipulation at the retail or wholesale levels that “violates state or federal laws and harms consumers or the federal government as a purchaser of oil and gas.”
“The Working Group will also evaluate developments in commodities markets and examine investor practices, supply and demand factors and the role of speculators and index traders in oil futures markets,” Justice said.
Federal agencies already have authority to address potential market abuses and undue speculation.
The CFTC, under a provision in last year’s Wall Street reform law, is working to set limits on the size of speculative positions that traders may take in commodities markets.
And five senators last month urged the Federal Trade Commission to use its powers under a 2007 law to probe whether recent oil price spikes — and the attendant rise in pump prices — stem from market manipulation.
Obama also used the speech to tout investments in clean energy technologies and call for cutting billions of dollars in oil industry subsidies, calling the tax breaks unnecessary for profitable companies.
“Four billion dollars a year are going to companies that are making record profits,” Obama said. “It doesn’t make sense. It has got to stop. Instead of subsidizing yesterday’s energy sources, let’s invest in tomorrow’s.”
Obama again said he recognized that high gasoline prices are causing a hardship for families, but reiterated his warning that there are no quick fixes.
This post was updated at 3:37 p.m.