FTC Cracks Down on Oil Price Manipulation
The Federal Trade Commission said Thursday it would begin policing the petroleum industry with new penalties for anyone attempting to manipulate energy prices.
The rule, which will go into effect in November, targets anyone dealing with crude oil, gasoline and petroleum distillates. It prohibits market distortions through false or misleading statements about stockpiles, prices or crude and fuel output.
The FTC will seek data, for instance, on the amount of gas held in storage by refiners. Those figures, which are collected and published by the Department of Energy each week, can push prices up or down.
Analysts and traders depend on government inventory reports when buying crude and gasoline futures. The future price in turn helps set wholesale and retail gasoline prices.
"This new Rule will allow us to crack down on fraud and manipulation that can drive up prices at the pump," said FTC Chairman Jon Leibowitz. "We will police the oil markets and if we find companies that are manipulating the markets, we will go after them."
Violators would face a civil penalty of up to $1 million per day.
Congress broadened the FTC's powers to scrutinize petroleum companies when oil prices started rising in 2007, eventually driving retail gasoline above $4 a gallon last summer.
FTC Deputy Assistant Director Patricia Galvan said the commission hasn't policed the petroleum industry like this before, but said she was unaware of any specific instances of market manipulation.
The Commission issued a report two years ago that found no evidence of price fixing during the summer of 2006.
The FTC rule does not target speculators, which also have been blamed for manipulating energy prices. A different federal agency, the U.S. Commodity Futures Trading Commission, is expected to decide whether to place trading limits on speculators later this year.
The CFTC, which regulates oil and other commodities in the U.S., is dropping its historic hands-off approach, CBS News investigative correspondent Armen Keteyian reported last month. It is now considering tougher regulations that would make it harder for speculators to amass huge positions and make money timing the market.
© 2009 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report. The rule, which will go into effect in November, targets anyone dealing with crude oil, gasoline and petroleum distillates. It prohibits market distortions through false or misleading statements about stockpiles, prices or crude and fuel output.
The FTC will seek data, for instance, on the amount of gas held in storage by refiners. Those figures, which are collected and published by the Department of Energy each week, can push prices up or down.
Analysts and traders depend on government inventory reports when buying crude and gasoline futures. The future price in turn helps set wholesale and retail gasoline prices.
"This new Rule will allow us to crack down on fraud and manipulation that can drive up prices at the pump," said FTC Chairman Jon Leibowitz. "We will police the oil markets and if we find companies that are manipulating the markets, we will go after them."
Violators would face a civil penalty of up to $1 million per day.
Congress broadened the FTC's powers to scrutinize petroleum companies when oil prices started rising in 2007, eventually driving retail gasoline above $4 a gallon last summer.
FTC Deputy Assistant Director Patricia Galvan said the commission hasn't policed the petroleum industry like this before, but said she was unaware of any specific instances of market manipulation.
The Commission issued a report two years ago that found no evidence of price fixing during the summer of 2006.
The FTC rule does not target speculators, which also have been blamed for manipulating energy prices. A different federal agency, the U.S. Commodity Futures Trading Commission, is expected to decide whether to place trading limits on speculators later this year.
The CFTC, which regulates oil and other commodities in the U.S., is dropping its historic hands-off approach, CBS News investigative correspondent Armen Keteyian reported last month. It is now considering tougher regulations that would make it harder for speculators to amass huge positions and make money timing the market.
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10 Comments Add a Comment
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- USSA is the biggest corrupt manipluator of oil in the world with there greed.I like the way they say there cracking down on manipulation like giving money out of there own lieing cheating pockets NOT
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- It's about damn time.
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- The FTC was never going to do this under Bush. He knew ever since he grew up in Texas that high oil prices meant good times for his friends in Houston. It did not matter why nor how they prices went up, as long as they were high it was good times for his friends.
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- Hmm I haven't even thought this out but really no regulation is needed to control prices. Oil is a nice big business that is nearly the size of our government. Make a government owned oil company to compete with the oil business. Have it have enough oil reserves so when speculators try to jack up prices the government releases all kinds of oil into the market making speculators go splat like the bugs on my windshield. Tell me if I am either being too wrong or too socialist here. Heh I am a socialist so I don't care if I am. I do like cheap gas though. Actually I liked it when gas went to 1.59 a gallon. Are you with me or against me here?
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- your part right just reverse it. USSA big oil companys have been making money hand over fist by manipulating the oil prices for decades. If you do what you are saying it would take money out of there pockets.
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- Why wait till November? Do it NOW!!
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- Good job, progress being made FINALLY. Thanks CBS for posting this and the previous story that I missed. Now if the CFTC can start doing their job soon, not sometime in the future, that is too vague. And the bankers that crashed the economy still need to be held accountable along with former Secretary of Treasury/CEO Goldman Sachs Henry Paulson.
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- You know how to stop this nonsense, make anyone that bids on these oil contracts take possession of the actual oil. Get the banks and speculators out of our energy markets.
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- amen brother. I'd suggest you run for Congress, but you sound too decent and honest to get the campaign donations you need to win. Speaking of donations, did the Conservatives in Congress get their usual $1.4 MILLION in bribes delivered on time today from their bosses in the health care industry? ....payola to deny Americans the popular public option? Maybe if we urge them, CBS will drop its bias and start reporting the truth about the anti-health care reform crowds at the town hall meetings ... that they've already been outed as highly organized by right wing ops.
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- Government option allow for abortions in hospitals and clinic. If they banned that they would win. Unfortunately the democrat party is the pro-choice party so its impossible for health care to pass right now since 54% of America is pro-choice right now so the point is moot.
