A task force formed by President Obama in response to skyrocketing gasoline prices will examine the role that speculators and index traders play in oil futures markets.
The task force also will give Obama something to point to showing that his administration is attempting to combat one of the thorniest issues in his recently announced bid for re-election in 2012.
On Thursday, Attorney General Eric Holder announced the formation of the Oil and Gas Price Fraud Working Group (See story, 1733 GMT).
Holder said the task force is a mix of federal and state government officials who will look for "evidence of manipulation of oil and gas prices, collusion, fraud, or misrepresentations at the retail or wholesale levels that violates state or federal laws and look at developments in commodities markets" and "examine investor practices, supply and demand factors and the role of speculators and index traders in oil futures markets."
At a town hall in Reno, Nevada, on Thursday, Obama said the task force's job "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," according to his prepared remarks.
"We are going to make sure that no one is taking advantage of the American people for their own short-term gain," Obama said.
Obama cautioned, however, that there was "no silver bullet that can bring down gas prices right away," and said he also wanted to stop $4 billion in annual taxpayer subsidies from going to oil and gas companies.
The task force will be comprised of representatives of the Justice, Agricultures and Energy Departments, as well as the National Association of Attorneys General, the Commodity Futures Trading Commission, the Federal Trade Commission, the Department of the Treasury, the Federal Reserve Board and the Securities and Exchange Commission.
"We will be vigilant in monitoring the oil and gas markets for any wrongdoing so that consumers can be confident they are not paying higher prices as a result of illegal activity," Holder said in a statement Thursday. "If illegal conduct is responsible for increasing gas prices, state and federal authorities should take swift action."
In a memo sent out to task force members on Thursday, Holder wrote that "there are lawful reasons for increases in gas prices, given supply and demand." He said the task force's aim was to make sure that Americans are "not paying a penny more than they should at the gas pump -- and that there is no violation of federal or state law, collusion, or fraud with respect to the price of the gasoline upon which our economy so vitally depends."
'DAMPENING EFFECT ON MALPRACTICES' IS FORESEEN
In an interview Thursday, Michael Greenberger, a former principal deputy associate attorney general with the Justice Department and former director of the CFTC's Division of Trading and Markets, called the task force "the ultimate marriage of expertise and prosecutorial expertise."
Greenberger, a professor at the University of Maryland School of Law, said the formation of the task force would likely have a near-term impact on energy markets.
"I think the very formation of this is going to have a dampening effect on malpractices in the energy markets and I do believe that we will see results from this that will end up in real prosecutions that will have and an ameliorative effect on unnecessary speculative premiums in these markets," Greenberger said.
Terry Madonna, director of the Center for Politics and Public Affairs at Franklin and Marshall College, said the task force will give Obama evidence that his administration has addressed rising gasoline prices, an issue that Madonna said could derail his re-election bid.
"Rising gasoline prices is potentially a huge problem for the president, and so one thing they can do is to go and find a scapegoat, find someone to blame and you can't just blame it on chaos in the Middle East," Madonna said.
But, finding that "smoking gun" will be a very difficult task, he said.
"There's probably very little that [the task force] can actually do," Madonna said.
Still, Greenberger said that pressure from the White House ensures that federal officials will be focused on the issue.
"It's one thing when something rises to the level of the president saying 'I need you to do this,'" Greenberger said. "The pressure of the presidency on seeking results here, in and of itself, causes people to put their shoulders together and produce."
