DoJ Forms "Oil and Gas Price Fraud Working Group"

Here's your federal energy policy: Do nothing significant to increase domestic supply, create mandates to have XX% of future supply come from magical green leprechauns, then when prices (surprise!) go up, you know what to do: Blame the "speculators":

Attorney General Eric Holder today announced the formation of a Financial Fraud Enforcement Task Force Working Group to focus specifically on fraud in the energy markets.   The 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. [...]

"Rapidly rising gasoline prices are pinching the pockets of consumers across the country," said Attorney General Holder. "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. If illegal conduct is responsible for increasing gas prices, state and federal authorities should take swift action."

Holder's "how high?" memo here [PDF]. President Barack Obama's money quote:

"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," President Obama said at a town hall meeting in Nevada on Thursday. "We are going to make sure that no one is taking advantage of American consumers for their own short-term gain."

It says a lot about how debased our politics have become that we could have expected this kind of aggressive economic ignorance had the other party won the presidency, too.

More on the latest push here. Reason on oil speculation here and here.

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  • WTF||

    "We are going to make sure that no one is taking advantage of American consumers for their own short-term gain."

    Yes, they really do think you are that stupid.

  • JoshINHB||

    Worse, they are that stupid.

  • Libertard||

    "Attorney General Eric Holder made no secret the move is a direct response to public angst, not to current evidence of any illegal conduct."

  • Libertard||

    If the government is going to investigate anything that is bothering the public, can we get a special commission to investigate Long Form Birth Certificates?

  • Realist||

    The answer to high oil prices is to invest in oil when it is cheaper!

  • Irresponsible Hater||

    Price controls in 3... 2... 1...

    (Also, please limit the use of the term "money quote")

  • Bingo||

    I would so so so love to see them do this. It would be the cherry on top of the ice cream sundae of economically ignorant policies that have come out of Washington.

    They might as well do it and go full retard.

  • P B||

    +1

  • Realist||

    What he said^^^^

  • ||

    Alright, since no one else said it; leave it to a lurker to reply appropriately.

    http://www.youtube.com/watch?v=svwGRJA28lY

  • Realist||

    I own oil stocks and I pray for price controls....nothing drives up the price faster.

  • Rahm Emanuel||

    We are going to make sure that no one is taking advantage of American consumers for their own short-term gain.

    O, baby, what'd I tell you about crises?

  • West Texas||

    Here we go!

  • ||

    The first thing Holder's team should investigate is a chart showing the inverse correlation of the dollar to oil...

  • Bingo||

  • ||

    Come on. For anyone crazy enough to buy that, they would have to believe that A)oil is priced in US dollars, and B)the decrease in the value of a dollar, causes prices to rise.

    Unless you can explain how this is linked to the evil oil companies, and greedy speculators, and ultimately "duh ritch", I refuse to buy into such nonsense.

  • Math||

    Hey! Don't blame me!

  • ||

    Speaking of derivatives.

  • rather||

    Libertarians will be crying for price controls when gas hits the ten dollar mark. Caving in just like Rand did when she couldn't afford her health care.

  • ||

    Like your head was caved in after that unfortunate beating accident by your father when you were just a baby? Actually, brain damage explains you perfectly, rectal. I'm surprised I didn't think of it before.

  • rather ||

  • cynical||

    If by price controls, you mean free currency rather than letting the Fed rape the dollar, or cutting/ending gas taxes, or removing federal restrictions on drilling, then sure.

  • ||

    The 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. [...]

    They'll start with the ethanol scamsters, right?

  • ||

    "We're working diligently to keep the price of this high-demand resource low, so we can hector and bully everyone about using less of it."

  • West Texas||

    This.

    It's not that they actually want you to change any of your behavior because the real goal is actually the nagging... and assimilating more political power because the nagging isn't working well enough.

  • rather||

    The speculators are fucking us with price manipulation, the Saudis are playing the same game, the oil and gas companies are inflating prices, the gas dealers are raising prices before their existing oil is replaced, Obama has failed to pursue the use of our own resources, Bush failed to make Kuwait pay for our services with oil, the oil companies, and their lobbyist have written our energy policy...basically it's a consumer gang bang

  • ||

    You forgot the EPA regulations.

  • rather ||

    the crazy winter/summer gas formulation that even varies by state needs to go first

  • ||

    Really, someone is stockpiling oil and gas somewhere to drive up prices?

    So where is this oil building up? To make this work someone has to buy and buy and buy the oil that is being currently produced - Like the Hunt brothers had to when they tried to corner the silver market.

    The only way this works is if you asssume that the whole oil and gas production line, from discovery to recovery to refinery is deliberately under producing to keep prices high. That practically every single oil and gas company in the world is part of one big cartel - A cartel that operates across national and cultural boundaries. A cartel that has been able to operate in secret for over a decade.

    By the way, gas stations don't sell gas at the price they bought it, they sell it at the price it will cost to buy their next tank. Every business does this or they go out of business pretty quickly.

    "the crazy winter/summer gas formulation that even varies by state needs to go first"

    Still sounds like a government problem to me.

  • ||

    ""That practically every single oil and gas company in the world is part of one big cartel - A cartel that operates across national and cultural boundaries. A cartel that has been able to operate in secret for over a decade."'

    Many people have a foil hat tuned to that frequency.

  • Danny Rather||

    Kenneth, what is the frequency?

  • mikey||

    ", the gas dealers are raising prices before their existing oil is replaced, "
    Gawd, doesn't anyone understand how business works?! How can a business replace inventory if current stock is sold below replacement cost? Without going out of business, of course.

  • rather||

    And believe me, I know about gang bangs.

  • kilroy||

    Livestock doesn't count.

  • kda||

    Obama told us in the campaign that his energy policy would drive up energy costs. Humans are dolts if they buy this crap from Obama and Holder today.

  • JoshINHB||

    "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

    So I guess they're going to indict the entire Obama administration then.

  • ||

    Yes, the Republican campaign ads write themselves:

    Clips of gas station prices rising inexorably.

    Clips of Obama saying that we should have higher prices to move us to green energy.

    More clips of gas prices rising.

    You don't even need any narration.

    The inverse relationship between the falling dollar and rising oil is nearly perfect. That's about all the explanation you need. The oil market is simply too large to manipulate - it takes money to manipulate a market, and no "speculator" or group of speculators has that much money.

  • ||

    Unless you can conjure money from thin air...like, um, The Bernank? Oil is only one commodity affected by the Chairman's profligate printing...I'm surprised the administration isn't looking into corn, cotton and all other inflating commodities.

  • ||

    The inverse relationship between the falling dollar and rising oil is nearly perfect.

    Hogwash - the dollar has mildly gained strength since March 2008 but crude oil has seen $147/bbl, then $35/bbl and now $108/bbl in that same time.

    Quit listening to Beck - he is an idiot.

  • ||

    Look at the chart, shrek. Look at the chart. Since QE began, the correlation is as good as you'll ever see.

  • ||

    Odd - Crude hit $147/bbl in July 2008 before QE began.

    Therefore QE has no discernible effect on oil prices.

  • ||

    Look at the chart, shrek. Look at the chart. The correlation since QE began is basically 1:1.

    But its mere coincidence! And I can prove it by cherrypicking a single price spike that quickly collapsed!

    I know, I know. Why argue with invincible ignorance?

  • ||

    ""The inverse relationship between the falling dollar and rising oil is nearly perfect. ""

    My understanding is the price of gas has less to do with oil, although that a factor, and more to do with gas inventory. So a lot of it is about refining capacity. So it seems to me if Obama really wanted to help, he would figure out a way to get gas companines to refine more. Which would include helping gas companines build more refineries, including taking another look at, and/or removing federal rules that hinder the process, or waivers of such rules.

  • ||

    Oil prices have been expected to rise for some time. Any company that uses a significant amount of fuel, would be a fool if they didn't lock in future prices, using some sort of financial instrument. This could be considered speculation, but only because these businesses are betting that fuel prices are going up, and it is cheaper to buy now, than wait until later.

    I'm sure Obama, and his band of merry men will distort this as corporate greed, instead of what it really is - good business.

  • Ted S.||

    Nobody with the possible exception of the Hunt brothers. ;-)

  • ||

    CUERO, Texas—Oil-drilling activity in the U.S. has accelerated to a pace not seen in a generation as energy companies, oilfield contractors and landowners rush to exploit newly profitable sources of crude.

    The number of rigs aiming for oil in the U.S. is the highest since at least 1987, according to Baker Hughes Inc. The 818 rigs tallied by the oilfield-service company last week are nearly double last year's count and about 10 times the number that were drilling for oil in the late 1990s.

    Wall St Journal - Feb 2011

    US oil stockpiles at record highs -- but Rush (King of the Rednecks) Limbaugh will tell you that we can't drill here at all because of Obama.

    When position limits on futures contracts are put in place (thanks to FinReg) the price will correct.

    Funny how the Hunt Brothers proved that the silver market could be drastically manipulated but now the myth persists that other markets cannot.

  • ||

    Hey shriek, tell us about your market victories! It's Friday, we could all use a good belly laugh. Then say Christfag! It's hilarious! Then say something incredibly stupid...what am I saying; that's everything you say. Carry on.

  • ||

    Shrike, you were much more entertaining when you acted the sputtering, flailing, psychopath that you know you are.

    This player of markets, Gordon Gekko affectation is not you at all, not to mention; so booooring.

  • cmace||

    Yes, rising prices result in more product, more jobs in that industry.

  • ||

    US oil stockpiles at record highs

    Meaningless. All that proves is that somebody thinks oil will be worth more later than it is now, and so they are, wait for it, buying it now and holding it until its worth more.

    Funny how the Hunt Brothers proved that the relatively small and illiquid silver market could be drastically albeit temporarily manipulated, but now the myth persists that other , much larger and more liquid markets cannot.

    The susceptibility of a market to manipulation is a function of its size and liquidity, shrek.

  • ||

    The susceptibility of a market to manipulation is a function of its size and liquidity

    Right, but the Hunts were mere pikers compared to the Morgans, Goldmans, Citi and other massive energy traders.

    Its legal and I would be doing the same thing - plus its only about $15 in spec premium now so nothing like the percentage effect the Hunts had on silver.

  • ||

    So, now we're admitting the spec premium in the current price spike is only $15, but somehow sticking with the theory that the trillions in QE has nad no effect on the rest of the price rise?

  • ||

    Yeah - the Fed's last audited balance sheet is only about $2.3 trillion or up 3x from 2007.

    They bought MBS and Treasuries only - which the private market could have easily absorbed. QE gets a bad rap from bond traders and goldbugs who use it to talk their book.

  • ||

    Meaningless. All that proves is that somebody thinks oil will be worth more later than it is now, and so they are, wait for it, buying it now and holding it until its worth more.

    .

    Southwest Airlines did this in 2008. As a result, they were able to keep operating costs low, because unlike the other airlines, their fuel prices didn't go up.

    Stocking up on a resource, that your business relies heavily on isn't manipulation. It's smart business.

  • Srhrike the WarPrick||

    Tell us how your WarPrig Obama, Son of Wubya, is not raising the price of oil by invading oil-producing countries.

  • Jersey Patriot||

    The price of oil is set by the seller of the oil. If you want a barrel of Saudi oil, you pay the Saudi's price or go without. Speculators aren't forcing the Saudis (or anyone else) to sell their oil for a high price.

    The price of oil is high for unbelievably simple reasons: supply and demand, and fear of Middle East conflagrations. Since 2005, there are 3 million barrels a day of crude oil (mbpd) fewer in the international market. Oil-exporting countries are burning more of their own fuel, while barely increasing overall production. That means net exports are down. At the same time, China and India are vastly increasing their imports. Higher demand, lower supply.

    Oh, and Obama's calls for reducing American oil imports by a third? The record America set was 11 mbpd a few years ago. Last week, it was 8.1 mbpd. We're almost there! One more crippling recession should do it.

  • ||

    But you must admit that anticipating seasonality is a form of speculation - the same with the anticipation of summer Mid-East turmoil.

    To complicate things the Enron Loophole was closed so there might be some type of illegal activity but the line is blurred - seasonality or illegal activity?

  • ||

    So were speculators temporarily not evil when, whatever their role is, oil dropped from $147 to $35? We need new regulations for only good speculation.

  • ||

    Do not try to make sense of anything shriek says. That way lies madness. And bonecrushing stupidity, so tread carefully.

  • ||

    I never said that speculation was evil. Just that they could effect markets prices.

  • ||

    Got confused with Rather.

    But Obama is directly implying speculation is evil.

  • Realist||

    Investing in oil or other commodities is not speculaion as long as the world is full of shit for brains collectivists....it is a sure thing. Thank you!

  • ||

    ""The price of oil is set by the seller of the oil. If you want a barrel of Saudi oil, you pay the Saudi's price or go without.""

    Oil is bought and sold in the worlds commodity exchanges.

    ""The price of oil is high for unbelievably simple reasons: supply and demand, and fear of Middle East conflagrations"'

    Yep, and instability in the Middle East has almost everything to do with the current spike in oil prices.

  • ||

    Only one solution. Invade!

  • ||

    Go, go, go.

    Wait, we are there alreay.

  • ||

    already.

  • ||

    We still have to invade Saudi Arabia, Venezula, Mexico, Canada and the North Sea to stabilize the oil market.

  • ||

    Well I hear all the Mexicans have come across our boarder for free health care, so that one should be easy to invade. With Canada, we may have to wait until hockey season comes back around.

  • ||

    lol, Holder is a true idiot. Wishful thinking, but WAY over his head.

    www.complete-privacy.au.tc

  • Thom||

    I'd love to see the outcry from these guys if the speculators refused to participate at all and the markets ground to a halt.

  • ||

    Well, "speculators" does roll off the tongue more easily than "hoarders and wreckers".

  • ||

    Speculators do not hoard. Most sell the contracts before the delivery date. So they never see the oil they bought and sold.

  • Realist||

    How sad. How can you really get to love it if you don't see it?

  • ||

    I'm not sure speculation is bad. IN fact, I think speculation vis-a-vis commodity futures exchanges has generally been a net positive to markets over time: when they push prices on futures high enough, you get more participation in production (i.e., everyone's a farmer when corn is high enough). They also provide insurance against risk of severe sudden deflation (i.e., everyone doesn't stop farming at the first drop in corn). It is the interference in this normal, legitimate market that creates huge imbalances...interferences like propping up speculators (read: banks) who fail; interferences like printing money and reducing rates to zero so that capital has less value and reflects distorted risk profiles (read: The Fed making speculation carry little risk).

  • Doc S||

    I need to get me some of that Arab money so I can buy a solid white gold benz

  • Even the poor in Saudi Arabia||

    ....drive Rolls Royces. Poor MEN, anyway...

  • Realist||

    How the fuck do you get into a SOLID white gold benz? If you were a scientist, instaed of an engineer, you would know how stupid your statement is.

  • Doc S||

  • Realist||

    I have seen pictures of the car in question a few years back.
    But what does that have to do with your silly statement about "solid" white gold. The URL says nothing about solid white gold. If it were solid, there would be no "inside" to get into and it would weigh tons.

  • Doc S||

    And who says I would want to get into it? I would probably just get a truck made out of diamonds and store both on my multi billion dollar yacht just to have sex on with attractive women that only want my money

  • Realist||

    You must be 18 years old...."truck"....."sex"???

  • Bryan||

    When Bush was president and the price of oil went sky high, all you heard was "this is because Bush is protecting his Big Oil buddies." I saw bumper stickers that tracked the price of oil since Bush was elected.

    I want to see the same level of indignation, conspiracy theorying, and "Oil went up since Obama became president ergo he & the Dems must be helping big oil profit" now.

  • ||

    Bush didn't help himself by loading up the SPR at the top of the market and vetoing legislation to curb Enron-type trading in oil futures.

  • Bryan||

    Ok, but I think the rise in oil under Obama, during pretty much the same season, and also during unrest in the Middle East, pretty much puts to rest the idea that it was Bush that did it.

    And that ignores the entire concept that higher prices should be EXACTLY what environmentalists and green-energy types want. Honestly, Greens should be clamoring for Republican presidents to protect Big Oil and raise prices 100%. Nothing would get electric cars selling and solar panels installed like $8 gas.

  • ||

    Plus it can be argues that Bush might have lowered crude prices if the Iraq invasion had lead to those flowers and Production Sharing Agreements with a US friendly puppet in place there.

    For the post below read the Wiki article on California electricity trading that Enron fixed. They drove the price up 20x at peak.

  • ||

    Enron-type trading in oil futures

    What specifically is Enron-type trading?

  • Realist||

    That is when you buy oil at a low price and sell it at a higher price. Thereby making a.....PROFIT. Oooohhhh the humanity!!!

  • WarMongering Shreike||

    Defending the indefensible again.

  • Darren||

    And the fact that our president is unilaterally bombing one of the world's largest oil producers wouldn't have anything to with price spikes, right?

  • kilroy||

    I don't think "unilaterally" is the right description but it's no less fucked up.

  • Darren||

    Hi Kilroy; I was using "unilaterally" in the sense that Obama never sought Congressional or public approval for his war.

  • ||

    No, it wasn't unilateral. Of the 112 tomahawk missiles fired into Libya during the opening wave, the US only fired 110.

  • ||

    So Bush was unilateral because he built a coalition without France and with Congress's approval and Obama is not unilateral because he got France without congress's approval.

    Is this about right for your definition of unilateral?

  • Well.....||

    ....not according to the fucking WarPig Obama. And I'm sure BushPig would never have admitted it, either. And now with all the EuroTrash leaders leading the war effort with their WarWhoops.....fuck, it's all your fault for having a car....

  • ||

    I would not be surprised if the anecdote were true in the sense that there was a group of speculators who said they could manipulate the oil market.

    Whether they actually could manipulate the market is another story. Speculators, like other people, are prone to self-aggrandizement; perhaps more than most as the occupation seems to attract thrill-seeking type A personalities.

  • chroma||

    "Doing nothing" to increase oil supply is exactly what the government should be doing, so I'm OK with that, and all of you should be too.

    Maybe this makes me a bad libertarian, but I'm against fraud, and believe it should not only be illegal, but the government should enforce laws that punish it.

  • IceTrey||

    We don't even use Saudi oil. We get our oil from Canada, Mexico and Venezuela.

  • Doc S||

    no.

  • Realist||

    "DoJ Forms "Oil and Gas Price Fraud Working Group"
    It's about fucking time...it's been about a year since we had this circle jerk.

  • ||

    What is Ben Stein talking about? The commodity traders I know don't really care which direction the market goes. They just want movment in the market and to bet on the right side of that movement.

  • ||

    That is correct. But Ben, Obama and the like interpret that as manipulation. That is what the traders meant when he heard them say "they don't care".

  • Tim||

    We should mandate gas be mixed with75% Ethanol. That would teach 'em a lesson.

  • ||

    I suspect those speculators were laughing their heads off at the very idea that they could manipulate the price of oil.

  • ||

    The oil suppliers are better at manipulating prices than traders. With gas, gas companies are very good at it. If they want more money for gas, they just decrease refinery output.

  • ||

    You know, I see a title like "X Working Group", and I assume the committee at hand is actually trying to accomplish X.

  • foolie||

    There are laws limiting how much power speculators are to have in markets...except the Commodity Futures Trading Commission has issued exemption letters to Goldman and then several other big investment firms. Cuz, you know, they totally deserve them.

    If you have problems with the government cracking down on speculation, then you should have problems with them enabling too.

  • ||

    Here's your federal energy policy: Do nothing significant to increase domestic supply, create mandates to have XX% of future supply come from magical green leprechauns, then when prices (surprise!) go up, you know what to do: Blame the "speculators":

    There is plenty of oil supply and a shrinking demand for it.

    Inflation is the causing oil prices to spike.

    There are simply to many devalued American dollars chasing the same amount of oil.

    Of course Obama is directly responsible for switching the Treasury's printing department into overdrive.

  • Michael Ejercito||

    Peak oil is here.

    There is no denying it.

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