Monday, April 25, 2011

Justice Department Task Force On Gasoline Prices

Obama's remarks attempt to assuage public anger over rising gas prices

President Obama has initated a new Justice Department Task Force to make sure there is no price gouging going on regarding gas prices. Attorney General Eric Holder iss forming the Financial Fraud Enforcement Working Group.  The task force will focus some of its investigation on "the role of traders and speculators" in the oil-price surge. It will include several Cabinet department officials, federal regulators and the National Association of Attorneys General.  Holder said he would press ahead with the investigation, even though he did not cite any current evidence of intentional manipulation of oil and gas prices or fraud.

President Obama said at a recent town hall meeting in San Francisco that the Justice Department will try to "root out" cases of fraud or manipulation in oil markets, even as Attorney General Eric Holder suggested a variety of legal reasons may be behind gasoline's surge to $4 a gallon. The national average price for a gallon of regular gasoline was $3.84 on Thursday, about 30 cents higher than a month ago and almost a dollar higher than a year ago.

There's not much Obama can do to affect the price of gasoline in short term.  Gas prices have risen steadily as a result of tensions in the Middle East and northern Africa and rising demand from China and other emerging economies.

President Obama renewed his proposal to end roughly $4 billion annually in various government subsidies to oil and gas companies "at a time when they're making record profits and you're paying near record prices at the pump. It has to stop."

We doubt there is price gouging going on regarding gas prices. Government reports have never found evidence of manipulation. The roller coaster rise and fall in gasoline and diesel prices over the last couple of years tracks are determined in the global crude oil market by the worldwide demand for and supply of crude oil. Weak economic conditions in the U.S. and around the world in 2008 and into 2009 led to less demand, which helped push prices down. Now, with the worldwide economic recovery underway, demand is on the rise again but unrest in the Mideast has put supplies at risk. This combination of rising demand and reduced supply is helping to push prices higher. Domestic production  could be increased, but there does not appear to be the will to pursue this course.  (MSNBC, Frank Maisano)

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