Sen. Maria Cantwell (D-WA) inserted a provision in last year’s energy bill that gave the Federal Trade Commission the authority to investigate manipulation of the petroleum market, and now with gasoline expected to top $4 a gallon this summer, Cantwell wants the FTC to use it.
“Their response has been tepid,” Cantwell said in an interview. […] She said she expected the agency would “run out the clock” and leave the manipulation regulations for the next administration to write and implement.
“They didn’t ask for the authority and they’ve never been excited about it,” Cantwell said. “They say they want to work with us. Given the impact on the economy, they need to get started.”
Now I know you knee-jerk free-marketeers will tell me that this is merely the market in action, and that the invisible hand of God will sort everything out just fine as long as we don’t let those damn government regulators interfere. But with crude oil now hovering around $110 a barrel, the supposedly inviolable law of supply and demand appears to have been magically suspended:
Cantwell noted that crude oil prices have doubled over the past year despite adequate inventories, no major disruption in supply and a slight drop in demand in the United States as the economy has cooled.
At congressional hearings over the past several weeks, oil company executives and market analysts have been at a loss to explain the sharp increase in crude oil prices. Cantwell said an Exxon Mobil executive recently told a House of Representatives committee that he thought the price of crude oil should be about $50 to $55 a barrel, given current supply and demand.
It was Cantwell who also authored a law that banned manipulation of the natural gas and electricity markets, and ordered the Federal Energy Regulatory Commission to enforce it. Subsequent investigations have resulted in 15 settlements and nearly a half billion dollars in fines. I’d wager the FTC would find similar manipulations in the petroleum market… that is, if it ever bothered to follow the law.