Published April 22, 2011
With gas prices surging to $4 a gallon, one of President Obama's solution to break the back of rising costs is to have Attorney General Eric Holder form a task force to examine alleged fraud or manipulation of oil markets.
"We are going to make sure that no one is taking advantage of the American people for their own short-term gain," Obama said to applause at a town hall-style meeting at a renewable energy plant in Reno, Nev., on Thursday.
But commodity analysts are skeptical of the president's plan.
"This is a transparently political fishing expedition that insinuates that fraud or manipulation is distorting oil prices without providing even the flimsiest factual basis for such a suspicion," said Craig Pirrong, a finance professor at the University of Houston who specializes in commodity prices.
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.
For Americans, who on average buy about 500 gallons of gasoline a year, that's an extra $500 from their wallets.
But that's not the only way consumers are hit by higher gas prices. More expensive oil imports means increases in the cost of food, airline tickets and products shipped or trucked from far-away locations, among other expenses.
At his town hall, Obama bemoaned the higher price "at a time when things were already pretty tough." He 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."
But without congressional support for that plan, his primary tool right now appears to be the task force.
The Financial Fraud Enforcement Working Group will focus some of its probe on "the role of traders and speculators" in the oil-price surge, Obama said, and will include several Cabinet department officials, federal regulators and the National Association of Attorneys General.
In a memo accompanying a statement announcing the task force, Holder promised to "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."
But he suggested a variety of legal reasons may be behind the spike in gas prices.
"Based upon our work and research to date, it is evident that there are regional differences in gasoline prices, as well as differences in the statutory and other legal tools at the government's disposal," Holder said. "It is also clear that there are lawful reasons for increases in gas prices, given supply and demand.
"Nonetheless, where consumers are harmed by unlawful conduct that has the effect of increasing gas prices, state and federal authorities will take swift action," Holder said, without citing any current evidence of intentional manipulation of oil and gas prices or fraud.
Stephen Moore, a senior economic writer for the Wall Street Journal editorial board and founder of the Club for Growth, said aside from the Middle East, part of the problem is Federal Reserve policy, which he describes as inflationary because it is pushing extra dollars into the economy.
"We're seeing inflationary effects through these gasoline prices but we're also seeing it in gold prices, copper prices and food prices. So I think (Federal Reserve Board Chairman) Ben Bernanke is as much responsible for these high gasoline prices as anyone," Moore said.
A McClatchy-Marist poll this month found that 36 percent of respondents blame tensions abroad for rising gas prices while 33 percent blamed oil companies. Eleven percent blamed Obama and Democrats, and 6 percent pointed to congressional Republicans. The nationwide poll of 1,274 adults was conducted April 10-14 with a margin of error of 3 percent.
Indeed, with the 2012 campaign ramping up, the White House is eager to show voters it's taking action to tackle rising gas prices. But Pirrong said the task force is hardly needed since the agencies already have tools to monitor for fraud and to take action.
"This is part of a broad effort by the administration to deflect criticism with regard to gasoline prices," he said.
As Obama targets traders, some media analysts argue that he is getting a free ride on the skyrocketing prices compared to former President George W. Bush who was largely blamed for soaring hikes near the end of presidency in 2008.
"The numbers are fascinating… There were 280 network news stories" dealing with the issue of recent rising gas prices, Brent Bozell, president of Media Research Center, told Fox News. "Only three, three out of 280 mentioned the Obama administration's responsibility in this."
Bozell argued that the administration does deserve some blame for the prices since isn't looking at its own actions affecting higher gas costs.
"Whereas the Republicans wanted to drill more, and still want to drill more … drilling is down 13 percent in the last year," he said. "That is a huge, huge contributor to the problem we have of rising gas prices."
Fox News' Doug McKelway and The Associated Press contributed to this report.