WASHINGTON — With the price of crude oil hovering near $110 a barrel and gasoline prices at record levels, a Washington senator says federal regulators need to stop delaying and start investigating whether petroleum markets are being manipulated.
Democratic Sen. Maria Cantwell said the Federal Trade Commission should move quickly to implement a provision she inserted in a national energy bill approved by Congress late last year that gives it authority to investigate whether excessive speculation and manipulation have driven up prices.
"Their response has been tepid," Cantwell said in an interview. "They said they want to work with us, but they need to get in the game."
Cantwell said the FTC response wasn't surprising. 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."
An FTC spokesman, Frank Dorman, declined to comment.
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.
In 2005, Cantwell persuaded Congress to adopt a law that banned manipulation in the electricity and natural gas markets and ordered the Federal Energy Regulatory Commission to enforce it. The law came in the wake of the West Coast energy crisis of 2000-2001 during which electricity prices in Washington, Oregon and California rose steeply amid allegations that Enron Corp. and other energy marketers had schemed to manipulate wholesale prices.
Since then, FERC has conducted 64 investigations that have resulted in 13 settlements involving the payment of $40 million in civil fines, Cantwell said. FERC also pursued two enforcement actions that resulted in the payment of nearly $460 million in fines.
FERC wrote and implemented its market manipulation rules in six months, according to Cantwell.
"That speaks to the fact if you are motivated, you can get it done," she said, adding that while she didn't know whether petroleum companies have engaged in the same type of manipulation tactics that Enron did, "I think there are things that are happening out there."