Cantwell Praises Obama Administration’s Creation of an Oil and Gas Price Fraud Task Force

Cantwell: ‘This task force brings together all relevant agencies to fight for consumers’

WASHINGTON, D.C. – Today, U.S. Senator Maria Cantwell (D-WA) released the following statement in response to Attorney General Eric Holder announcing the formation of a Financial Fraud Enforcement Task Force Working Group to focus specifically on fraud in the energy markets, monitoring oil and gas markets for violations that would harm the consumer.

“I applaud President Obama and Attorney General Holder for creating a task force to crack down on potential oil market manipulation. This task force brings together all the relevant agencies, including the CFTC and the FTC, to fight for consumers. It will also bring the strong investigative and prosecutorial power of the Department of Justice.

“Just last month, I asked the Federal Trade Commission to investigate oil markets using its new market manipulation law. I’m pleased to see President Obama and Attorney General Holder take action on behalf of consumers and move this idea forward. 

“But there is still more that should be done. The Commodity Futures Trading Commission is still more than three months late in enacting rules that would rein in excessive speculation. Speculators have flooded the oil markets, with speculation up 64 percent since 2008. Americans are hurting at the pump, and the CFTC needs to act now.”

Thanks to legislation Cantwell championed that gave new authorities to the FTC and CFTC, the Attorney General’s Financial Fraud Enforcement Task Force Working Group will have the tools to investigate and, where there is evidence, prosecute for fraud or manipulation of oil prices in wholesale and futures markets.

Cantwell wrote the law making market manipulation illegal in wholesale oil markets. Her legislation, which became law in 2007 but didn’t go into effect until late 2009 when the FTC finalized its rulemaking process, empowers the FTC to levy civil penalties of up to $1 million per day. Just last month, Cantwell sent a bipartisan letter to the FTC calling on the consumer protection agency to be more proactive and aggressive in enforcing its market manipulation rule to meet its responsibility to protect consumers. Cantwell called for an investigation to ensure skyrocketing prices at the gas pump are not the result of market manipulation or other anticompetitive behavior. 

And last year during the Wall Street reform debate, Cantwell pushed for new rules to prevent price distortion and manipulating the oil market. She fought to ensure the bill strengthened the CFTC's market manipulation law and required the CFTC to enact position limits to diminish, eliminate or prevent excessive speculation that disrupts the market. Mandatory speculative position limits, which the CFTC is in the process of setting now, and strong anti-manipulation tools in the futures market were main contributors to Cantwell’s eventual support of the Wall Street reform law. But the CFTC is now three months late in establishing the new speculative position limits. In a letter sent last month, Cantwell urged the CFTC to crack down on oil speculation that is likely contributing to a recent spike in gas prices. And just this week, Cantwell called on the CFTC to not delay any further in implementing long overdue rules to crack down on excessive oil market speculation that may be contributing to artificially high gas and diesel prices across the country.

Cantwell has long fought to prevent market manipulation and excessive speculation from artificially driving up the price of oil and prices faced by consumers at the pump. As far back as April 2008, Cantwell was calling for the creation of a Department of Justice Oil and Gas Market Fraud Task Force to examine fraud and manipulation of oil and gas markets. Cantwell sent a letter along with Congressman Jay Inslee (D-WA-01) to President George W. Bush and Attorney General Michael Mukasey urging the new task force be created immediately; however, their call was not met.

Cantwell brought to the larger financial regulatory reform effort the knowledge she gained from a decade of fighting to protect Washington state ratepayers, including her historic battle to expose the ways Enron manipulated West Coast electricity markets to jack up prices. Using the lessons learned, Cantwell helped author provisions in the 2005 Energy Bill that made it a crime to manipulate electricity or natural gas markets. To date, the Federal Energy Regulatory Commission (FERC) has used the law to conduct 93 investigations resulting in 45 settlements and civil penalties of $122,230,000 and disgorgement of profits totaling $35,945,000. Cantwell also secured a provision in the Energy Policy Act of 2005 that prevented a bankruptcy court from forcing Snohomish Public Utility District (PUD) and its customers to pay millions of dollars in termination fees for electricity that was never delivered. This measure reaffirmed FERC’s authority to decide whether charges related to manipulated power contracts could be deemed invalid.