Administration Goes on Fruitless Quest to Find Oilus Manipulatus
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Oilus Manipulatus: A unique species of financial creature that surfaces periodically, usually just before the summer travel season starts. It is said to have a unique ability to feed off of Ameicans’ wallets by boosting oil and gas prices. Its habitat is thought to be commodities trading pits in lower Manhattan and Chicago as well as in front of Bloomberg terminals in random metropolitan areas around the country.
Under pressure to take action on rising gasoline prices, President Obama on Tuesday will ask Congress to implement a plan that entails strengthening federal supervision of oil markets and increasing penalties for market manipulation, a senior administration official confirms to CBS News.
Senior administration officials who put together the proposal said it aims to detect and deter illegal manipulation by energy speculators, the type of practices that many Democrats blame for the high cost of gasoline. The officials spoke on the condition of anonymity to discuss the plan ahead of Obama's announcement.
They would not go as far as to say that market manipulation is responsible for rising gas prices, but the officials said they wanted to curtail the ability of speculators to take unlawful advantage of oil price volatility.
At issue is the increasing role of investment in oil futures contracts by pension funds, mutual funds, hedge funds, exchange traded funds and other investors. Much of that money is betting that oil prices will rise. Analysts say it is possible that such speculation has somewhat inflated the price of oil.
I only need to go back one month. In March, the President asked Attorney General Eric Holder to “reconstitute” a task force investigating oil and gas speculation. It seems they were having trouble locating the nesting place of Oilus Manipulatus, or they didn’t do much of anything as reported byMcClatchy Newspapers:
The Oil and Gas Price Fraud Working Group has met only four or five times since its creation last April 21 , and most of those meetings came at the time of its inception.
Oilus Manipulatus is a difficult creature to spot in the wild. That’s because, as National Journal, reported, the Commodity Futures Trading Commission found in 2008 that “speculation has little effect on the price of oil, which is still largely driven by the fundamentals of supply and demand.”
In the end, these task forces, investigations, and snipes hunts will do nothing to lower energy prices. In fact, they might actually make oil prices more volatile.
Good federal policy can affect oil and gas prices. Institute for 21st Century Energy president and CEO Karen Harbert told the House Science Committee today, that expanded domestic oil development on private, state, and federal lands can be “a signal to the global energy market that the U.S. is committed to accelerating the development of its vast conventional and unconventional oil resources .” That would be more effective than ceaseless quests to find Oilus Manipulatus.