WASHINGTON, D.C. – As American consumers and businesses continue to look for relief from record high gas prices, today, U.S. Senator Maria Cantwell (D-WA) welcomed the Federal Trade Commission’s (FTC)  issuance of a proposed rule explaining how the Commission plans to protect consumers from manipulation in the crude oil and wholesale petroleum markets.  Cantwell was particularly pleased that the draft rule firmly embraced the legislative authority and responsibility Congress granted the FTC, and the Commission’s decision to adopt well-established regulatory tools utilized by agencies such as Securities and Exchange Commission (SEC), the Federal Energy Regulatory Commission (FERC), and the Commodity Futures Trading Commission (CFTC) in preventing manipulation in other commodity markets. 

Earlier this year, Cantwell and other members of Congress urged the FTC to expedite its use of this new regulatory responsibility to stop oil and petroleum market manipulation mandated in the 2007 Energy Bill.  The Cantwell-authored legislation established that it is the responsibility of the FTC to establish clear procedures to ensure that the U.S. petroleum market is as free from manipulation as possible, and authorized the Commission to impose civil penalties of up to $1 million per violation.  Utilized effectively, Cantwell believes this new authority will substantially augment consumer protections, help lower and stabilize prices, increase market transparency, and provide drivers the confidence that retail gasoline and diesel prices are free from the influence of anticompetitive practices and the exercise of market power. 

 

 “Today’s out of control petroleum markets can’t be explained by normal market fundamentals, and I hope that aggressive action by the Federal Trade Commission can burst the energy price bubble that is burdening American families and dragging down our economy,” said Cantwell.  “Every American sees the smoke, and this proposed rule is a down payment on the fire engine we need to put out record high pump prices.” 

Over the last several years, several major energy companies including Amaranth, Marathon Oil, and British Petroleum among others have been under federal investigation for manipulation of petroleum and natural gas markets.  For example, as a result of an investigation involving British Petroleum, that company must now pay approximately $303 million for conspiring to corner the market and manipulate the price of propane carried through Texas pipelines. Similarly, in the summer of 2006, a manipulative scheme to game the natural gas market by the now defunct hedge fund Amaranth cost consumers upwards of $9 billion. In July of last year, Marathon Oil Corporation agreed to pay a $1 million fine to the Commodity Futures Trading Commission to settle charges that its Marathon Petroleum Company subsidiary attempted to manipulate crude oil prices in 2003.   

 

“By establishing a clear bright line distinguishing healthy market practices from illegal manipulation, we can help restore a functional oil and gasoline marketplace where pump prices are fair and affordable. I encourage every American who believes manipulation may be behind today’s record high gasoline and diesel prices to write the Federal Trade Commission to encourage them to issue the strongest final rule possible,” said Cantwell.

Over the years, Cantwell has worked to increase transparency and root out manipulation in the energy markets, including helping secure anti-manipulation provisions in the Energy Policy Act of 2005 to provide Federal Energy Regulatory Commission (FERC) expanded authority over manipulation in the electricity and natural gas markets.  Last December, Cantwell’s legislation banning manipulation in the oil and petroleum markets became part of the 2007 Energy Bill.  During an April 8, 2008 Senate Commerce Committee hearing, Cantwell grilled FTC Commissioners about the status of the rulemaking and announced her intention to send a letter to the FTC, along with Commerce Committee Chairman Daniel Inouye (D-HI) and Senators Olympia Snowe (R-ME), Byron Dorgan (D-ND), and Gordon Smith (R-OR) asking them to aggressively and urgently implement this new responsibility.  Senator Cantwell also chaired a landmark Senate Commerce Committee hearing on June 3, 2008 on the FTC’s Advanced Notice of Proposed Rulemaking.

 

 

 

# # #