FTC probes possible oil market manipulation
WASHINGTON (Reuters) - The Federal Trade Commission is investigating whether oil companies have engaged in anticompetitive practices or manipulated crude oil prices, the government's latest salvo to rein in high energy prices.
The commission said on Monday it was also looking into whether oil companies had provided false or misleading information to a federal agency related to the wholesale price of oil or petroleum products.
"We remain committed to preventing and prosecuting any anticompetitive, fraudulent, or otherwise illegal activity which we identify through the foregoing investigation," commission Chairman Jon Leibowitz said in a letter to Senator John Rockefeller, who called on the FTC in March to launch an investigation.
As part of the probe, the commission has authorized the use of a "compulsory process," an action that allows the agency to require people to submit information.
"This is ratcheting up the investigation, obviously," a lawyer who practices in the area told Reuters.
The commission said its probe was spurred by soaring refining margins and reports that U.S. refiners were using less of their capacity than they did last year, as well as other developments.
Earlier this year the Obama administration set up a task force of federal and state agencies, including the FTC, to help identify unlawful conduct in oil and gasoline markets.
FTC UNDER PRESSURE
With oil prices spiking this year, federal regulators have faced pressure to probe for wrongdoing.
Rockefeller, a Democrat from West Virginia, and other lawmakers pressed the commission in March to use its authority to crack down on any market manipulation that could be artificially inflating prices.
U.S. oil prices have fallen nearly 20 percent since reaching highs around $114 in late April.
Last month, another group of senators asked the FTC to probe whether U.S. refiners are cutting gasoline production to keep pump prices high.
One reason the FTC opened the probe was that U.S. refiners were using only 81.7 percent of their capacity as of early May, 7 percent less from the same period in 2010, according to the Energy Information Administration.
More recent EIA data for the week ended June 10 shows refineries running at 86.1 percent of capacity, down 1.8 percent from a year ago.
Oil traders and analysts have blamed the low runs on diminished demand for gasoline caused by the weak economy and greater ethanol use. They said the high margins were only available to a select few refiners that can take advantage of a glut of cheap mid-continent crude.
A refiners trade group said this FTC investigation was a waste of taxpayer dollars that would not yield any results.
"Dozens of investigations of gasoline price fixing over the years have generated plenty of headlines and political hyperbole, but have failed again and again to find any evidence of wrongdoing," said Charles Drevna, head of the National Petrochemical & Refiners Association.
(Reporting by Ayesha Rascoe; Editing by Lisa Shumaker)
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