President Obama announced Thursday that his administration will investigate whether fraud or manipulation in oil markets is behind the sharp increase in gasoline prices.
"We are going to make sure that no one is taking advantage of the American people for their own short-term gain," Obama said at a town hall-style meeting in Reno, Nev.
He said a government task force directed by Attorney General Eric H. Holder Jr. would "root out any cases of fraud or manipulation" in gasoline prices, "and that includes the role of traders and speculators."
Financial speculation is widely considered a possible reason for higher oil prices. Despite turmoil in the Middle East, there has been no significant interruption of oil production. Meanwhile, financial institutions have been purchasing contracts for future oil delivery as an investment strategy, driving up prices.
Other factors contributing to rising oil prices are thought be a fear of future supply interruption because of the troubles in the Mideast and projections of more demand for oil.
Obama is under political pressure to address gas prices that are nearing an average of $4 a gallon.
In Washington, Holder said a Financial Fraud Enforcement Task Force Working Group, comprising regulators from several federal agencies, would focus on fraud in energy markets. An Oil and Gas Price Fraud Working Group would investigate oil and gas markets for potential violations of civil or criminal laws. It also will examine commodities markets and the role of speculators and index traders in oil futures.
Speculation has been on regulators' minds as oil prices climbed from about $80 a barrel late last year to more than $112 on Thursday.
A regulator whose agency will participate said the task force isn't for public relations purposes alone. When oil prices soared in the past, prosecutors tried to make examples of gas station owners or middlemen profiting from high prices. This task force is looking at financial markets and seeking much bigger targets.
"We are definitely looking at trading in the markets that isn't nickel-and-dime stuff. They're big enough that we would want the Justice Department involved. We would want people potentially to go to jail," said the regulator, who spoke on condition of anonymity.