New report says gas prices are susceptible to manipulation by oil companies

Next week marks the two-year anniversary of the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Dodd-Frank is the bill President Obama signed into law to protect consumers and rein in risky Wall Street behavior after the housing and financial crisis made clear that the world of finance is rigged to benefit the top 1% at the expense of the rest of society. Oil prices also are susceptible to manipulation, according to a new report.

The most recent financial scandal revolves around revelations that the London InterBank Offered Rate (LIBOR) was rigged by the big banks. Now, the British prime minister, members of parliament and activists are urging regulators to expand their investigation of LIBOR manipulation and to look at whether banks also manipulated oil prices.

Calls for investigation have cited a recent report by the International Organization of Securities Commissions (IOSCO), which found that oil prices are “susceptible to manipulation or distortion.” The report went on to state that, as is the case with LIBOR manipulation, traders in oil derivatives have an opportunity “to submit a partial picture…in order to influence the assessment to the trader’s advantage.”

American workers all over the United States have experienced how rising gas prices can eat away at their incomes and cause financial hardship.

Despite these concerns, Republicans in Congress are pushing measures to hamstring the U.S. regulators responsible for fighting this type of bad behavior. They are pushing to withdraw critical funding from the U.S. Commodity Futures Trading Commission (CFTC), the U.S. regulator leading the charge against LIBOR manipulation and responsible for policing the oil derivatives markets.

House Republicans also are expected to move legislation next week that will create additional roadblocks for regulators implementing the financial reform bill. The package of bills, called the “Red Tape Reduction and Small Business Job Creation Act,” includes legislation that adds an array of onerous requirements to the already existing statutory cost-benefit requirements. The legislation effectively will paralyze the CFTC’s rule-writing ability. This would derail the CFTC’s progress in implementing rules like those designed to prevent excessive speculation that drives up prices for gas and other commodities. –http://www.aflcio.org/Blog/Economy/New-Report-Says-Gas-Prices-Are-Susceptible-to-Manipulation-by-Oil-Companies#.UAkTa4TH79g.mailto