As Connecticut's attorney general, Richard Blumenthal used to be able to get his shot of publicity by filing populist, anti-business lawsuits. Now as a junior member of the U.S. Senate, he's forced to seek publicity in other ways, introducing outrageous charges of possible criminality in his campaign against the oil industry. From The Hill, "Grand jury floated to probe gas prices":
Sen. Richard Blumenthal (D-Conn.) on Sunday called for an aggressive federal probe - including a possible grand jury - into whether rising gasoline prices stem from illegal manipulation of energy markets....
Blumenthal, Connecticut's former attorney general, said on CBS' "Face the Nation" that federal officials need to play hardball.
"I commend and applaud the president for focusing on this issue but I think there really needs to be an investigation involving, for example, subpoenas and compulsory process which I used as attorney general in similar investigations. There needs to be very possibly a grand jury to uncover the potential wrongdoing," said Blumenthal, who was elected to the Senate last year.
Blumenthal is a member of the Senate Judiciary Committee, and you would expect Chairman Patrick Leahy to hold hearings to attack "Big Oil" soon enough.
The political posturing that historically accompanies rising gas prices has gotten even more twisted this year than in the past. Last week President Obama announced that Attorney General Eric Holder would lead a task force, as described in his Saturday radio address, "with just one job: rooting out cases of fraud or manipulation in the oil markets that might affect gas prices, including any illegal activity by traders and speculators." Holder touted his effort at the White House blog and promoted it at the dispassionately named web site, StopFraud.gov.
Why turn to the Department of Justice when the Federal Trade Commission already has the expertise in investigating oil pricing and speculation? A reasonable conclusion is that the White House wants a political document with pre-ordained conclusion, because factual studies have previously disproved allegations of speculation. Here's what the FTC concluded in its study of pricing in the wake of Hurricane Katrina, a report released in May 2006.
In its investigation, the FTC found no instances of illegal market manipulation that led to higher prices during the relevant time periods but found 15 examples of pricing at the refining, wholesale, or retail level that fit the relevant legislation's definition of evidence of "price gouging." Other factors such as regional or local market trends, however, appeared to explain these firms' prices in nearly all cases. Further, the report reiterated the FTC's position that federal gasoline price gouging legislation, in addition to being difficult to enforce, could cause more problems for consumers than it solves, and that competitive market forces should be allowed to determine the price of gasoline drivers pay at the pump.
A separate study in 2008 by the Commodity Futures Trading Commission found that financial trading had not driven price moves in the oil market. (See Wall Street Journal editorial, Sept. 15, 2008, "See You Later, Speculator.")