- The Washington Times - Thursday, August 14, 2008

The Federal Trade Commission proposed new rules that would levy stiff fines for manipulation in the petroleum markets.

The plan seeks to deter “fraudulent or deceptive conduct,” including false reporting or misleading announcements by refineries, pipelines or investment banks, the FTC said. Violators could face civil penalties of up to $1 million per violation per day.

“The Federal Trade Commission is committed to exercising its authority to determine whether crude oil, gasoline or petroleum distillates price increases at wholesale are a result of illegal market manipulation,” said FTC Chairman William Kovacic.

The FTC has been under pressure from Congress to police manipulation using powers it was granted in energy legislation last year. In May, the agency took a first step toward crafting new rules by soliciting public comments.

Wednesday’s action, which the FTC commissioners approved 4-0, again requests public comment. The commission said it may adopt a rule by the end of the year.

Sen. Maria Cantwell, Washington Democrat, welcomed the proposal.

“Today’s out-of-control petroleum markets can’t be explained by normal market fundamentals,” Ms. Cantwell said. “I hope that aggressive action by the Federal Trade Commission can burst the energy price bubble.”

In previous gasoline price jumps over the past decade, FTC investigations didn’t uncover evidence of widespread anti-competitive practices. Oil industry analysts have questioned whether traders have the power to raise prices and argue that speculation is a symptom, not a cause, of high oil prices, which are set on the world market.

Pump prices have dropped 22 of the past 24 days, according to the AAA, the nation’s largest motorist organization. The nationwide average price of a gallon of regular gasoline fell 1.2 cents Tuesday to $3.787 a gallon.

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