WASHINGTON — The nation's top regulator of oil trading announced Tuesday the creation of a special federal task force to study the role of speculators and the investment practices of large institutions that critics think are running up oil prices.
The announcement came as a special advisory committee went before the Commodity Futures Trading Commission to discuss ways to make the oil markets more transparent. Increasing reporting requirements and other transparency measures would reduce concerns that oil traders are manipulating the trading of contracts for future delivery of oil, called futures, in ways that drive up oil prices. The CFTC announced in late May that it was investigating whether there has been price manipulation during this year's steep run-up in global oil prices.
With the average price of gasoline nationwide now above $4 a gallon, Congress is studying a number of measures to quash what many think is speculative behavior that is pushing up oil prices. The CFTC, which regulates the futures markets, has said it doesn't believe that speculation causes today's high oil prices but has promised that the task force will take a deep look.
"It is intended to bring together the best and brightest minds in government to aid public and regulatory understanding of the forces that are affecting the functioning of these markets and it will strive to complete its work quickly and make public its results," CFTC Chairman Walter Lukken said.
Critics dismissed the task force as a public relations move that won't lower prices.
"That's a great way to appear to be doing something when you are not," said Michael Greenberger, a University of Maryland law professor who was the CFTC's director of trading during the Clinton administration.
The new task force will include representatives from the Federal Reserve, the Treasury Department, the Securities and Exchange Commission and the Departments of Energy and Agriculture. The task force will examine investor practices, fundamental supply and demand factors and the role of speculators and index traders in commodity markets.
Treasury Secretary Henry Paulson suggested Tuesday that supply and demand forces alone are to blame for today's record prices.
Bart Chilton, a CFTC commissioner, said that Paulson spoke too soon.
"Perhaps the secretary has a crystal ball, but I don't, and given what I'm seeing and hearing in the markets and from market users, that seems to be a premature determination, at best," Chilton said in prepared remarks. "At worst, I think it would be a dereliction of our duties for us, the overseers of these markets, to ignore other possible reasons for price run-ups, and continue to fall back on reliance on 'fundamentals.' "
The leaders of Saudi Arabia have said that today's high prices aren't justified by market fundamentals "and I think the Saudis know a little bit about the oil markets," Chilton noted.