FTC Launches Oil-Trade Probe

The Wall Street Journal, Tennille Tracy and Jerry Dicolo

Regulators are examining whether oil companies, refiners or traders have manipulated crude-oil markets, the latest government action spurred by the rise in fuel prices this year.

The Federal Trade Commission on Monday said in a letter to Sen. Maria Cantwell (D., Wash.) that it has launched an investigation to determine whether oil-market participants engaged in anticompetitive practices or manipulation, or provided false information to federal agencies about the price of crude oil. Sen. Cantwell has been a proponent of further regulatory scrutiny of the energy markets.

The agency plans to review how refinery operators decided to shut some equipment for maintenance, which sometimes leads to higher gasoline and diesel prices, among other matters. The FTC also is looking at the practices of firms owning pipelines and other transportation and storage infrastructure. The FTC declined to comment.

The investigation by the FTC underscores the renewed drive by regulators to demonstrate they are serving as watchdogs in the crude-oil market.

In April, the Obama administration launched a joint task force, which includes the FTC and is led by the Justice Department, to investigate the oil and gas markets. The Commodity Futures Trading Commission last month brought charges against two oil traders at Arcadia Petroleum Ltd., alleging they manipulated the physical and financial oil markets in 2008. Arcadia said it plans to fight the charges.

U.S. oil prices' discount to Europe's Brent benchmark has created the illusion of windfall profits for refineries, although few have access to cheaper crude priced off New York Mercantile Exchange contracts. A buildup of crude inventories in the Midwest has pushed down Nymex prices compared with Brent, and the price difference last week hit records above $20.