Wall Street Gets Some Blame for Pain At the Pump

Obama revives efforts to combat unfair oil price speculation, but some doubt it will help much.

By + More

Filling up at the gas station recently, you might have noticed that prices at the pump are going up—a lot.

And while the White House and its Republican rivals would like you to think it's just a problem with supply and demand, there's another factor at work that's influencing the price per gallon.

"You guys have been hearing about what's happening with Iran; there are other oil producers that are having problems. And so people have gotten uncertain," President Obama said in a recent address. "And when uncertainty increases, then sometimes you see speculation on Wall Street that drives up gas prices even more."

As anxiety over the future stability of the oil industry has mounted, oil speculators—all sorts of players including oil refiners, transporters, and traders—bid up the price of crude oil, which accounts for about 70 percent of the ultimate price of a gallon of gas, according to the Energy Information Administration.

[Check out today's best photos.]

So the White House has asked Attorney General Eric Holder to "reconstitute" a working group that investigates fraud related to oil and gas prices speculation, according to various reports. The Oil and Gas Price Fraud Working Group, a subsidiary of the Financial Fraud Enforcement Task Group, has met seven times since its inception in 2011. The group meets again Friday, according to the Department of Justice, to address mounting concerns that unfair oil price speculation could be playing a big role in driving up the prices consumers see at the pump.

The group itself has no enforcement authority, but instead brings together various government agencies that monitor the oil and gasoline industries, including the Federal Trade Commission, the Departments of Agriculture and Energy, and the Federal Reserve Board. It's mission? To increase "cooperation between investigators and government officials, so we can vigorously enforce state and federal laws against collusion, manipulation and other forms of wrong doing," Holder said in statement in 2011.

"If illegal conduct is responsible for increasing gas prices, state and federal authorities should take swift action," he added.

[Read: Rescinding Jones Act First Step to Lowering Gas Prices.]

It all sounds good on paper, but is the working group doing anything to ease the pressure of high gas prices on consumers' wallets? Sort of.

At the behest of several members of Congress, the FTC launched an investigation last summer into whether skyrocketing prices at pump were the result of unfair competition or market manipulation. But, more than eight months later, the panel hasn't yet concluded its investigation.

The working group has also been able to leverage the power of the Dodd-Frank Act through the U.S. Commodities and Futures Trading Commission, instituting regulations aimed at "preventing excessive speculation in commodity markets such as oil and gold," according to Reuters. Several financial industry groups have unsuccessfully challenged the rule.

But the impact of their efforts might be limited, some observers say, especially in the fast-paced trading world of today where $100 million in oil futures can trade hands in mere seconds.

[Read: How Obama Can Deal With Rising Gas Prices.]

"I think the genie's out of the bottle and I don't know how you can get that genie back in," says Tom Kloza, chief oil analyst at the Oil Price Information Service. "We have electronic trading, which passes through dozens and dozens of countries. It's very, very difficult to regulate. Even if you could regulate it in the U.S., how would that stop investment flows from Asia and all of these other countries?"

Unfortunately, that means the working group probably won't get much done in they way of protecting consumers from the evils of oil price speculation, he says. That's just not the way the markets work.

"The price of oil is like a beer," Kloza says. "You've got the beer itself, but then you'll always have a head on the beer and we certainly saw the froth [with oil prices] in 2008 and now coming from money chasing money."