Spiking West Coast Gas Prices Spur Cantwell, Feinstein, Wyden to Introduce Bill Targeting Fuel Market Anomalies Hurting Consumers

May 13, 2022

The Transportation Fuel Market Transparency Act will protect consumers at the pump by uncovering possible manipulation and penalizing cheaters up to $2 million per day

With Americans facing record level gas and diesel price increases, U.S. Senator Maria Cantwell (D-WA), Chair of the Committee on Commerce, Science, and Transportation, introduced legislation that would significantly increase transportation fuel market transparency and directs the Federal Trade Commission (FTC) to proactively monitor and prevent any fraud or manipulation that may be artificially inflating pump prices.  The legislation is co-sponsored by Senator Dianne Feinstein (D-CA) and Senator Ron Wyden (D-OR). The legislation will likely be considered at the Commerce Committee’s next Executive Session and Senate Majority Leader Schumer has publically committed to a Senate floor vote on the measure. 

“This legislation couldn’t come at a more needed time as drivers in Washington and all across the country face record breaking pump prices,” said Cantwell. “Americans are frustrated and bewildered by gasoline prices that keep going up even when oil prices drop and fossil fuel companies post obscene profits. Protecting American households and business requires forcing the same level of transparency in fuel markets that we successfully fought to secure in other energy markets. This legislation will put a full time policeman on the beat able to shine a bright light on the mysterious middle of gas markets and go after any bad actors that are exploiting consumers.”

“Americans are paying record-high gas prices while gas companies are raking in record-high profits. It’s time for this to stop,” said Feinstein. “As we continue to work toward energy independence by investing in clean energy sources, we also need to ensure there is greater transparency in the oil and gas markets to prevent price gouging.”

“The outrageous volatility of the oil and gas market goes far beyond legitimate free-market competition,” Wyden said. “This much is painfully clear: oil companies and middlemen are raking in profits while Americans from communities large and small struggle to afford record-high prices at the pump. This legislation provides much-needed transparency and oversight to reveal harmful price gouging that is devastating working families.”

The Transportation Fuel Market Transparency Act:

  • Strengthens Oversight. Enhances the FTC’s 2007 authority to go after false market information designed to artificially inflate retail prices at the consumers’ expense, including data submitted to private-sector price reporting agencies. Legislation broadens Commission’s oversight authority to cover the full range of transportation fuels, including biofuels.
  • Ensures Dedicated Market Monitoring. Establishes a new Transportation Fuel Monitoring and Enforcement Unit at the FTC devoted to protecting the public interest by continuously and comprehensively monitoring and analyzing crude oil, gasoline, diesel, home heating oil, and other petroleum distillate markets in order to facilitate transparent and competitive market practices.
  • Targets Bad Actors. The new unit at the FTC is also charged with identifying any manipulation, reporting of false information, use of market power or any other unfair method of competition employed to distort transportation fuel markets to accrue illegal profits, and advising the full Commission whether to go after the perpetrators and impose relevant penalties.
  • Increases Penalties. Doubles the maximum penalty for manipulating wholesale oil markets to $2,000,000 a day for each violation.
  • Improves Market Transparency and Competition. Directs the Energy Information Administration to collect, analyze, and publish more detailed information related to the quantity and pricing of transportation fuels in order to facilitate price transparency, fair competition, and compliance with relevant international sanctions. This data may also be used to facilitate enhanced FTC efforts to police the transportation fuel markets.

A one-page summary of the Transportation Fuel Market Transparency Act is available HERE.

Background information on Federal Anti-Market Manipulation Authority is available HERE.

The full bill text is available HERE.

Washington state currently has the fourth-highest gas prices in the country. According to AAA, today’s average price across Washington state is $4.92 per gallon, and just this week, gas prices soared above $5 a gallon for the first time in the Seattle-Bellevue metro area. According to a Seattle Times analysis of gas prices compiled by AAA, from 2017-2021, Washingtonians paid on average 45 cents more per gallon than the national average.

On April 5, 2022, Cantwell chaired a Senate Commerce Committee hearing that revealed a lack of oversight and visibility into petroleum trades that affect prices at the gas pump. The committee heard from energy expert Robert McCullough, who testified that benchmark indices used to price petroleum contracts across the West Coast market are based on transactions that are not on an exchange, not public, and not well understood.  

The Senator has long sought to protect consumers from unjustified energy prices. In the aftermath of Enron’s energy trading schemes, Cantwell authored an amendment to the Energy Policy Act of 2005 that strengthened the Federal Energy Regulatory Commission’s (FERC) authority to investigate and punish market manipulation in the electricity and natural gas markets.  

Since then, FERC has built a permanent cadre of internal energy experts that continually monitor and investigate anomalous market trends and suspicious behavior. These policemen on the beat have uncovered numerous exploitive schemes, to date approving 127 settlement agreements, assessing over $790 million in civil penalties and disgorging over $521 million in illegal profits. 

In the wake of the 2008 Financial Crisis, Cantwell authored legislation that gave the Commodities Futures Trading Commission (CFTC) similar anti-market manipulation authority and responsibilities in financially-settled energy commodity derivatives markets. Over the last decade, the Commission has used their anti-fraud and anti-market manipulation authority to prosecute more than 50 actions which have collectively imposed more than $4.5 billion in monetary relief.

A Cantwell addition to the 2007 Energy Bill gave the FTC virtually identical anti-market manipulation authority and responsibility to the Federal Trade Commission to oversee wholesale crude oil and petroleum markets.  However, unlike FERC and the CFTC, the FTC has only used their authority sparingly. As described above, the Transportation Fuel Market Transparency Act would significantly enhance the 2007 authority and establish a new unit within the Commission dedicated to overseeing transportation fuel markets, as well as direct the Energy Information Administration to collect the market data necessary to effectively monitor and police markets.