The Transportation Fuel Market Transparency Act can protect consumers at the pump by uncovering and penalizing market manipulators

WASHINGTON, D.C.— Today, the U.S. Senate Committee on Commerce, Science, and Transportation advanced Senator Maria Cantwell’s (D-WA) Transportation Fuel Market Transparency Act, which would significantly increase transportation fuel market transparency and direct the Federal Trade Commission (FTC) to proactively monitor and prevent any fraud or manipulation that may be artificially inflating pump prices. The legislation, which incorporated five amendments offered by Commerce Committee Republicans, is expected to be voted on by the full Senate during the next work period. 

Senator Cantwell, who chairs the Senate Commerce Committee, said the following at today’s Committee Executive Session:

“The rising prices of fuel is wreaking havoc on consumers,” Senator Cantwell said. “The issue before us today is whether the FTC should have every tool possible to make sure that oil market manipulation in the petroleum sector is properly transparent.”

The reported 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 consumer’s 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.
• 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.

Earlier this month, Democrats in the U.S. House of Representatives introduced different legislation to prevent price gouging at the pump. A fact sheet explaining the differences between the Senate (S. 4217) and House bills (H.R. 7688) is available HERE.

Senator Cantwell’s legislation advances just one day after the New York Times reported that Glencore, a giant multi-national firm, will pay over $1.1 billion for manipulative and fraudulent conduct that went on for over 11 years and involved the head of Glencore’s oil group. During an exchange with Ranking Member Wicker, Senator Cantwell said, “The public deserves to know that we are fighting for transparency in oil markets, and that transparency, just as our Attorney General and every agency, the Department of Justice, the CFTC and others are doing, that we are also making sure that there is transparency in these 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 for S. 4217 as introduced is available HERE.

Video of Senator Cantwell’s remarks from today’s markup is available HERE, audio HERE, and a transcript HERE.

Washington state currently has the fourth-highest gas prices in the country. AAA reports that today, the average price across Washington state is $5.21 per gallon. 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 $5.7 billion in monetary relief. This Cantwell legislation played a key role in enabling the CFTC to pursue its record setting crackdown on Glencore’s decade long manipulation of oil markets which resulted in over $320 million in improper gains.

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.