Obama Eyes Speculators for Rising Gas Prices, as Other Factors Play Role

AP

Wednesday: President Obama speaks during a town hall meeting at Facebook headquarters in Palo Alto, Calif.

With gas prices surging to $4 a gallon, one of President Obama's solution to break the back of rising costs is to have Attorney General Eric Holder form a task force to examine alleged fraud or manipulation of oil markets.

"We are going to make sure that no one is taking advantage of the American people for their own short-term gain," Obama said to applause at a town hall-style meeting at a renewable energy plant in Reno, Nev., on Thursday.

But commodity analysts are skeptical of the president's plan.

"This is a transparently political fishing expedition that insinuates that fraud or manipulation is distorting oil prices without providing even the flimsiest factual basis for such a suspicion," said Craig Pirrong, a finance professor at the University of Houston who specializes in commodity prices. 

The national average price for a gallon of regular gasoline was $3.84 on Thursday, about 30 cents higher than a month ago and almost a dollar higher than a year ago.

For Americans, who on average buy about 500 gallons of gasoline a year, that's an extra $500 from their wallets. 

But that's not the only way consumers are hit by higher gas prices. More expensive oil imports means increases in the cost of food, airline tickets and products shipped or trucked from far-away locations, among other expenses. 

At his town hall, Obama bemoaned the higher price "at a time when things were already pretty tough." He renewed his proposal to end roughly $4 billion annually in various government subsidies to oil and gas companies "at a time when they're making record profits and you're paying near record prices at the pump. It has to stop."

But without congressional support for that plan, his primary tool right now appears to be the task force. 

The Financial Fraud Enforcement Working Group will focus some of its probe on "the role of traders and speculators" in the oil-price surge, Obama said, and will include several Cabinet department officials, federal regulators and the National Association of Attorneys General.

In a memo accompanying a statement announcing the task force, Holder promised to "be vigilant in monitoring the oil and gas markets for any wrongdoing so that consumers can be confident they are not paying higher prices as a result of illegal activity."

But he suggested a variety of legal reasons may be behind the spike in gas prices.

"Based upon our work and research to date, it is evident that there are regional differences in gasoline prices, as well as differences in the statutory and other legal tools at the government's disposal," Holder said. "It is also clear that there are lawful reasons for increases in gas prices, given supply and demand.

"Nonetheless, where consumers are harmed by unlawful conduct that has the effect of increasing gas prices, state and federal authorities will take swift action," Holder said, without citing any current evidence of intentional manipulation of oil and gas prices or fraud.

Stephen Moore, a senior economic writer for the Wall Street Journal editorial board and founder of the Club for Growth, said aside from the Middle East, part of the problem is Federal Reserve policy, which he describes as inflationary because it is pushing extra dollars into the economy.

"We're seeing inflationary effects through these gasoline prices but we're also seeing it in gold prices, copper prices and food prices. So I think (Federal Reserve Board Chairman) Ben Bernanke is as much responsible for these high gasoline prices as anyone," Moore said.

A McClatchy-Marist poll this month found that 36 percent of respondents blame tensions abroad for rising gas prices while 33 percent blamed oil companies. Eleven percent blamed Obama and Democrats, and 6 percent pointed to congressional Republicans. The nationwide poll of 1,274 adults was conducted April 10-14 with a margin of error of 3 percent.

Indeed, with the 2012 campaign ramping up, the White House is eager to show voters it's taking action to tackle rising gas prices. But Pirrong said the task force is hardly needed since the agencies already have tools to monitor for fraud and to take action.

"This is part of a broad effort by the administration to deflect criticism with regard to gasoline prices," he said.

As Obama targets traders, some media analysts argue that he is getting a free ride on the skyrocketing prices compared to former President George W. Bush who was largely blamed for soaring hikes near the end of presidency in 2008.

"The numbers are fascinating

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Study: Spare time, drinking factors into school performance

And what about the students at elite colleges, known for their "work hard, party hard" ethos, who may use substances but make great grades while doing so? Turns out, they're not immune. "I was able to exactly replicate the previous finding with the work-hard, play-hard students," Wyatt said. "Although their grades are inflated to the point where they look super-smart ... you have to realize that they're probably still not recognizing their full potential."

That assertion caused some grief for Wyatt when he took it to a few Ivy League colleges (which he declined to identify). Officials at two of them blew him off, he said, saying that their students still get better grades than anyone else, so who cares?

Other colleges cannot even attempt to make that argument. There has been a decades-long decline in how much students study, Wyatt showed. In the 1960s, college students spent 24 hours a week studying. As of 2005, that number had dropped to 11. There are potential positive implications to students studying less: they're more socially competent, spending more time on leisure and sports, and participating in dynamic learning methods like group work.

But there are negative consequences, too: increased substance use, decreased academic engagement, and decreased professional preparedness. (Wyatt recalled his students in a developmental psychology class, who included text jargon and emoticons in their reflection papers.) "One of the main reasons why students aren't spending as much time studying is they don't know how to study," Wyatt said. "They don't know how to study efficiently."

To that end, Wyatt said, the most important thing to take away from his research is the importance of effective tutoring. "Although tutoring has been proven time and time again," he said, "it's a really hard nut to crack, simply because students resist it almost like it's a sickness. They see it almost as a punishment."

Some colleges are urging students to make tutoring appointments rather than agreeing to visit the lab during open hours. One college this year added an extra resident assistant on each floor of its freshman dorms, plus one "floater RA" per building who visits every room every night to talk with students about their studies. In this way, the RA forms a relationship with the resident and acts as an informal tutor/supervisor to students who might not otherwise seek help. The college, which Wyatt declined to identify because it plans to publish its own study on the experiment, has seen a decline in emergency room visits, campus vandalism, alcohol violations and sexual assault.

Mark Gehrke, a student at Boise State University, said he started a tutoring program at his fraternity this semester, and the average member's grade point average is now 3.5. When other Greek organizations saw the grades of those students, he said, almost all of them added in-house tutors. Gehrke also reinforced the idea that campus activities reduce the negative effects of drinking: when Gehrke got involved in student government, he said, it set his priorities in order, and that newfound passion trickled over into his classroom performance. Offering opportunities for students to socialize on-campus without alcohol — and doing so with something more compelling than "free pizza" — is a great way to improve student success, Wyatt said.

Officials at the session also expressed interest in using the study as a warning sign for new students and their parents — a red flag at freshman orientation to show that, "if you want to succeed," as Wyatt put it, "these are the two main predictors: studying hard and staying off the bottle. That's it."

Some attendees suggested other ideas to improve academic outcomes. "Having worked in housing for 13 years, I'm always thinking about how students spend their time," said Kevin Michael Kerr, general manager of student housing at Greenville Technical College, in South Carolina. At Greenville, starting next year, all students who intend to eventually transfer to a four-year degree program will be required to take a class in which they re-learn how to study and think critically. Halfway through the class's first semester, students are already coming back with better grades.

Wyatt approved. "Educating students to study better is the crux of our entire academic system," he said. "Just being able to say, 'You need to study more' isn't enough. You need to study better."

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