WASHINGTON (CN) – The Federal Trade Commission has made it illegal for any person involved in wholesale purchase or sale of petroleum products to knowingly engage in any act, practice, or course of business – including making any untrue statement of material fact or intentionally failing to state a material fact – that may distort market conditions for petroleum products.
“This new [r]ule will allow us to crack down on fraud and manipulation that can drive up prices at the pump,” said FTC Chairman Jon Leibowitz. “We will police the oil markets and if we find companies that are manipulating the markets, we will go after them.”
Examples of such conduct cited by the agency include false public announcements of planned pricing or output decisions, false statistical or data reporting, and wash sales intended to disguise the actual liquidity of a market or the price of a particular product. Violators of the new regulations will be subject to fines of $1 million a day.
To make sure suppliers and traders comply with the new rules, the FTC plans to monitor and investigate refinery inventory reports filed each week the Energy Department. Some industry insiders are afraid that the rule will make the petroleum market less transparent as suppliers will only provide information required by government reports to avoid any disclosure that might be used against them later.