Justice Department group tasked with monitoring oil prices

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As gas prices across the nation inch higher, the Obama administration will investigate the energy markets for any evidence of manipulation of oil and gas prices through the formation of a new group, the Department of Justice announced Thursday.

With the average price of a gallon of gas at about $3.84 this week, almost a dollar higher than a year ago, according to the Department of Energy, the Oil and Gas Price Fraud Working Group will search for incidents of fraud and collusion in addition to price manipulation.

“The attorney general’s putting together a team whose job it will be to root out any cases of fraud or manipulation in the oil markets that might affect gas prices – and that includes the role of traders and speculators,” President Obama said at a town hall meeting in Nevada on Thursday. “We are going to make sure that no one is taking advantage of American consumers for their own short-term gain.”

The group’s formation comes at a time that the Obama administration is under increasing pressure to take action to combat soaring gas prices. Last week, a group of 17 Democrats sent the president a letter urging him to release oil from the federal Strategic Petroleum Reserve, citing the continued unrest in the Middle East as a cause for action and calling the reserve “the only tool we possess which can counter supply disruptions and combat crippling price spikes in the short term.”

However, the president has been reluctant to tap the reserve, saying it is available only for emergencies.

Northwestern University professor Laurel Harbridge says the formation of the investigative group is a way for the president to take control of the situation without taking more extreme steps.

“Doing something that suggests that there’s at least the possibility that gas prices are high because of manipulation or something like that kind of turns the high gas prices into something that he’s combating and he’s against rather than either a problem that can’t be dealt with or something that’s due to domestic policy decisions,” Harbridge said.

Obama’s comments came at the start of his third town hall meeting on the budget this week, and the second on a three-day West Coast swing that includes two stops in California. At the Reno event, he also called for ending tax incentives for oil companies and instead investing in clean energy.