Will Eric Holder Cost Barack Obama a Second Term in Office?

Speculators may be driving the price of oil up by at least $23 per barrel. Is the attorney general charged with watching them asleep at the switch?

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Reuters

With his poll numbers bruised by rising gas prices, President Obama last week casually mentioned at a news conference that the actions he was taking included "making sure that my attorney general is paying attention to potential speculation in the oil markets."

But is Eric Holder, who is gaining a reputation for passivity in a number of investigations, really paying attention?

Obama added that he had asked Holder "to reconstitute a task force that's examining" oil speculation, which is partly responsible for the rapid runup in prices. According to some market watchers, including Robert Lenzner of Forbes magazine, prices of crude would be at least $23 per barrel less -- translating into 56 cents less per gallon of gas -- if speculators weren't driving them up based on rumors of an Iran war and other factors unrelated to actual supply and demand.

And yet the so-called task force that Holder convened almost a year ago, in April 2011, the Oil and Gas Price Fraud Working Group, has met only several times, leading a frustrated Obama to call for it to be "reconstituted." And in the week that's passed since Obama made his comments, the task force has met once more, according to a Justice Department spokeswoman.

The spokeswoman, Adora Andy, told me Tuesday evening that the task force "is aggressively focused on identifying civil or criminal violations in the oil and gasoline markets, and ensuring that American consumers are not harmed by unlawful conduct, which remains an important priority. With the recent increase of gasoline prices, the working group is monitoring the situation and if we find any evidence of criminal behavior or other misconduct we will respond immediately."

Some commodity-market experts believe that if the task force were perceived as serious, it would have a chilling effect on rampant speculation. Rules designed under the Dodd-Frank financial-reform law to rein in speculation have also been delayed.

Holder has provoked criticism by failing to pursue or by stringing out other investigations as well, including of Wall Street and in the BP Oil spill. In a speech at Columbia University in late February, Holder defended his record by saying that while some of the speculative and fraudulent behavior that led to the worst crash since the Great Depression may have been "morally reprehensible ... it may not necessarily have been criminal."

It is also nearly two years since the disastrous BP oil spill in the Gulf of Mexico that killed 11 people. Holder told a House subcommittee at the end of February that the criminal investigation is still going on.

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Michael Hirsh is chief correspondent for National Journal.

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