Oil and gas companies have reason to welcome but be wary of the latest report of an oil-price investigation.
Most such probes start in Congress, focus on operating companies that sell gasoline, and find nothing.
The one lately in the news started at the US Commodity Futures Trading Commission, targets traders, and remains under way.
There's a difference between operating companies and traders, although some traders work for operating companies. The oil industry should hope these distinctions stay clear.
The CFTC on May 29 unveiled an investigation begun last December into "the purchase, transportation, storage, and trading of crude oil and related derivative products."
It called disclosure of a continuing investigation "an extraordinary step," taken "because of today's unprecedented market conditions."
The step also might have something to do with pressure from Congress. On May 27 Jeff Bingaman (D-NM), chairman of the Senate Energy and Natural Resources Committee, asked CFTC to examine commodity trading on foreign exchanges and challenged its assertions discounting speculation as a factor in oil-price elevation (OGJ Online, May 28, 2008).
In its statement announcing the investigation, the CFTC reported an agreement with the UK Financial Services Authority and ICE Futures Europe increasing the exchange of information about commodity contracts with US delivery points.
Although the statement didn't say so, that move responds to concern about the so-called Enron loophole, which exempts from CFTC oversight forward contracts traded outside the US covering US commodity deliveries.
The statement also reported measures to enhance the transparency of index trading.
Whether misbehavior in any of these areas can account for recent leaps in the price of crude oil is questionable.
Yet individual traders of various types have been known to misbehave, sometimes with spectacularly damaging consequences.
Oil companies don't benefit from anything that distorts markets, including trading shenanigans. They should applaud government exertions to keep markets honest.
But they'll face guilt by association if the CFTC probe uncovers trading irregularities anywhere.
And if problems center on any of their own traders, they'll have to deal with political hostility that will make the currently nasty mood on Capitol Hill feel tame.
(Online May 30, 2008; author's e-mail: email@example.com)