With consumers growing more surly over rising prices at the gas pump, President Obama has proposed new rules for investors who trade oil futures, to ensure there is no market manipulation.
Obama has called for an increase in budgets for the regulators who monitor these markets and new requirements for traders to use more of their own money when they buy oil futures.
Will it help? Hardly anyone thinks it will.
"We shouldn't expect a crackdown on "market manipulation' to have much of an effect because the market isn't being manipulated in any systematic way," said Steven Kyle, an economics professor at Cornell University. "In the short run the only thing likely to bring gas prices back down is a slide back into recession. Nobody should want that."
Supply and demand
Kyle and others say the real reason gasoline prices are high is supply and demand, but it may be a little more complicated than that. Gasoline demand in the U.S. is falling, so much so that U.S. refiners have increased their gasoline exports over the last year.
At the same time, refiners find themselves in an odd situation. Because they have to pay so much for crude oil, they have to sell their refined products at a high price. Because the price is so high, consumers continue to find ways to buy less.
In a pure supply and demand equation, the price of gasoline would fall, but in this case it doesn't because the cost of producing the product itself is so high. Refiners, in some cases, are actually trying to close down because they say they can't make a profit with rising oil prices and falling consumer gasoline demand.
And while "speculators" may not be to blame, the market certainly is driving up the price of oil - not because of a supply shortage but because of a feared supply shortage in the future.
U.S. producing more oil
PhotoIn its oil price forecast this week, Ernst & Young says U.S. and non-OPEC oil production has increased to the point that it should lower prices, but it hasn't.
"Increased supply typically creates lower oil prices, but today's new supply is being outweighed by anticipated supply interruption from Iran and other smaller sources including Syria,Yemen, the Sudans, and the North Sea," the report says.
The market fears that a confrontation with Iran over its nuclear program will lead to hostilities that would shut off the flow of oil from the Persian Gulf for a while, creating a world-wide oil supply shortage. It hasn't happened, and it might not - but the real possibility it could happen causes the market to place a "risk" premium on the price of oil.
Pressure on OPEC
The report also notes that OPEC is now facing pressure to cut back its oil production, in order to keep prices high. While that might count as market manipulation, there is little the President or Congress can do about it.
According to Ernst & Young, the real energy story may be that, after decades of rising demand and declining supply, the U.S. is consuming less and producing more, lowering its reliance on foreign sources of crude.
"The advent of increased domestic supply is certainly positive for the U.S. economy and energy security," said Marcela Donadio, Americas Oil and Gas Leader, Ernst & Young LLP. "Importing less oil and gas creates a more positive trade balance for the US, and domestic production stimulates job growth, local business revenues and tax receipts, along with other positive economic impacts."