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Gas Prices Take Center Stage

As gas prices creep closer to the $5 point, the Justice Department is taking the reins in the battle against fraud and manipulation at the pump.

Speaking at a renewable energy plant in April, President Barack Obama said U.S. Attorney General Eric Holder was putting together the Financial Fraud Enforcement Working Group, according to the Associated Press. "We are going to make sure that no one is taking advantage of the American people for their own short-term gain," Obama said.

However, Holder suggested legal reasons may be behind the increase in gas pumps, which is reaching $4 in some states and has almost hit the $5 mark in others. "Based upon our work and research to date, it is evident that there are regional differences in gasoline prices, as well as differences in the statutory and other legal tools at the government's disposal," Holder said in a memo accompanying the task force announcement. "It is also clear that there are lawful reasons for increases in gas prices, given supply and demand.

"Nonetheless, where consumers are harmed by unlawful conduct that has the effect of increasing gas prices, state and federal authorities will take swift action," he added.

Despite the pump prices taking a turn in the national spotlight, Obama acknowledged there may not be much he can do about the price of gas in the short term. As the news outlet reported, gas prices have been on a steady incline because of tensions in the Middle East and northern Africa, and growing demand in emerging economies like China.

However, Gulf Oil CEO Joe Petrowski told CNBC in an interview that the price of oil is likely nearing a top and will fall beneath $100 a barrel by July 4.

Consumers will put the brakes on car travel when gas reaches an average $4 a gallon, he said. At that price, it costs drivers about $50 to fill a gas tank, he noted, and that psychological level is the tipping point. The national average for the price of gas was $3.99 at press time.

"At these prices, and especially over time, people carpool, they bundle their trips," Petrowski said. "We're starting to see it at all our 3,500 locations."

The CEO believes the price of oil is currently within a few dollars of a top. "I don't think we'll hit $125. I think by July 4 we'll be under $100," he added.

He also said world demand for oil is slowing. There are signs "this market is peaking out. I think we will see the peak, if we haven't seen it already, in the next three to four weeks."

In an exclusive interview with CSNews, Alon USA CEO Jeff Morris predicted that the strength of the dollar will have a big effect on fuel prices. "Is it going to be stronger, or weaker? If the dollar is going to weaken, then gas will be more expensive," said Morris. "If the dollar's value strengthens, then gas will become less expensive. I've found that there is a higher correlation between the value of the U.S. dollar and crude oil prices than there is for any other variable. Why is that? Because supply and demand are not good predictors any more. Crude oil has become a financial instrument. Every day one billion barrels of crude are traded on the NYMEX. Every barrel in the U.S. is traded over 50 times per day. Supply and demand don't count as much anymore."

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