Attorney General Eric Holder has uncovered “disturbing” details early in their investigation of gas price manipulation. He didn’t elaborate on the matter.

The speculation of oil price has been out there since the spike of 2008. Matt Taibbi devoted an entire book Griftopia to the topic. It was a feature of his seminal article in Rolling Stone about Goldman Sachs.

And what caused the huge spike in oil prices? Take a wild guess. Obviously Goldman had help — there were other players in the physical-commodities market — but the root cause had almost everything to do with the behavior of a few powerful actors determined to turn the once-solid market into a speculative casino. Goldman did it by persuading pension funds and other large institutional investors to invest in oil futures — agreeing to buy oil at a certain price on a fixed date. The push transformed oil from a physical commodity, rigidly subject to supply and demand, into something to bet on, like a stock. Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent. By 2008, a barrel of oil was traded 27 times, on average, before it was actually delivered and consumed.

Democratic Senators worked at the time to close the “Enron loophole” that allows electronic traders to buy foreign oil on spec. Obama was in the Senate at the time. When the bottom dropped out of demand, the speculators moved out of the markets, but global demand has returned, and now the speculators are back. The very same politicians, led by Maria Cantwell, are fighting to get the CFTC to crack down on oil speculation. Under Dodd-Frank, CFTC has new powers to pop the speculative bubble. It doesn’t even have to go to the Justice Department

So, “disturbing”? It’s disturbing that a well-known issue about over-speculation and imbalance in the oil markets goes years without any attention. Better late than never, I suppose, with the fraud task force, but it’s pretty late. And while I’m sure fraud plays a role, CFTC has the tools right now to stop this by setting high margin requirements that would rein in speculation in the commodity markets. The hedgers in the oil markets have gotten completely out of control. It’s disturbing that they are still allowed to operate.