Obama seeks to confront oil market manipulation
(CBS/AP) Under pressure to take action on rising gasoline prices, President Obama on Tuesday will ask Congress to implement a plan that entails strengthening federal supervision of oil markets and increasing penalties for market manipulation, a senior administration official confirms to CBS News.
The White House plan is more likely to draw sharp election-year distinctions with Republicans than have an immediate effect on prices at the pump. The measures seek to boost spending for Wall Street enforcement at a time when congressional Republicans are seeking to limit the reach of federal financial regulations.
Obama will spell out his $52 million proposal Tuesday at the White House, where he will be joined by Attorney General Eric Holder.
Republicans have been hammering Obama on his energy policies, recognizing the political cost of high gas prices on the president. Obama's plan would turn the tables on Republicans by taking aim at Wall Street's role in the oil price chain.
Senior administration officials who put together the proposal said it aims to detect and deter illegal manipulation by energy speculators, the type of practices that many Democrats blame for the high cost of gasoline. The officials spoke on the condition of anonymity to discuss the plan ahead of Obama's announcement.
They would not go as far as to say that market manipulation is responsible for rising gas prices, but the officials said they wanted to curtail the ability of speculators to take unlawful advantage of oil price volatility.
At issue is the increasing role of investment in oil futures contracts by pension funds, mutual funds, hedge funds, exchange traded funds and other investors. Much of that money is betting that oil prices will rise. Analysts say it is possible that such speculation has somewhat inflated the price of oil.
At the same time, investors can also bet that prices will go down -- indeed, speculators have been credited for low natural gas prices. Studies of the effects of speculation on oil markets indicate that it probably increases volatility, but doesn't have a major effect on average prices.
Still, seeing a potential problem with speculators is not limited to Obama or Democrats or this election season. When gasoline hit $3 a gallon in 2006, George W. Bush launched an investigation, declaring Americans "don't want and will not accept ... manipulation of the market. And neither will I." Last year, as prices rose, Obama and Holder announced the creation of a task force to look into fraud in the energy markets.
Obama's plan this time calls on Congress to:
-- Increase six-fold the surveillance and enforcement staff of the Commodity Futures Trading Commission to better deter oil market manipulation.
-- Increase spending on technology to provide better oversight and surveillance of energy markets.
-- Increase civil and criminal penalties against firms that engage in market manipulation from $1 million to $10 million.
-- Give the Commodity Futures Trading Commission authority to increase the amount of money that a trader must put up to back a trading position. The administration officials said such authority could help limit disruptions in energy markets.
In addition, the Obama administration, on its own, will increase access to the commission's data so the White House Council of Economic Advisers can examine and analyze trading information.
The White House effort comes at the same time that Republicans have been pushing Obama with their own energy proposals. House Speaker John Boehner, R-Ohio, wants to seek votes on more domestic oil and natural gas exploration, a freeze on regulations on refineries and approval of construction of the Keystone XL pipeline from Canada to Texas, a project Obama has blocked.
Republicans are also trying to place limits on the financial regulation legislation Congress passed in 2010 over Republican objections. Though the House Republican budget, which calls for sharp reductions in government programs, does not specify reduction in spending by the trading commission, the administration officials said that if the cuts were applied the commission would lose more than five times what it spends on regulating energy markets.
The debate will pit Republicans who blame Obama for high gasoline prices against a White House that blames Republicans for coddling Wall Street.
Popular in Politics
- Obama and Berlin: Faded echoes meet new realities
- Senators: U.S. must take "more decisive" military action in Syria
- House Republicans pass 20-week limit on abortions 262 Comments
- Smooth, on-time Obamacare rollout no sure thing: GAO
- Immigration reform would cut deficit, analysis shows 74 Comments
- Obama renews push for a nuclear disarmament legacy
- GOP Sen. Murkowski backs same-sex marriage
- Bill Ayers: Obama should be tried for war crimes
But we can no longer depend on the government to meet our demands. We need a massive nationwide non-violent direct action campaign to force the government to do what the people want. Fortunately many, many groups have united to start the 99% Spring. Look for us in a town near you and join us. Power starts from the bottom up.
The world uses 80 million barrels of oil per day. At maximum capacity the Keystone Pipeline would carry 600,000 barrels of oil per day. A 0.075% increase in the supply of oil will have no effect whatsoever on the price of gasoline.
Obama has tried to get lower gas prices, including a release from the strategic reserve, which helped for a while. But once again, reality differs from right wing accusations.
And before the right wingers try to spin the Keystone Pipe line and drilling in the US, most US oil production is sold overseas. Drilling on US lands only increases oil company profits, who make more money selling it overseas than they do making gasoline for use here. We already drill almost as much oil as Saudi Arabia. But while the Saudis use their oil there and pay $0.50 a gallon, the US ships ours overseas and our gas prices are $4. Do the math.
-----------by Rafterman11 April 17, 2012 10:35 AM EDT
Is that what a blind leftwing nut like you is seeing?
That's hilarious!
----------------by Lucas4440 April 17, 2012 10:52 AM EDT
Wow, Lucas, what a devastating counter to my points. You must have been on the debate club.
Obama is trying to push America to use technologies that still are not cost competitive with oil. Obama thinks he should dictate the lifestyle of the American people instead of the other way around.
The average American is paying a high price to support Obama's liberal / radical agenda.
---------by troutfishman2 April 17, 2012 11:31 AM EDT
Its the agenda that the right wing can't actually see (because they can never seem to post just what it is), but, gosh darn it, they know the agenda is there.
Don't forget Obama told you dummies.... "Under my energy plan gas prices will necessarily skyrocket"
********************
REALLY??
Exactly when did he say that?
The willingness of you Fox/Rush Zombies to tell outrageous lies is staggering!
And also we export more gas, diesel and heating oil last year then we have since 1949
http://content.usatoday.com/communities/ondeadline/post/2012/02/us-exported-more-gasoline-than-imported-last-year/1
So, if big oil is shipping more crude, gas, heating oil, and diesel OUT of the U.S. because they can make more money, how is this OBAMA's fault? The republicans don't want to force BIG OIL to keep the product here (less regulations you know), they want them to make as much money as they can and to heck with the American public. After all what is good for the company is good for the U.S.
Obama has tried to get lower gas prices, including a release from the strategic reserve, which helped for a while. But once again, reality differs from right wing accusations.
And before the right wingers try to spin the Keystone Pipe line and drilling in the US, most US oil production is sold overseas. Drilling on US lands only increases oil company profits, who make more money selling it overseas than they do making gasoline for use here. We already drill almost as much oil as Saudi Arabia. But while the Saudis use their oil there and pay $0.50 a gallon, the US ships ours overseas and our gas prices are $4. Do the math.