Obama calls for tougher penalties for oil market manipulators (+video)
With gas prices a big election issue, Obama says Congress should enact new curbs on speculation and illegal manipulation in a market now dominated by investors.
President Obama called Tuesday for stepped-up oversight of oil markets, plus tougher penalties on trading firms caught trying to manipulate energy prices.Skip to next paragraph
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He asked Congress to provide more funds for regulators to monitor commodities trading and pursue rogue activities by investors. He also called for a tenfold increase in penalties when violations are found, and for those penalties to be levied for each day that manipulation persists, rather than for each general instance of manipulation.
The president also said Congress should grant new authority to the Commodity Futures Trading Commission (CFTC) to raise margin requirements on traders, in a bid to reduce market volatility and to ensure that investors can make good on their trades.
His appeal comes with US gasoline prices edging toward $4 a gallon, and with many voters citing high gas prices as a top pocketbook concern ahead of November's presidential election. Currently the price of regular gas is $3.90 per gallon, according to AAA's Daily Fuel Gauge Report.
Many factors influence oil prices, from the strength of economic demand to concerns about how instability in oil-producing regions might affect supply. Mr. Obama cast his proposals as just part of an "all of the above" strategy to tame energy prices and to reduce US dependence on imported oil.
"None of these steps by themselves will bring gas prices down overnight," but they will help, he said.
The new Obama proposals coincide with Republican efforts to push their own energy strategy, which calls for more aggressive efforts to develop domestic oil and gas resources. Republicans argue that Obama has paid little more than lip service to expanding fossil-fuel output at home.
"We can harness our natural resources and end our dependence on Middle Eastern oil," Rep. Jeff Duncan (R) of South Carolina said on his website Monday. "But that won’t happen until Washington receives a wakeup call from the American people."
The debate over domestic drilling promises to be an important one in the presidential race.
In effect, Obama was changing the subject Tuesday, arguing that another factor – market manipulation – is an important factor behind high oil prices.
Finance experts note that everything from tensions over Iran's nuclear program to trends in US refineries affects prices. But many agree with the notion that speculative investors now play a greater role in energy markets than they used to – though the effect of their trading activity on retail gas prices is inconclusive.