Obama calls for greater oversight of oil markets

In a recent announcement, President Obama proposed legislation that would significantly raise the civil and criminal penalties put in place for the deliberate manipulation of oil markets.

The president said, “We can’t afford a situation where speculators artificially manipulate markets by buying up oil, creating the perception of a shortage and driving prices higher only to flip the oil for a quick profit … We should strengthen protections for American consumers, not gut them.”

The proposed legislation would see the numbers of enforcement staff at the US Commodity Futures Trading Commission boosted as a well as rise of civil and criminal penalties from US$ 1 million to US$ 10 million. Civil penalties would also begin to be charged on a daily basis rather than a per-incident basis.

Opposition

Obama has faced stern opposition from Republicans over his energy policies, which they claim have driven up gasoline prices at the pump. The Republican Senate leader, Mitch McConnell said, “It probably polls pretty well, but I guarantee it won’t do a thing to lower prices at the pump.”

This particular opinion appears to be widely shared amongst Republicans, which does not bode well for the likelihood of the bill making it through the Republican-controlled congress successfully.

Other opponents to the proposed legislation claim that increasing the controls over oil commodity trading risks damaging the positive impact that commodity traders are purported to have on global markets.

Obama was quick to point out the dangers that market manipulation held for the average consumer: “Just think back to how Enron traders manipulated the price of electricity to reap huge profits at everybody else’s expense.”

The CME Group, one of the world’s largest operators of futures exchanges opposes the legislation, saying, “ Taking away from exchanges the ability to manage margins would make the markets less efficient, less tied to fundamentals and would create the potential to push the hedgers out of the market, which would make oil more expensive for all consumers.”

Edited from various sources by David Bizley

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