Obama Proposes $52 Million Program to Take on Oil Speculators
Chuck Kennedy for the White House/Public Domain
Obama's moving to expand his arsenal in the battle to prove he's working overtime to combat high gas prices. He made a big show of approving the southern leg of the Keystone XL pipeline, took a populist tack in calling to end Big Oil subsidies, harped on his record of leniency on drilling, and, now, he's returning to a favorite in the Democrats' playbook: decrying the oil speculators.
The president announced a major $52 million proposal that would allow federal regulators to better monitor commodities traders activities, in hopes of preventing market manipulation from inflating prices.
Obama wants Congress to approve new funding for at least a six-fold increase of “cops on the beat” to stop market manipulation and illegal speculation, a tenfold increase in civil and criminal penalties for manipulation and new funding to update the CFTC’s technology to monitor markets. Obama is also taking executive action to share the commission’s data with the Council of Economic Advisers.There's plenty of evidence that oil speculation does indeed inflate prices, though exactly how large their influence is on prices at the pump is uncertain. Joe Romm points out that the CEO of Exxon himself, Rex Tillerman, admitted that oil speculators' activities may drive the price of oil up $70 a barrel.
Mitt Romney, predictably, is taking the side of the oil speculators: “While American families struggle to pay gas prices that have doubled on his watch, the President’s only solutions are to target oil and gas producers for higher taxes and now to dramatically increase federal regulation,” he says.
That statement is so chock-full of disingenuousness that it would make anyone other than a career politician cringe. In reality, higher taxes = ending their billions in federal handouts. Doubled on his watch = have risen along a predictable supply and demand curve over which Obama has no control.
And to be sure, Obama's oversight proposal, if it ever gets off the ground, may not be able to make a significant dent in oil prices—it's primarily a politically motivated move to the core. But like his crusade against oil subsidies, it's actually a good idea, too. And cracking down on speculation is likely to have a hell of a lot more of an immediate impact that approving a tar sands pipeline or drilling for oil that wouldn't even make it to a refinery until years down the road.