WASHINGTON -- President Obama in a Rose Garden speech yesterday announced new steps intended to strengthen oversight of energy markets, while calling on Congress to pass a package of measures that he said would deter illegal behavior and hold oil speculators accountable for financial gain at the expense of consumers.
"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 can't afford a situation where some speculators can reap millions, while millions of American families get the short end of the stick. That's not the way the market should work," said the President.
"My administration has already taken several actions to step up oversight of oil markets and close dangerous loopholes that were allowing some traders to operate in the shadows," he said. "We closed the so-called Enron loophole that let traders evade oversight by using electronic or overseas trading platforms. In the Wall Street reform law, we said for the first time that federal regulators will make sure no single trader can buy such a large position in oil that they could easily manipulate the market on their own."
He added, "I've asked Attorney General Holder to work with Chairman Leibowitz of the Federal Trade Commission, Chairman Gensler of the Commodity Futures Trading Commission and other enforcement agencies to make sure that acts of manipulation, fraud or other illegal activity are not behind increases in the price that consumers pay at the pump. So today, we're announcing new steps to strengthen oversight of energy markets. Things that we can do administratively, we are doing."
Watch the video below or click here to read a full transcript of remarks by the President on increasing oversight on manipulation in oil markets.
As outlined by his administration, the President's five-part plan includes:
1. Requesting immediate funding to put more "cops on the beat" overseeing oil markets. The President is calling on Congress to pass an immediate increase in funding to support at least a sixfold increase in the surveillance and enforcement staff for oil futures market trading at the Commodity Futures Trading Commission (CFTC).
2. Funding critical technology upgrades in the oversight and surveillance of energy market activity. The President is also requesting that Congress provide the CFTC funding for critical IT upgrades to strengthen monitoring of energy market activity.
3. Substantially increasing civil and criminal penalties for manipulation in key energy markets. The President's proposal includes a tenfold increase in maximum civil and criminal penalties for manipulative activity in oil futures markets. These heightened penalties will make sure that penalties reflect the seriousness of misconduct.
4. Empowering the CFTC to raise margin requirements in oil futures markets. The President is also calling on Congress to act immediately to give the CFTC authority to direct exchanges to raise margin requirements to address increased price volatility or prevent excessive speculation or manipulation. This authority will help limit disruptions and reduce volatility in oil markets.
5. Taking immediate steps to expand access to CFTC data to better understand trading trends in oil markets. These executive actions will allow additional analysis of CFTC's data to look for patterns and better understand trading activity in energy markets.
Click here to read the full Fact Sheet: Increasing Oversight & Cracking Down on Manipulation in Oil Markets.
"None of these steps by themselves will bring gas prices down overnight. But it will prevent market manipulation and make sure we're looking out for American consumers. And in the meantime we're going to keep pursuing an all-of-the-above strategy for American energy to break the cycle of price spikes year after year. We are going to keep producing more biofuels; we're going to keep producing more fuel-efficient cars; we are going to keep tapping into every source of American-made energy," Obama said in his speech.
"The president has all the tools available to him if he believes that the oil market is being manipulated," Speaker of the House John Boehner told reporters Tuesday, according to the Associated Press. "Where's his Federal Trade Commission? Where is the SEC? He's got agencies there. So instead of just another political gimmick, why doesn't he put his administration to work to get to the bottom of it?"
Senior administration officials who put together the proposal 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, the report said.
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