An election ploy? Obama Targets Oil Market Speculators

by Don Azarias
June 1, 2012
With polls suggesting that high gas prices are affecting his odds of winning a second term, President Barack Obama urged Congress to curb the powerful oil speculators’ role that’s causing pain in the pump. He also called for stricter government oversight of oil markets. It makes you wonder why he has to make such obvious political maneuvers during an election year instead of taking action sometime ago when signs of oil markets speculations are beginning to emerge. Of course, it’s all politics, you dummy!
During a meeting with reporters at the White House Rose Garden, Obama had this to say: “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.” He warned “there are no quick fixes to this problem” but said government must “work extra hard to protect consumers from factors that should not affect the price of a barrel of oil. That includes doing everything we can to ensure that an irresponsible few aren’t able to hurt consumers by illegally manipulating or rigging energy markets for their own gain.”
Republican House Speaker John Boehner was quick to counter what he perceived as Obama’s politically-motivated move and had this to say: “Listen, the president has all the tools available to him if he believes that the oil market is being manipulated. Where’s his Federal Trade Commission? Where’s 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?”
Later, in a CBS News interview, Boehner charged that President Barack Obama’s re-election strategy will be to “pull out every bogeyman they can” to scare voters and distract them from economic issues. He spoke out as Obama traveled to the critical battleground state to defend his handling of the Great Recession, the top issue on voters’ minds heading into the general election campaign. “The president checked out last Labor Day,” said Boehner. “All he’s done is campaign full time for the last six months. He’s not been engaged in the legislative process at all. There have been no efforts at trying to work with Democrats and Republicans to address this issue at all. It’s shameful.”
The Republicans were also quick to point out that the Obama administration’s creation of the Oil and Gas Price Fraud Working Group, which was announced with great fanfare in April 2011 was another Obama political gimmick. The GOPs derisively claimed that the task force has only met four of five times since its inception and has never reported to the public.
In fairness to Obama, there’s really nothing he can do to effect change in the high prices of gas in the pump. Even as President of the United States, he has no say when it comes to energy pricing because the U.S. economy is based on the free enterprise concept that’s inherent in a capitalistic society. But it really makes one wonder why he seems to be taking the high road in going after those powerful oil market speculators during an election year.
Obama called on Congress to boost the surveillance and enforcement staffing budgets for the Commodity Futures Trading Commission (CFTC) to enhance and upgrade the agency’s technology in order to monitor the energy markets and to adopt tougher rules on speculators in the oil market. He also pushed to ramp up penalties for illegal energy-market manipulation, raising the ceiling on civil and criminal fines from $1 million to $10 million and assessing them on a per-day rather than per-violation basis. And he called for enabling the CFTC to raise the so-called margin requirements on oil markets—the amount of money a trader must have on hand to back up a trade position—which could discourage some speculation. Independent analysts estimate that “somewhere between 10 percent and 25 percent of the price at the pump is likely due to excess speculation. This gives the Republicans enough ammunition to use high gas prices as an important campaign issue against Obama. If the fragile economic recovery stalled because of high prices of gasoline, Obama’s reelection chances would likely be impacted.
Meanwhile, the International Energy Agency and the U.S. Energy Department both reported that global oil supplies are loosening even with Western sanctions on Iranian oil. Saudi Arabia and other producers are increasing output which has helped to put some downward pressure on oil prices.
For American consumers, the oil markets’ situation is, indeed, confusing. It gives them, once again the chance to ask this vexing question: If Saudi Arabia and other producers are increasing output, why in the world, are the prices of gasoline still sky high?