Obama wants toothier oversight of oil markets
Gary Gensler (L), Chairman of the U.S. Commodities Futures Trading Commission, U.S. Secretary of the Treasury Timothy F. Geithner, U.S. Attorney General Eric H. Holder Jr. and Jon Leibowitz (R), Commissioner of the Federal Trade Commission, listen as U.S. President Barack Obama speaks from the Rose Garden of the White House April 17, 2012 in Washington, D.C. President Obama spoke about keeping oil prices low and enforcing fair pricing.
Kai Ryssdal: For those who wince at paying $70 every time you swing by the gas station, rest assured the White House knows you're unhappy.
Today President Obama said he's gonna crack down on speculation in the oil market. He wants Congress to spend $52 million to beef up federal oversight of crude and how it's traded.
From the Marketplace Sustainability Desk, we asked Sarah Gardner to find out whether that's all it would take.
Sarah Gardner: President Obama says an “irresponsible few” are rigging the energy markets for their own gain. He didn’t name the few, but implied that traders were manipulating the markets by colluding with each other. The president said they were buying up oil, creating the perception of a shortage and driving prices higher. Then they sell for a quick buck.
Barack Obama: We can't afford a situation where some speculators can reap millions, while millions of American families get the short end of the stick.
Analyst Fadel Gheit at Oppenheimer and Company says speculative betting is “part of the DNA of oil prices.” He figures at least 20 percent. But Gheit says Obama’s fixes -- higher fines, more cops on the beat, and making it more costly for Wall Street to trade oil futures -- won’t work.
Fadel Gheit: There are tens of billions of dollars to be made in oil price speculation. So those people are willing to spend 10 times more to fool government regulators and to hide their tracks.
But Blake Clayton at the Council on Foreign Relations says speculation’s a scapegoat. Clayton says there may be some market abuses, but they’re not responsible for $4 gas.
Blake Clayton: The truth is, supply and demand right now augur in favor of high prices.
And nobody, he notes, seems to be complaining about all the speculative betting in the natural gas markets right now. Natural gas prices are currently at 10-year lows.
I’m Sarah Gardner for Marketplace.