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President Obama targets oil price manipulators

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Bob Moon: At the White House within the past hour, President Obama announced a new crackdown on illegal manipulation of oil prices by traders. He’s asking for stronger regulations, bigger penalties for violators and more cops on the regulatory beat.

Joining us live is our Washington bureau chief John Dimsdale. Hi John.

John Dimsdale: Hey Bob.

Moon: Why go after the speculators now and why is the president doing it?

Dimsdale: Well, he believes that one reason gas prices are so high is oil traders are speculating on future contracts — artificially bidding up the price of oil. And that means consumers are paying for market manipulation.

Barack Obama: 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.

Moon: So how much is manipulation driving up the price?

Dimsdale: It’s really difficult to know exactly. Most experts say what’s really causing high prices is huge demand from growing emerging markets and the uncertainty about supplies coming from these volatile parts of the world.

John Kingston with the oil information firm Platts says speculation is really tough to police.

John Kingston: I know its easy to look at manipulation, people are looking for an easy solution. But there are a lot of indications out there on the supply and demand fundamentals that this is about where the price should be.

Plus Kingston points out that speculation does work both ways — for example right now its driving natural gas prices to new lows.

Moon: I suppose we’ll have to stay tuned, or at least watch the pump prices. Marketplace’s John Dimsdale, thanks.

Dimsdale: Thanks Bob.

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