In remarks made from the White House Rose Garden on Tuesday, President Obama announced his intention to further “crack down on illegal activity” in the energy markets.
“… I call on Congress to pass a package of measures to crackdown on illegal activity and hold accountable those who manipulate the market for private gain at the expense of millions of working families,” Obama said. “And be specific.
“First, Congress should provide immediate funding to put more cops on the beat to monitor activity in energy markets,” he noted. “This funding would also upgrade technology so that our surveillance and enforcement officers aren’t hamstrung by older and less sophisticated tools than the ones that traders are using. We should strengthen protections for American consumers, not gut them. And these markets have expanded significantly.
“Second, Congress should increase the civil and criminal penalties for illegal energy market manipulation and other illegal activities. So my plan would toughen key financial penalties tenfold, and impose these penalties not just per violation, but for every day a violation occurs,” he said. “Third, Congress should give the agency [the Commodity Futures Trading Commission or (CFTC)] responsible for overseeing oil markets new authority to protect against volatility and excess speculation by making sure that traders can post appropriate margins, which simply means that they actually have the money to make good on their trades.”
While he called on Congress to act on all of his proposals “right away,” Obama also noted that the White House would, “take new executive actions to better analyze and investigate trading activities in energy markets and more quickly implement the tough consumer protections under Wall Street reform.” What exactly those executive actions might be were not spelled out, nor was there mention of any particular “illegal activities,” behind his call for further regulation.
The American Trucking Associations (ATA) voiced support for actions which might curb energy market speculation. Sean McNally, vice president of communications and press secretary for ATA, told Fleet Owner "American Trucking Associations is one of several groups that has urged the Commodity Future Trading Commission and Congress to do more to curb oil market speculation, which we believe leads to higher crude oil prices – and in turn, increased fuel costs for the trucking industry. Last year, the trucking industry consumed 37.2 billion gallons of diesel fuel at a cost of nearly $143 billion, so if curbing speculation can bring down the price of oil and refined products like diesel and gasoline then that is a positive for the industry.”
Republican presidential hopeful, Mitt Romney, was quoted in the blog E2 Wire and elsewhere as saying that, “President Obama’s government by gimmick is reaching another new low today. 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.”
According to ABC, “The Republican National Committee [also] circulated news wire reports from each of the past four years highlighting Obama pledges to ‘crack down on oil speculation’ while voicing his concerns about the impact on prices.”
The White House countered by noting in briefing remarks that “taken together, the President’s immediate funding request for cops on the beat and technology upgrades would be for $52 million in additional FY 12 resources. This request would bridge the CFTC to the Administration’s higher funding request of $308 million in FY 2013. In stark contrast, the House Republican Budget would apply across the board cuts to domestic funding that, if applied to the CFTC, would be more than 5 times the amount the CFTC currently spends on monitoring, oversight and enforcement staff in energy markets.”
Meanwhile, the U.S. average for diesel dropped slightly to $4.127 per gallon this week from $4.148 per gallon last week, with the largest dip occurring in the Midwest – a 3.4 cent decline to$4.021 per gallon. Analysis by the Energy Information Administration (EIA), however, indicates that fuel prices should stay relatively high for the next several months at least - long enough to continue to fuel the ongoing debate over energy policy and market regulation.