Today, President Obama asked Congress to take further action on decreasing speculation in the oil markets. This request comes on the heels of the recently issued report by the St. Louis Federal Reserve Bank which found that speculation in the oil markets has led to a 15% increase in the price of oil.
The administration needs to “work extra hard to protect consumers from factors that should not affect the price of a barrel of oil,” he said. “That includes doing everything we can to ensure that an irresponsible few aren’t able to hurt consumers by illegally manipulating or rigging the energy markets for their own gain.”
The Administration also released a fact sheet today, outlining a plan to crack down on speculation in the market.
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 six-fold increase in the surveillance and enforcement staff for oil futures market trading at the 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 ten-fold 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.