Obama’s plan to stop speculators from driving up the price of oil
Here are excerpts from the text of the four-part “Obama Plan to Crack Down on Excessive Energy Speculation,” as provided by the campaign:
1) Fully Close the “Enron Loophole”: One of the reasons our energy market is particularly vulnerable to excessive speculation is the so-called “Enron Loophole” … [which means] Commodity Futures Trading Commission (CFTC) is unable to fully oversee the oil futures market and investigate cases where excessive speculation may be driving up oil prices. This regulatory gap is dangerous because: 1) the absence of government oversight has the potential to facilitate abusive trading or price manipulation. And 2) the failure of a large derivatives dealer could trigger disruptions of supplies and prices in energy markets. As President, Barack Obama will go beyond the changes included in the recently-passed Farm Bill and fully close the Enron loophole by requiring that U.S. energy futures trade on regulated exchanges. He will call for new, disaggregated data on index fund and other passive investments to increase transparency and oversight of the growing number of institutional investors participating in commodities futures markets. And he will support legislation directing the CFTC to investigate whether additional regulation is necessary to eliminate excessive speculation in U.S. commodities markets, including higher margin requirements and position limits for institutional investors.
2) Ensure That U.S. Energy Futures Cannot be Traded on Unregulated Offshore Exchanges: CFTC oversight of oil market speculation is also limited by rules that allow energy traders to engage in unregulated transactions through foreign subsidiaries of U.S. exchanges. Currently, about 30 percent of U.S. oil futures trades fly below the regulatory radar because they are transacted on a U.S. exchange that works through a subsidiary in London. Similar arrangements are being pursued by U.S. exchanges in partnership with Dubai as well. Barack Obama would limit the price impacts of excessive speculation by preventing traders of U.S. crude oil from routing their transactions through off-shore markets in order to evade speculation limits and also impose reporting requirements.
3) Work with Other Countries to Coordinate Regulation of Oil Futures Markets.
4) Call on the Federal Trade Commission and Department of Justice to Vigorously Investigate Market Manipulation in Oil Futures.
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Tags: obama, oil, politics, speculators
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