Obama's Oil Speculator Wish Heads for Big Oil, Buffett Rule Abyss
In mid-March, a group with which Collura works representing industries -- airlines, truckers, fueling companies and petroleum marketers -- that need to hedge fuel prices for actual business reasons, sent a letter to the CFTC asking why its Energy and Environmental Markets Advisory Committee (EEMAC) -- created by the Dodd-Frank Act, hadn't held a meeting since 2009.
"Given the current run-up in oil prices and many members of Congress urging the CFTC to immediately impose position limits on oil traders, our organizations believe an EEMAC meeting is needed to address stakeholder concerns," the industries' group wrote to the CFTC.
The meeting still has not occurred. "We have a seat on that committee," Collura said. "I'm bewildered. The CFTC has the authority to call for a meeting. It was the only committee made permanent within the CFTC in the Dodd-Frank Act. I don't get it."
Why the renewed push on oil market speculation after a year's hiatus and given the frustration voiced by a lobby group directly involved in the oil market issue representing some of the biggest fuel hedgers that exist?
Memorial Day is coming up and there's the chance that gasoline prices continue to rise. It's an election year and it's not just the Republicans, but even Democrats asking the president to do more on the issue of gas prices. The head of the CFTC, Gary Gensler, is being attacked from all sides. Then there is also the old, reliable tactic of vilifying oil companies and oil speculators, but this much is obvious to even the most casual observer.
In short, the White House is feeling a lot of pressure. That's not to say Obama's aiming at oil market shenanigans is merely a ploy. There is a real policy aim reflecting the fact that oil market speculation and manipulation exists, even if the White House enthusiasm for the policy seems to ebb and flow.
Obama's plan would increase penalties for market manipulation from $1 million to $10 million -- a measure that would be "the least" the government could do to send a message to the worst offenders. The plan would also increase position limits for traders and add "more cops on the beat" to oversee the oil markets, both measures that would aim to combat speculation rather than just punish outright manipulation. However, it would require elevating what have been emergency powers of the CFTC to a permanent level, and that's a much tougher sell.
"Obama's heart is in the right place," Collura said.