President Obama Offers Proposals That Would Lower Gas Prices, House GOP Balks

Well, maybe I was wrong when I said there was almost nothing the President could do to impact gas prices. Yesterday, President Obama released a set of proposals to limit oil speculation. We’ve detailed here, here, and here how Wall Street speculation on oil raises its price because it distorts the perception of oil supply. President Obama’s proposals look to limit the ability of this speculation by:

• Boosting spending on technology to improve better oversight and surveillance of energy markets.
• Increasing by six times the amount of money spent on surveillance and enforcement staff for the Commodity Futures Trading Commission to better deter oil market manipulation.
• Increasing from $1 million to $10 million civil and criminal penalties against firms that engage in market manipulation.
• In an effort designed to limit energy market disruptions, giving the Commodity Futures Trading Commission authority to increase the amount of money that a trader must put up to back a trading position.

Currently, while the Commodity Futures Trading Commission voted to adopt rules to impose limits on the amount of futures and swap contracts that commodities traders can hold, it has yet to enforce any rules. As we detailed earlier, a recent letter sent by 71 Democratic lawmakers and one independent to the CFTC called out the agency's lack of enforcing the limits on speculation, even though Dodd-Frank required it do so no later than Janury 17, 2011. The President’s proposals would provide more resources for the Commission to carry out its mandate and would provide tools to better spot market manipulation as well as levy substantial financial penalties to discourage the practice.