NEW: Whitehouse Applauds President Obama’s Plan to Address High Gas Prices
Wednesday, April 18, 2012
As Rhode Islanders and middle class families across the country struggle to keep up with rising gas prices, President Obama has announced series of new initiatives to crack down on the oil speculation that many believe is behind the price spike. U.S. Senator Sheldon Whitehouse (D-RI), who recently wrote to Attorney General Eric Holder to request an update on the Administration’s efforts to address oil speculation, applauded the President for his announcement.
“With middle class families struggling to get by, it is imperative that we take every step possible to bring gas prices back down to a reasonable level,” said Whitehouse. “We must crack down on oil speculators in order to ensure that families in Rhode Island aren’t getting gouged at the pump. President Obama’s plan to increase oversight of the oil markets and its major players is a step in the right direction.”
The President’s proposal aims to increase oversight of the oil and energy markets. His plan would, among other things, increase enforcement efforts of the CFTC over the oil futures markets, upgrade surveillance technology for enforcement staff, increase civil and criminal penalties for any manipulative activity in oil futures markets, raise margin requirements to prevent excessive speculation, and expand access to CFTC data in order to better analyze trading trends in oil and energy markets.
Senator Whitehouse, along with his colleagues Senator Klobuchar (D-MN), Senator Coons (D-MD), and Senator Blumenthal (D-CT), recently sent a letter to Attorney General Eric Holder to request an update on the efforts of the Administration’s Oil and Gas Price Fraud Working Group. If implemented, the initiatives outlined by the President would bolster the authority of the CFTC, which is a member of the Oil Working Group, to start putting an end to speculation in the oil markets. Senator Whitehouse encourages the CFTC to use its new authority to better inform the efforts of the Oil Working Group, and ensure that every necessary step is taken to crack down on unfair oil speculation.
Many believe that speculation is a significant driver of rising gas prices. As the Senators’ letter notes: “Last month, Forbes reported that Goldman Sachs calculated that each million barrels of speculation in the oil futures market adds about 10 cents to the price of a barrel of oil. Based on trade levels, that translates into an increase of $23.39 of the price of a barrel of oil.” The letter also notes that Exxon Mobil Chairman and CEO Rex Tillerson has estimated that speculation is responsible for a 50 percent increase in the price of oil.
