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Obama proposal would rein in oil speculation

By Jessica Yellin, CNN Chief White House Correspondent
updated 11:33 AM EDT, Tue April 17, 2012
Prices posted at a gas station in downtown Los Angeles, California, on March 16, 2012.
Prices posted at a gas station in downtown Los Angeles, California, on March 16, 2012.
STORY HIGHLIGHTS
  • $52 million measure would increase supervision of oil markets
  • Regulators could force traders to put their own money into trades
  • Effort likely to be seen as a political move to draw contrasts with GOP
  • White House is blaming Wall Street for high gas prices

Washington (CNN) -- Under pressure to bring down the high price of gas, President Obama and Attorney General Eric Holder will outline a proposal Tuesday to increase federal supervision of the oil markets in an effort to clip the wings of speculators who are profiting off the volatility of the oil market.

The president's $52 million plan would let regulators force energy traders to put more of their own money into trades and boost the penalties on manipulators who are found to be speculating unlawfully, according to a senior administration source who would not comment on the record in advance of the president's remarks.

The president will call on Congress to:

• boost spending on technology to improve oversight and surveillance of energy markets.

• increase by six times the money spent on surveillance and enforcement staff of the Commodity Futures Trading Commission to better deter oil market manipulation.

• increase 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, give the Commodity Futures Trading Commission authority to increase the amount of money that a trader must put up to back a trading position.

The Obama administration plans to increase access to the commission's data so the White House Council of Economic Advisers can examine and analyze trading information, which the administration can do on its own.

This effort is likely to be seen as a political move designed to draw contrasts with the Republican Party and especially presumptive presidential nominee Mitt Romney on energy issues. House Republicans are unlikely to pass a measure that seeks to impose more limits on Wall Street at a time when they are seeking to limit regulations on the finance industry. At the same time, Republican leaders are calling on the White House to open more domestic land for oil and gas exploration.

The White House is pinpointing Wall Street for the high price of gas, which could afford the president an opening to criticize Romney and his ties to the world of high finance.

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