The President's word,
We can't afford a
situation where speculators artificially manipulate markets by buying up oil,
creating the perception of a shortage, and driving prices higher -- only to
flip the oil for a quick profit. We can’t afford a situation where some speculators
can reap millions, while millions of American families get the short end of the
stick. That’s not the way the market
should work. And for anyone who thinks this cannot happen, just think back to
how Enron traders manipulated the price of electricity to reap huge profits at
everybody else’s expense.
The President's plan
would do five things:
1) Increase funding to increase the number of
surveillance and enforcement staff charged with oversight of the oil futures
market;
2) Allow the Commodity Futures Trading
Commission (CFTC) to upgrade the technology used to monitor the energy markets;
3) Increase the civil and criminal penalties
for those convicted of manipulating the oil futures market;
4) Provide the CFTC with additional the
authority to limit disruptions in the oil market; and
5) Expand access to CFTC data so that analysts
can better understand trading trends in the oil markets.
Remarks by the
President on Increasing Oversight on Manipulation in Oil Markets
Rose Garden
THE PRESIDENT: Good morning, everybody. Lately, I’ve been speaking a lot about our
need for an all-of-the-above strategy for American energy -- a strategy that
produces more oil and gas here at home, but also produces more biofuels and
fuel-efficient cars, more solar power and wind power and other sources of
clean, renewable energy.
This strategy is not
just the right thing to do for our long-term economic growth; it’s also the
right way for us to reduce our dependence on foreign oil right now. It’s the right way for us to put people to
work right now. And ultimately, it’s the
right way to stop spikes in gas prices that we’ve put up [with] every single
year -- the same kind of increase that we’ve seen over the past couple of
months.
Obviously rising gas
prices means a rough ride for a lot of families. Whether you’re trying to get to school,
trying to get to work, do some grocery shopping, you have to be able to fill up
that gas tank. And there are families in
certain parts of the country that have no choice but to drive 50 or 60 miles to
get to the job. So when gas prices go
up, it’s like an additional tax that comes right out of your pocket.
That’s one of the
reasons we passed a payroll tax cut at the beginning of this year and made sure
it extended all the way through this year, so that the average American is
getting that extra $40 in every paycheck right now.
But I think everybody
understands that there are no quick fixes to this problem. There are politicians who say that if we just
drilled more then gas prices would come down right away. What they don’t say is that we have been
drilling more. Under my administration, America is
producing more oil than at any time in the last eight years. We’ve opened up new areas for exploration.
We've quadrupled the number of operating rigs to a record high. We've added enough new oil and gas pipeline
to circle the Earth and then some.
But as I've said
repeatedly, the problem is we use more than 20 percent of the world’s oil and
we only have 2 percent of the world’s proven oil reserves. Even if we drilled every square inch of this
country right now, we’d still have to rely disproportionately on other
countries for their oil. That means we
pay more at the pump every time there’s instability in the Middle East, or
growing demand in countries like China
and India.
That’s what’s
happening right now. It’s those global
trends that are affecting gas prices. So
even as we're tackling issues of supply and demand, even as we're looking at
the long-term in terms of how we can structurally make ourselves less reliant
on foreign oil, we still need to work extra hard to protect consumers from
factors that should not affect the price of a barrel of oil.
That includes doing
everything we can to ensure that an irresponsible few aren’t able to hurt
consumers by illegally manipulating or rigging the energy markets for their own
gain. We can't afford a situation where
speculators artificially manipulate markets by buying up oil, creating the
perception of a shortage, and driving prices higher -- only to flip the oil for
a quick profit. We can’t afford a
situation where some speculators can reap millions, while millions of American
families get the short end of the stick.
That’s not the way the market should work. And for anyone who thinks this cannot happen,
just think back to how Enron traders manipulated the price of electricity to
reap huge profits at everybody else’s expense.
Now, the good news is
my administration has already taken several actions to step up oversight of oil
markets and close dangerous loopholes that were allowing some traders to
operate in the shadows.
We closed the
so-called Enron loophole that let traders evade oversight by using electronic
or overseas trading platforms. In the
Wall Street reform law, we said for the first time that federal regulators will
make sure no single trader can buy such a large position in oil that they could
easily manipulate the market on their own.
So I’d point out that anybody who’s pledging to roll back Wall Street
reform -- Dodd-Frank -- would also roll back this vital consumer protection
along with it.
I’ve asked Attorney
General Holder to work with Chairman Leibowitz of the Federal Trade Commission,
Chairman Gensler of the Commodity Futures Trading Commission, and other
enforcement agencies to make sure that acts of manipulation, fraud or other
illegal activity are not behind increases in the price that consumers pay at
the pump.
So today, we’re
announcing new steps to strengthen oversight of energy markets. Things that we can do administratively, we
are doing. And I call on Congress to
pass a package of measures to crack down on illegal activity and hold
accountable those who manipulate the market for private gain at the expense of
millions of working families. And be
specific.
First, Congress
should provide immediate funding to put more cops on the beat to monitor
activity in energy markets. This funding
would also upgrade technology so that our surveillance and enforcement officers
aren’t hamstrung by older and less sophisticated tools than the ones that
traders are using. We should strengthen
protections for American consumers, not gut them. And these markets have expanded
significantly.
Chairman Gensler
actually had a good analogy. He said,
imagine if the NFL quadrupled the number of teams but didn’t increase the
number of refs. You’d end up having
havoc on the field, and it would diminish the game. It wouldn’t be fair. That’s part of what’s going on in a lot of
these markets. So we have to properly
resource enforcement.
Second, Congress
should increase the civil and criminal penalties for illegal energy market
manipulation and other illegal activities.
So my plan would toughen key financial penalties tenfold, and impose
these penalties not just per violation, but for every day a violation occurs.
Third, Congress
should give the agency responsible for overseeing oil markets new authority to
protect against volatility and excess speculation by making sure that traders
can post appropriate margins, which simply means that they actually have the
money to make good on their trades.
Congress should do
all of this right away. A few weeks ago,
Congress had a chance to stand up for families already paying an extra premium
at the pump; congressional Republicans voted to keep spending billions of
Americans' hard-earned tax dollars on more unnecessary subsidies for big oil
companies. So here's a chance to make
amends, a chance to actually do something that will protect consumers by
increasing oversight of energy markets. That should be something that
everybody, no matter their party, should agree with. And I hope Americans will ask their members
of Congress to step up.
In the meantime, my
administration will take new executive actions to better analyze and
investigate trading activities in energy markets and more quickly implement the
tough consumer protections under Wall Street reform.
Let me close by
saying none of these steps by themselves will bring gas prices down
overnight. But it will prevent market
manipulation and make sure we're looking out for American consumers. And in the meantime we're going to keep
pursuing an all-of-the-above strategy for American energy to break the cycle of
price spikes year after year. We are
going to keep producing more biofuels; we're going to keep producing more
fuel-efficient cars; we are going to keep tapping into every source of
American-made energy.
And these steps have
already helped put America
on a path to greater energy independence.
Our foreign -- our dependence on foreign oil has actually decreased each
year I've been in office -- even as the economy has grown. America now imports less than half
of the oil we use for the first time in more than a decade. So we are less
vulnerable than we were, but we're still too vulnerable.
We've got to continue
the hard, sustained work on this issue.
And as long as I'm President we're going to keep placing our bets on America's future -- America's
workers, America's
technology, America's
ingenuity, and American-made energy. That's
how we're going to solve this problem once and for all.
Thank you very much, everybody
April 2012: Photo of the Day
http://www.whitehouse.gov/photos-and-video/photogallery/april-2012-photo-day?utm_source=041912&utm_medium=photo&utm_campaign=daily