The president is proposing a plan that would actually make a dent in gas prices. And no, it’s not drill baby, drill because, as Obama explained, there’s a big hole in that idea.
…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.
Instead, the president wants to attack gas prices both administratively — meaning acting as allowed without Congress needing to do that whole law-passing thing of which they seem incapable — and legislatively. Both strategies start by attacking the real problem — oil speculation. Obama:
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…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.
Obama made good a long time ago on a campaign promise to close the “Enron loophole,” which allowed traders to evade American regulations by buying and selling electronically or overseas.
So here’s what he’s asking our representatives in Washington to do.
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…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…
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.
Within the Dodd-Frank Wall Street reforms was a section forbidding any single trader from buying enough oil to manipulate the market on his or her own. Obama is stepping up the timeline to implement that change. But he can’t pressure Congress to do the rest without us, because as we know, they often don’t do the right thing on their own.
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.