Obama: Monitor Oil Markets with More ‘Cops,’ Better Tech

The Obama Administration is proposing new measures to police or limit oil market speculation in a move to combat gas prices and the perception that the president is not doing enough to help consumers.
The administration today called on Congress to pass a package of measures that would deter illegal behavior and hold accountable those who manipulate markets for financial gain.
Among the proposals is a request to put “more cops on the beat” overseeing the oil markets, including a six-fold increase in the surveillance and enforcement staff for oil futures markets at the Commodity Futures Trading Commission (CFTC).
Also proposed is an increase in funding for upgraded computerized monitoring of trading activity, and stiffer civil and criminal penalties for market manipulation.
Obama’s immediate funding request for “cops on the beat” and technology upgrades would amount to $52 million in additional fiscal year 2012 resources
The president is also calling on Congress to act immediately to give the CFTC authority to direct exchanges to raise margin requirements.
The administrations said higher margins on futures contracts would address increased price volatility or prevent excessive speculation or manipulation. “This authority will help limit disruptions and reduce volatility in oil markets,” the White House said in a statement.
There is much debate as to how much of a role speculative futures-trading plays in the run-up of oil prices, which is influenced by the outlook of oil supplies, global demand and events in oil-producing regions.
Prices on crude oil futures contracts have also been influenced over recent months by threats from Iran to close the Strait of Hormuz in the Persian Gulf to oil tankers, a retaliation for sanctions imposed by the United States and other Western nations.

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