Report: Obama’s latest proposal to stabilize gas prices could backfire

posted at 2:31 pm on April 20, 2012 by Tina Korbe

Barack Obama’s proposal to regulate trading margins in an effort to curb the influence of oil speculators was never really intended to either stabilize or lower gas prices. As AP put it, it was just the Obama campaign’s newest shiny object. His proposal was intended to communicate that he cares about gas prices — and nothing more.

Here’s the catch, though: Reporters and pundits take his proposals seriously (he is the president, after all). They parse and analyze — and, in the process, they come up with information like this:

U.S. President Barack Obama’s bid to dampen the influence of oil speculators by having regulators set trading margins could backfire, potentially making prices even more volatile and leaving crude dominated only by those with the deepest pockets.

Under Obama’s request to Congress, the Commodity Futures Trading Commission (CFTC) would determine how much speculators need to pay to trade U.S. crude oil futures, in theory increasing the amount when prices move too far, too fast.

But economists and traders cautioned that pushing smaller investors out of markets would only hand greater influence to the largest hedge funds and Wall Street banks. Ultimately, there may not be enough traders left to do business with oil producers and consumers looking to hedge their needs.

Maybe Mitt Romney knows what he’s doing when he repeatedly emphasizes that Barack Obama is in over his head. He really seems to be. Even his best campaign ploys make little sense — and yield talking points for his opposition. In this case, the talking point is this: At the same time that he wants to raise taxes on the rich, the president wants to hand greater influence over oil prices to the largest hedge funds and Wall Street banks. There’s an Obama proposal to dislike for everyone — the 1 percent AND the 99 percent!


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Comment pages: 1 2

Of course it will backfire. Obama is a failure and everything he touches he destroys. Typical clueless democrat strategy.

CTpatriot on April 21, 2012 at 12:59 PM

speculators FOLLOW markets they don’t make them.

At the end of the day, the product has to be bought at that price or the speculators are screwed. For that reason speculators don’t jack prices up or down. They might cause prices to jump around but only in response to market forces trying to do price discovery.

Leave them alone. If you want prices to drop, tell the market you’re going to flood it with oil. Tell it you’re going to get out of the way. Tell it you’re going to stabilize oil regions.

And then you have to do it.

Karmashock on April 21, 2012 at 6:08 PM

Comment pages: 1 2