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The Obama administration lost its bid to get the Buffett Rule (which would have increased taxes for those earning $1 million or more) passed, so on Tuesday it shifted focus to another battle: Slowing the rise in oil prices.
U.S. President Barack Obama's proposed solution to painfully high prices is to limit speculation in oil markets.
The new bids that the president proposed seek more money ($52 million) for market enforcement and monitoring activities, call for loftier penalties for market manipulation, and require oil traders to put up more of their own cash for transactions.
At a White House press conference Tuesday President Obama said, "None of these will bring gas prices down overnight. But they will prevent market manipulation, and help protect consumers."
The move is in stark contrast with Republicans, who have been lobbying for more domestic drilling to help alleviate the near record-high gas prices. Paying more at the pump takes a bite out of consumer spending and has the potential to stall the slow-going economic recovery.
The maneuver, however, may be focused more on political strategy than consumer interest.
It is extremely doubtful that House Republicans will pass any measure that aims to implement more limits on Wall Street while the GOP looks to reduce regulation of the financial sector.
House Speaker John Boehner, R-OH, called it a political ploy and disparaged President Obama for not using the means already at his disposal to deal with the oil situation.
"The president has all the tools available to him if he believed that the oil market is being manipulated," Boehner said. "Where's his Federal Trade Commission? Where is the SEC? He's got agencies there. So instead of just another political gimmick, why doesn't he put his administration to work to get to the bottom of it?"
What's Behind High Gas and Oil Prices
The recent spike in oil prices has been blamed by some on speculation in the markets among hedge funds, mutual funds, and exchange-traded funds. Arguments include that the amount of oil traded in futures contracts far surpasses the actual amount of oil available, and that wagers placed by index funds on higher prices benefit traders but hurt consumers.
On the flip side, others argue that if oil prices were in fact artificially inflated, a surplus of crude would accumulate globally, a scenario that has not happened.
Also of note is that in other commodities where speculation runs high, like natural gas, prices hover near record lows. Ample natural gas stores have created a glut of the fossil fuel, and have driven prices to decade lows. It is a simple equation of supply and demand.
It's the reverse in the oil markets: Stressed supply equals soaring prices.
Obama's request for additional funds for oversight may shed more light on the storied world of oil trading – and may reveal that traders are not the force or foes behind rising oil prices.
Republicans have been laying the blame for the rising price of gas on President Obama. The GOP has continually pressured the president's administration to open more areas of the country for drilling and to approve energy projects.
Americans overall blame the sky-high price of gas on oil companies. According to a recent CNN poll, just 24% of those surveyed blamed the president, while roughly 21% blamed Republicans. The bulk accused big oil companies or foreign countries.
In trading Wednesday, benchmark West Texas Intermediate crude fell $1.42 to $102.78 per barrel in New York, while Brent crude lost $1.88 to $116.90 per barrel in London.
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