April 17 (Bloomberg) -- President Barack Obama will call on Congress to bolster federal supervision of oil markets, including bigger penalties for market manipulation and greater power for regulators to increase the amount of money traders must put up to back their energy bets.
Obama will ask for more ‘cops on the beat’’ to oversee oil trading at an 11:10 a.m. event at the White House, according to a White House statement. The president will be joined by Attorney General Eric Holder as he details a $52 million proposal that seeks to reassure Americans that his administration is working to prevent spikes in gasoline prices.
“It is critically important that we kick-start the bureaucracy and get speculative position limits in place, now,”
Bart Chilton, a Democratic member of the Commodity Futures Trading Commission, said in an e-mailed statement. “Anybody who fills up a tank gas knows that some relief from unfair prices is sorely needed.”
Gasoline prices and their impact on the economy have emerged as an issue in the 2012 presidential campaign, and Obama has been seeking to set out his differences with Republicans. Mitt Romney, the likely Republican nominee, has accused the Obama administration of thwarting domestic oil production through regulations.
The president will call on Congress for a six-fold increase for surveillance and enforcement staff at the CFTC, said an administration official, who requested anonymity to preview the president’s remarks. Obama will also press lawmakers to raise civil and criminal penalties for businesses that are guilty of market manipulation to $10 million from $1 million.
In addition, he wants to empower the CFTC to raise margin requirements for traders’ oil positions, which would force them to increase the amount of money that back their oil bets.
Obama has been discussing international oil markets with counterparts in the Group of Eight, whose leaders he will host at a Camp David summit May 18-19.
Last week, the president discussed “tightness” in the global oil market in a video conference with French President Nicolas Sarkozy as the U.S. and its allies continue to monitor the economic impact of energy costs.
White House press secretary Jay Carney declined to say whether the two leaders discussed using strategic reserves to hold down oil costs. Officials in France and the U.K. said last month that the allies have talked about whether to tap crude stockpiles. The U.S. has repeatedly said that no decision has been made.
Obama’s comments today on oil prices and efforts to counter manipulation come as the U.S. is leading an effort to force Iran to end development work that may lead to building a nuclear weapon. Further U.S. sanctions on Iran are set to take effect by the end of June, about the same time a European Union embargo of Iranian oil kicks in. Iran is the second-largest producer in the Organization of Petroleum Exporting Countries.
Crude oil for May delivery advanced $1.74, or 1.7 percent, to $104.67 a barrel at 9:44 a.m. on the New York Mercantile Exchange. Prices are up 5.9 percent this year.
The White House is seeking additional funding for the CFTC as it works to implement new rules and regulations mandated by the financial services law known as Dodd-Frank.