By Bernice Napach
President Obama today raised the ante on his efforts to limit the rise in oil prices. The president, joined by Treasury Secretary Tim Geithner and Attorney General Eric Holder, called on Congress to adopt tougher rules on speculators in the oil market.
"We can't afford a situation where some speculators can reap millions while millions of American families get the short end of the stick," President Obama said.
The president's $52 million proposal would stiffen penalties for firms found to manipulate markets and raise the amount of money traders would have to put up to back their positions. It would also beef up the enforcement staff of the Commodity Futures Trading Commission and increase spending on technology to oversee and monitor energy markets.
The Daily Ticker's Henry Blodget says the proposal is "embarrassing" because speculators have little to do with the rising price of oil and gasoline. Prices are moving higher, Henry says, because "three billion new capitalists" in India and China are consuming oil and gasoline. It's the balance between supply and demand that determines whether oil prices rise or fall, not speculators, Henry argues.
The International Energy Agency and the U.S. Energy Department both reported last week that global oil supplies are loosening even with Western sanctions on Iranian oil. Saudi Arabia and other producers are increasing output which has helped to put some downward pressure on oil prices. Oil is trading higher on Tuesday afternoon.