Obama seeks to curb speculation in oil market

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US President Barack Obama on Tuesday announced a plan to 'crack down' on speculation in the crude oil markets to put the brakes on the rise in gasoline prices.

"We can't afford a situation where speculators artificially manipulate markets by buying up oil, creating the perception of a shortage, and driving prices higher - only to flip the oil for a quick profit," he said at the White House.

Currently, the average price for a gallon (3.78 litres) of gasoline in the US is about $4, substantially above the range where it has stood in recent years, and that price increase is like 'an additional tax' on consumers, the president said.

The Republicans, in full campaign mode in the run-up to the November presidential elections, are accusing the Obama administration of not doing anything to halt the recent rise in the price of gasoline.

The White House says that with this plan, which will be sent to Congress for its approval, the ability of speculators to take advantage - in an unwarranted way - of the volatility in the prices of petroleum will be curtailed.

Obama promised that his government will do everything possible "to ensure that an irresponsible few aren't able to hurt consumers by illegally manipulating or rigging the energy markets for their own gain".

The initiative presented Tuesday includes a request for an extra $52 million for the Commodity Futures Trading Commission (CFTC) with the aim of strengthening its monitoring and oversight capabilities.

Also, the initiative includes an increase in civil and criminal sanctions against the manipulation of the petroleum futures markets.

Obama said that those sanctions will be made more severe and will be applied not only for each violation, but also for every day that the illegal practice continues.

In addition, the government intends for the CFTC to raise margin requirements for transactions in the energy markets.

Obama, who once again ascribed the global increase in oil prices to instability in the Middle East and the growing demand for petroleum in countries like China and India, said that there are no 'quick fixes' and that none of the measures presented so far are going to cause gasoline prices in the US to substantially recede overnight.

The US consumes more than 20 per cent of the petroleum used worldwide but possesses only 2 per cent of the known global reserves, Obama noted.

Within that framework, the president promised to continue with the energy policy he put into place to try and reduce US dependence on foreign oil, a policy that aims to increase domestic exploration and production and to facilitate the development of alternative clean energy technologies.