COMMENTARY | President Barrack Obama's gamble to release 30 million barrels from the U.S. Strategic Petroleum Reserves has failed miserably. Oil took a quick hit after the news first broke on Obama's decision to make the risky play and now the prices are nearing the same numbers they were before the announcement.
Yahoo! Finance reports that oil prices have risen from their low of $90 a barrel to $98.67 a barrel at the close of business Friday. The rise in prices comes from optimism that the economy in the United States is on the verge of improving. In other words, speculators are once again stalling an economic recovery by raising oil prices.
The gamble by Obama to release the Strategic Petroleum Reserves has already backfired before it has ever happened. Obama miscalculated the manipulative nature of those in the oil trading business. It is time to go after those manipulating the oil markets.
They are making money on paper when oil prices rise and oil prices fall. There is a simple solution. Limits on how Wall Street involves itself in oil speculation is an issue that has not gone away for years. Two years ago there was a plan proposed to limit futures trading, focusing on oil but it never came to fruition.
In 2009, in November before the cold of the winter, the Commodities Futures Trading Commission put together a plan to curtail oil futures speculation. Government regulations curtailing speculators in the oil and gas futures have been in force since January but nothing has been enforced.
Rep. Bernie Sanders, I-Vt., said in a statement on his own website, "The same Wall Street speculators that caused the worst financial crisis since the 1930s through their greed, recklessness, and illegal behavior are ripping off the American people again by gambling that the price of oil and gas will continue to go up, and up, and up."
Sanders also questioned why the CFTC has not acted to limit Wall Street speculation as directed. The question is valid. It has been five months since the CFTC has had the power to curb Wall Street trading on oil futures and nothing has happened. In fact, manipulation of the oil futures has been the worst in the history of the system. It is time to aggressively set up stings and eliminate the traders operating outside the law.
Next, limits need boundaries and rules enforced. Anyone violating the rules must suffer severe punishment and made an example to discourage widespread wrongdoing. Wall Street speculators once only controlled 30 percent of the oil futures market. They are now in control of 80 percent of the market. Releasing 30 million barrels of oil was never the answer, eliminating corrupt oil futures traders and forcing the CFTC to do their job was always the answer.
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