CHICAGO (Reuters) - U.S. Democratic presidential candidate Barack Obama offered new steps on Sunday to crack down on speculation in oil markets, saying his plan would help rein in runaway fuel costs.
A jump in gasoline prices above $4 a gallon has spurred consumer anger and is a top theme in the race between Obama and his Republican rival in the November election, John McCain, who has proposed more U.S. offshore oil exploration as a way to boost energy supplies.
“I think everyone believes there’s too much speculation in the oil markets,” said New Jersey Gov. Jon Corzine, an Obama ally who announced the proposals in a conference call with reporters. “A lot of the price of oil, I think, people put at the doorstep of speculators bidding up and holding supplies off the market.”
Corzine said Obama’s plan aims to close the so-called Enron loophole, which exempts some energy speculators who trade electronically from U.S. regulation. It takes its name from the now-collapsed energy firm that benefited from the law.
Obama would require U.S. energy futures to trade on regulated exchanges. The campaign also said he backed legislation that would direct the Commodity Futures Trading Commission, the top U.S. futures market regulator, to investigate proposals such as increasing margin requirements in the market.
In addition, the Illinois senator wants to see more transparency and oversight of institutional investors in commodities markets.
Oil hit a peak of nearly $140 a barrel last week. It has doubled over the past year, adding to woes such as a housing crisis that are already taking a toll on the faltering U.S. economy.
Soaring oil prices have come as big funds have poured money into commodities, seeking a hedge against inflation and a weak dollar. The hot money has helped extend a six-year rally in oil, as supplies have failed to keep pace with surging demand in emerging economies like China.
The Obama campaign has accused McCain’s campaign co-chair, former Sen. Phil Gramm of Texas, of creating the energy-trading loophole at the “behest of Enron.”
The loophole is “one example of the special interest politics that put the interests of Big Oil and speculators ahead of the interests of working people,” Obama’s campaign said in a statement.
But the McCain campaign rejected the effort to link the Arizona senator to that law and said he had broken ranks with many Republicans to try to close the loophole.
“John McCain has been part of an effort to close the Enron loophole,” said McCain’s top economic adviser Douglas Holtz-Eakin.
“The truth is Barack Obama is following John McCain’s lead to close a Wall Street loophole that was signed into law by President Bill Clinton,” said McCain spokesman Tucker Bounds.
Since he became the presumptive Democratic presidential nominee earlier this month, Obama has focused his campaign message heavily on the economy while McCain, a Vietnam War hero and former prisoner of war, has emphasized foreign policy.
Many U.S. lawmakers have been discussing ways to limit speculation in crude oil futures, including regulation of overseas trading in a benchmark U.S. oil contract.
The Commodity Futures Trading Commission has promised to boost surveillance of energy trading by tracking index funds and getting more information on oil contracts based on American crude that are traded in the United Kingdom.
But Sen. Maria Cantwell, a Washington Democrat, has called the regulator “toothless tiger” and said Congress must act if the CFTC fails to pursue the matter aggressively enough.
Obama’s announcement came as major producers, consumers and leading oil company executives gathered for an emergency meeting in Jeddah, Saudi Arabia, on ways to tame the oil-price surge. Host Saudi Arabia vowed to pump yet more oil, but said that alone would not be enough to calm the market.
Additional reporting by Jeff Mason