Obama steps up campaign against high fuel costs

[ProSense]

Source: AFP

WASHINGTON (AFP) – US President Barack Obama on Tuesday stepped up his campaign over politically damaging high gasoline prices, calling on Congress to eliminate $4 billion dollars in subsidies to oil industry giants.

"There are steps we can take to ensure the American people don't fall victim to skyrocketing gas prices over the long term," said Obama in a letter to top Republican and Democratic leaders on Capitol Hill.

"One of these steps is to eliminate unwarranted tax breaks to the oil and gas industry and invest that revenue into clean energy to reduce our dependence on foreign oil."

Obama's offensive comes in a week when several giant oil firms are poised to release quarterly results expected to show big profit increases at a time when American motorists are being squeezed by rising prices at the pumps.



Read more: http://news.yahoo.com/s/afp/20110426/pl_afp/usoilpoliticsobama_20110426174303

[MannyGoldstein]

1. Wow, a letter to Congress

The oil markets are probably plummeting as I type this.

[Kolesar]

2. Wow, a post on a message board

:sarcasm:

[Donnachaidh]

12. and a post on a message board means just about as much as that letter

But the poster here isn't turning it into a pr event.

:eyes:

[FSogol]

3. I hope it was a "strongly worded" letter.

:facepalm:

[ProSense]

4. It's in addition to this:

Attorney General Holder Announces Formation of Oil and Gas Price Fraud Working Group to Focus on Energy Markets

WASHINGTON – Attorney General Eric Holder today announced the formation of a Financial Fraud Enforcement Task Force Working Group to focus specifically on fraud in the energy markets. The Oil and Gas Price Fraud Working Group will monitor oil and gas markets for potential violations of criminal or civil laws to safeguard against unlawful consumer harm.

The working group will include representatives from the Department of Justice, the National Association of Attorneys General, the Commodity Futures Trading Commission, the Federal Trade Commission, the Department of the Treasury, the Federal Reserve Board, the Securities and Exchange Commission, as well as the Departments of Agriculture and Energy.

“Rapidly rising gasoline prices are pinching the pockets of consumers across the country,” said Attorney General Holder. “We will be vigilant in monitoring the oil and gas markets for any wrongdoing so that consumers can be confident they are not paying higher prices as a result of illegal activity. If illegal conduct is responsible for increasing gas prices, state and federal authorities should take swift action.”

In March 2011, President Obama asked the Attorney General to work with federal and state agencies to monitor oil and gas markets for potential wrongdoing. In response to the President’s call for action, Department of Justice leadership consulted with federal agencies and state attorneys general and discussed pending inquiries in some states, the most effective legal tools and areas that require additional exploration. As a result of this examination and to further the central mission of the Financial Fraud Enforcement Task Force, the Attorney General formed the Oil and Gas Price Fraud Working Group.

The Oil and Gas Price Fraud Working Group will explore whether there is any evidence of manipulation of oil and gas prices, collusion, fraud, or misrepresentations at the retail or wholesale levels that violates state or federal laws and harms consumers or the federal government as a purchaser of oil and gas. The Working Group will also evaluate developments in commodities markets and examine investor practices, supply and demand factors and the role of speculators and index traders in oil futures markets.

The Financial Fraud Enforcement Task Force was established by President Obama to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes and other laws prohibiting financial fraud. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement agencies who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

Repealing the subsidies are part of the President's budget. Congress needs to act.

It would be great if Congress held hearings on the rising gas prices too.

[KeepItReal]

5. There's no systemic fraud to be found. That's a red herring.

What is being done on the commodities markets that has been inflating the price of oil totally legal.

Obama needs to tell the CFTC to limit the players who are allowed to speculate on oil futures. Goldman Sachs has no business bidding on the price of oil against Southwest Airlines who is actually gonna *use* the oil.

"A new academic study contends that speculation by financial players like banks, hedge funds and index funds was behind the steep rise in oil prices last year and says that the Commodity Futures Trading Commission used models that were “not adequate” when it argued that speculation was not a major factor in the oil price spike.

The authors of the study, Kenneth Medlock and Amy Myers Jaffe, from the Baker Institute for Public Policy at Rice University, write that the commission looked at models that measured volatility just in a couple of months to base their conclusion that financial speculation was not behind oil’s meteoric rise last year to $147 a barrel, from $80.

...

Ms. Jaffe told DealBook that the commission’s decision to play down the role of speculators was “politically motivated,” because the agency “didn’t want to be blamed for not having proper oversight of the markets.”

Last month, Gary Gensler, the chairman of the commission, reversed the agency’s opinion on the matter and said at a hearing that excessive speculation by commodity traders might have played a major role in the swings in energy prices over the last few years."

http://dealbook.nytimes.com/2009/08/27/study-argues-cftc-overlooked-oil-speculation/

[orwell]

8. Ya think?

Last month, Gary Gensler, the chairman of the commission, reversed the agency’s opinion on the matter and said at a hearing that excessive speculation by commodity traders might have played a major role in the swings in energy prices over the last few years."

[Donnachaidh]

13. so basically the WH can *look into this*, find it's legal, and add this to

it's *list of Accomplishments*

No wonder they are so hot to do this now... :sarcasm:

[Historic NY]

29. Close the Enron loop hole.

[MineralMan]

9. And what would you have him do, I wonder?

What mechanism does he have to change oil and gasoline prices without congressional action?

If you know something I don't, please let us all in on it.

[KeepItReal]

15. See post #7

eom

[MineralMan]

16. Yes, but you are not the person I asked.

I don't know what the President is doing with regard to that Commission. That was not the focus of that article, which only outlined what he had proposed to Congress. That's a separate issue.

Your Wikipedia entry is not current, so I'm going to ignore it, until I can do some more research for more current information.

[KeepItReal]

17. Here's a good link from April 20, 2011

"U.S. President Barack Obama on Tuesday blamed speculators for driving gasoline prices higher and straining American consumers, saying there was enough oil in world markets to meet demand.
...
Obama said that global oil supply is adequate and that speculators are driving up prices significantly.

"It is true that a lot of what's driving oil prices up right now is not the lack of supply. There's enough supply. There's enough oil out there for world demand," Obama said.

"The problem is ... speculators and people make various bets, and they say, you know what, we think that maybe there's a 20 percent chance that something might happen in the Middle East that might disrupt oil supply, so we're going to bet that oil is going to go up real high. And that spikes up prices significantly." "

http://www.reuters.com/article/2011/04/20/us-usa-energy-obama-speculators-idUSTRE73J1NN20110420


There's some good stuff in that article. Hopefully the CFTC and FTC will act on curbing excessive speculation.

[MineralMan]

32. Yes, that's my hope, too. I guess we'll have to see what happens.

I'm afraid I know precious little about the CFTC. I'm just not that much into futures trading and derivatives. It all gives me a monster headache, so I'll leave that to others.

[neoralme]

36. How about releasing oil from the reserve? But he won't do that. Obama

wants gas prices higher. This is all pretend.

[MannyGoldstein]

37. Do an LBJ or an FDR

Step 1: Show the world who's boss. Use the Executive branch to grind a large and visible business into the ground until the CEO and executives are forced out and the stock price gets decimated. Could be any business that does something evil, doesn't have to be oil related. Make it clear that if you fuck with the American people, there are consequences. (Bad consequences - not "oh dear, the Fed will bail you out no strings attached, do you need any tax breaks too?" consequences - this will need to be explained slowly and carefully to Obama, or course.)

Step 2: Invite the heads of the oil companies into the Oval Office and say "fellahs, there's plenty of oil but the American public is getting fucked. What can we do to work together to fix this, and quick? Nobody leaves here until this is fixed. we'll get takeout."

End of problem.

[neoralme]

35. No doubt.

[texastoast]

6. Why is it $1.48 in Ecuador?

And almost $4 here?

Diesel is $1.02 in Ecuador and $4.12 here.

I don't get it.

[Spider Jerusalem]

39. Fuel is heavily subsidised by the government of Ecuador.

[KeepItReal]

7. No mention of the CFTC in that article...

If Obama is interested in dropping the price of oil, he'd get the Commodity Futures Trading Commission involved. Speculation is what has propping up the price of oil since before Obama took over:

"On June 25, 2008 Speaker Pelosi sent a letter to President Bush calling on him to direct the Commodity Futures Trading Commission (CFTC) to use its emergency powers to take immediate action to curb excessive speculation in energy markets, and to investigate all energy contracts. Despite growing reports of excessive speculation in energy markets, the CFTC has refused to take actions they have taken in the past.<13> The Energy Markets Emergency Act of 2008 was a failed bill that would have attempted to curb excessive speculation in the energy futures markets."

http://en.wikipedia.org/wiki/Commodity_Futures_Trading_Commission

"Ms. Jaffe told DealBook that the commission’s decision to play down the role of speculators was “politically motivated,” because the agency “didn’t want to be blamed for not having proper oversight of the markets.”

Last month, Gary Gensler, the chairman of the commission, reversed the agency’s opinion on the matter and said at a hearing that excessive speculation by commodity traders might have played a major role in the swings in energy prices over the last few years.

The agency is now considering new rules to curb excessive speculation in the market by putting into effect limits on the number of positions a trader can hold at any one time. This could have a major effect on profits of financial institutions, including Morgan Stanley and Goldman Sachs, which derive large profits from their big energy-trading arms."

http://dealbook.nytimes.com/2009/08/27/study-argues-cftc-overlooked-oil-speculation/

[defendandprotect]

10. Obama needs to REGULATE capitalism and commodities markets --

vs speculation -- !!

Wasn't previously premitted --

But when are we going to discuss Obama bright shiny new trade agreements here

at DU?

Colombia and Korea?

More jobs will be sucked out of US!!

[Fearless]

11. Gas prices are high because we're fucking around the Middle East.

The president should end what are now his wars and do so immediately. Then take the savings and balance the budget. This would increase the value of the dollar abroad as well as lower the price of gas.

[KeepItReal]

14. Not one oil tanker has been sunk to my recollection.

Remember back in '87 when the US Navy had to escort tankers transiting the Persian Gulf because the waters had *MINES IN THEM*? Now *that* was a reason for some high gas prices.

The current high prices are based purely on speculation in commodities markets by entities like Goldman Sachs instead of honest trading by the end users of the actual oil products (like airlines).

on edit: the Somali pirates have hijacked oil tankers but seem to be releasing them after ransoms have been paid.

[Fearless]

44. OPEC raises prices so the rest of the world does.

They control oil prices. They don't like us in the Middle East. A -> B

[Historic NY]

43. Yeah all that mid east oil comes from Canada.

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html

[Playinghardball]

18. Obama to Congress: End Big Oil's tax breaks... NOW

Source: Raw Story

WASHINGTON – A consensus appears to be building in favor of stripping $4 billion in giveaways to multi-billion dollar oil companies, as the specter of rising oil prices amid high unemployment and soaring debt pressures Congress to act.

In a letter Tuesday afternoon, President Barack Obama urged House and Senate leaders to "take immediate action to eliminate unwarranted tax breaks for the oil and gas industry, and to use those dollars to invest in clean energy to reduce our dependence on foreign oil."

"While there is no silver bullet to address rising gas prices in the short term, there are steps we can take to ensure the American people don't fall victim to skyrocketing gas prices over the long term," he added.

The president's sternly-worded letter came less than one day after Speaker John Boehner (R-OH) said that cutting oil subsidies is "certainly something we should be looking at," invoking the deficit and declaring that oil companies "ought to be paying their fair share."



Read more: http://www.rawstory.com/rs/2011/04/26/obama-demands-congress-slash-oil-subsidies-now/

[plumbob]

19. More like this, please!

Thank you!

[Ship of Fools]

20. i agree

my man BO -- his timing as impeccable as always ... who'da thunk 6 months ago the repubs would be getting so thrashed about? thank you, mr president for your patience.

[gratuitous]

21. All right! A sternly-worded letter

Take that mofo!

[Sadie5]

22. They need more than a thrashing

Obama needs to continue kicking a$$ them go after the top 1%. You go O!! Kick more a$$!!

[callous taoboy]

23. The MEpublicans will say no to helping Obama get re-elected.

[Kurmudgeon]

30. Them saying no for the oil corporations probably won't play well back home, if so. n/t

[callous taoboy]

38. You're right. Like a constrictor squeezing the rat.

[onehandle]

24. Too late. nt

[InkAddict]

25. Well, just take that, you evil subsidized oil outfits -

Wonder what the sternly worded response from Marathon, Ashland, et al, in Ohio to Mr. Orangeman w/copy to John Kasux (?) might soon reveal? Something along the lines of "thanx, but we'll be moving across the river or, indeed, across the world, and quantitatively easing away your Ohio jobs and there's the matter of changing our distribution plans a bit, you know, to control costs? Hey, nothing personal; just business.

Isn't it lovely to see those politicians man-up post-damage? Heck of a job,(fill in name).

You know what Ms. Gump used to say...

[plumbob]

31. For years, oil companies in west Texas threatened to take their wells

somewhere else if the local school board dared to spend money on schools by taxing oil values.

Well, in 1988, the whole district was air conditioned and a lot more.

Guess what? The wells are still there, still producing, and the taxes still benefit schools.

And they are welcome to try to get new rights of way for pipelines in addition to the ones in existence. Welcome to try, but no new trans-state route has been approved in Texas since the 80s. And this is Texas, not exactly a tough regulatory climate.

[CelticThunder]

26. Bwahahahahaha! You have to laugh at this farce! Obama doesn't mean it, but he knows it's safe

to demand it because it's not ever gonna happen.

[Bodhi BloodWave]

33. where can i learn to read peoples minds as well as you? n/t

[Scurrilous]

27. K & R

:thumbsup:

[fascisthunter]

28. but will it happen

boy, since his reelection campaign started he's been talking like a progressive... oh wait, he did this before.

[EmmettKelly]

34. Outside of giving them a tax refund how has that investment

in "Green Energy" with GE worked out?

GE Energy Financial Services announced in December that it had reached its multi-year target of building a $6 billion renewable energy investment portfolio by the end of 2010. Renewable energy now comprises nearly 30 percent of its portfolio, up from 6 percent in 2006, the company said. In 2009 and 2010, the business unit invested or committed more than $1.5 billion to wind farms, closed transactions in geothermal and hydroelectric power generation and made venture capital investments in smart grid and renewable energy companies. GE also said its research has shown that investments in the wind industry have risen and fallen with the renewal and expiration of renewable energy incentives. Specifically, GE said the expiration of incentives in 2000, 2002 and 2004 caused a 76 to 90 percent drop in installed capacity from the previous year.

http://www.novoco.com/journal/2011/02/briefs_retc_201102.php

[ProudDad]

40. He's pulling the wool over your eyes

and/or creating a smoke screen to cover up for the other polluting industries especially coal and nuclear...

The oil IS running out (or more accurately the easy, cheap half has been extracted) but at present, gas prices still have NOTHING to do with the process of extraction, shipment and refining. they have to do with speculators and price gouging of the public.

However, the ACTUAL costs of extraction, etc. will be increasing exponentially once Peak Oil kicks in, soon, so your price at the pump in the long run is NOT going down. Better think a little less instant gratification in the area of "mobility"...

But, what Obama SAYS IS correct. The oil subsidies should be ended.

But as usual, he stops short. The reality is that all subsidies to all of the polluting energy sources from coal to oil, "natural" gas to nuclear should be ENDED and applied to a crash program a'la the Manhattan Project to research and implement ACTUALLY renewable sources of energy as well as to put in place massive conservation programs.

Anything less condemns us to cook on an overheated Earth.

[TheWebHead]

41. The problem is that removing the tax credits would reduce production

My understanding of the tax credits are that they were for things like dry holes or extracting higher priced oil in areas that would otherwise be abandoned. If you incentivize something, like oil drilling, you get more of it, while if you penalize something you get less of it. Oil companies pay about 41% in taxes and royalties in the U.S., higher than a lot of other industries and they pay collectively more in federal income taxes than the bottom 50% of individual taxpayers. If there are tax breaks that have no impact on the oil companies' behavior or won't make them less competitive with their foreign counterparts, I'm all for their elimination, but I will assume the vast majority of the $4 billion being discussed doesn't fit that scenario.

[freshwest]

42. Why does common sense get so little air time? Bet this won't be on 'the news.'