Obama offers plan to crack down on oil speculation

U.S. Democratic presidential candidate Barack Obama proposed on Sunday new steps to tackle energy market speculation that has been blamed for runaway oil costs.The plan comes as the high cost of gasoline has become a major concern for the economy and U.S. consumers as well as a top theme in the election race between Obama and his Republican rival in the November election, John McCain.

Among other measures, the plan would require U.S. energy futures to trade on regulated exchanges, Obama’s campaign said in a statement.

The campaign also said Obama backed legislation that would direct the Commodity Futures Trading Commission to investigate proposals such as increasing margin requirements in the market.

The Illinois senator also wants to see more transparency and oversight of institutional investors in the commodities markets.

"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."

Obama said last week he was concerned about irregularities in the oil markets.

McCain’s campaign accused Obama of following the Republican candidate’s lead to close a loophole it said was signed into law by Democratic President Bill Clinton.

"John McCain has supported bipartisan efforts to close this loophole and will work to address abuses in oil speculation," McCain spokesman Tucker Bounds said. "Barack Obama has voted the party line for Democrats who claim the loophole is fixed."

Obama’s proposal comes as 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, the top U.S. futures market regulator, 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 will need to act if the CFTC does not pursue the matter aggressively enough.

Oil prices have doubled in the past year as big funds have poured money into commodities, seeking a hedge against inflation and the weaker 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.

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 rein in runaway oil prices. Host Saudi Arabia vowed to pump yet more oil, but said that alone would not be enough to calm the market.