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Oil Speculation Arises as Hot Issue in U.S. Election

Posted June. 24, 2008 03:12,   


Speculative oil investment has emerged as a hot issue in the U.S. presidential race.

The notion of speculative investment fueling oil price hikes in addition to skyrocketing demand is laying the groundwork for election pledges for the November election.

Barack Obama, the presidential candidate of the Democratic Party, said Sunday, “For the past years, our energy policy in this country has been simply to let the special interests have their way -- opening up loopholes for the oil companies and speculators so that they could reap record profits while the rest of us pay four dollars a gallon."

That day, Obama’s economic adviser Jason Furman offered four measures to eliminate speculative oil investment: abolition of the “Enron loophole”; a ban on overdraft transactions of energy draft; international cooperation to control the market for global oil futures; and a federal investigation of the oil market.

The loophole refers to a clause in the Commodity Futures Modernization Act established at the end of President Bill Clinton’s term. The clause states that electronic or over-the-counter transactions of energy products are not subject to regulation by the Commodity Futures Trading Commission.

Obama said the clause established due to lobbying from Enron, which collapsed after an accounting scandal, made the commission’s regulation ineffective and promoted oil speculation.

Furthermore, his camp criticized Phil Gramm, the economic adviser to Republican rival John McCain, citing that Gramm was one of five senators who jointly filed a motion for the bill in 2000.

The McCain camp responded that the Arizona senator has long driven legislation to scrap the loophole, suffering damage to his relations with many Republicans.

Meanwhile, Hillary Clinton is planning to come back to Congress this week and attend a fundraiser with Obama. Experts say Clinton’s support for Obama will begin in full swing with the event.