President Obama rightly has stated this week in an interview in Miami that his chances for re-election will rise and fall on the economy not on killing Bin Laden. Killing Bin Laden may have markedly increased Obama's foreign policy cred with the American people but Obama did something this past week that most people are not aware of that may increase his chance for re-election.
President Obama on May 11, 2011 nominated Mark Wetjen to the Commodity Future Trading Commission (CFTC).
Let me explain below the jump:
There are two headwinds right now that are hurting economic growth: falling house prices and rising gas prices. In terms of falling house prices there is something that Obama can do but that is for another diary. In terms of rising gas prices, many people have said that there isn't much a president can do about rising gas prices but that isn't entirely true in President Obama's case.
There are many causes for rising gas prices (turmoil in the Middle East, China's increase usage of oil, Japan's nuclear crisis, etc) but the single most cause is OIL SPECULATION. Typically oil prices should be set by supply and demand but the reality is that there is good supply right now particularly since gas prices are so high that Americans are driving far less. Knowing this fact is one of the reasons why cost of a Barrel of oil went for $115 to under $100 in a week after Wall Street was told that there is a good supply.
So what is causing high gas prices? Oil Speculation which is Wall Street gambling. Ed Schultz and the Nation explains it below:
Dodd-Frank Wall street reform bill has empowered the CFTC to curb oil speculation. Rules on doing just that were suppose to be implemented 180 days after the Wall Street reform bill was passed. So why hasn't the CFTC done their job? Wall Street, Banks, and Hedge Funds have been fighting tooth and nail to delay this implementation spending millions of dollars lobbying the CFTC on regulation because curbing oil speculation will cut into their profits when they gamble on Wall Street.
There are currently 5 commissioners in the CFTC whereby in order to get things done there needs to be 3 out of 5 votes. Right now there are 3 Democrats and 2 Republicans. The two Republicans side with Wall Street and are blocking curbs on commodity speculation. Two of the 3 Democrats are FOR curbing oil speculation. The one Democrat who is the swing vote and often sides with Republicans will leave his post on June 19th this year. His name is Mark Dunn and is a Bush appointee and has stated many times he doesn't believe in curbing speculation.
So what did President Obama do this week? He appointed Dunn's replacement. Dunn's replacement if approved by the Senate is named Mark Wetjen and is a former aide to Senator Reid. He also worked on Dodd-Frank and knows the derivatives market inside out. The Industry believes that he will be the third vote need for the CFTC to function and do their job.
http://advancedtrading.com/...
The Obama administration is poised to secure an all-important vote at its U.S. futures regulator to drive through its plan to clamp down on speculation in the hard-charging oil, metals and grain markets with a nomination of a fresh-faced commissioner.
The White House put forward Mark Wetjen, 37, a top aide to the Senate majority leader, for a spot on the Commodity Futures Trading Commission Wednesday, replacing fellow Democrat Michael Dunn, who has given CFTC Chairman Gary Gensler a few headaches in his drive to bring commodity markets to heel.
The change comes just as a renewed surge in prices and whipsaw volatility has once again brought speculation to the political fore.
The fifth seat on the commission is important for ensuring the swift passage of the dozens of rules the agency is making to implement derivatives reforms in the Dodd-Frank law.
So will the Senate drag their feet in approving this appointment? Probably but there are two things that may push this appointment along in the Senate. 1. This person used to work for Harry Reid and Reid will make sure that this appointment is speedily approved. 2. "Horse-trading" may have secured Republicans support:
Republicans hate the law and might be expected to drag their heels on the nomination. But they may have already secured a "horse-trading" deal with Democrats to advance a separate Republican appointment elsewhere.
For example, Republicans have been pushing for the reappointment of William Ostendorff, a commissioner at the Nuclear Regulatory Commission, whose term also expires in June, and have chided Democrats for dragging their feet.
So what does this all mean? Many analysts believe that any where from 25% to 50% of the oil prices are do to speculation. By curbing oil speculation that could be the single best thing to decrease oil prices.
Of course the Senate could drag its feet but Obama could just recess appoint Wetjen by the end of the Summer if the Senate doesn't complete its task stating that Dunn's job is up in June 19th and we need to get all 5 Commissioners on board. We also don't know specifically where Wetjen stands on derivatives but the fact that he was one of Reid's point man on the Dodd-Frank bill that Harry Reid probably knows where he stands (thus the White House knows). Thus he is far more likely to vote with the 2 other Democrats than the 2 Republicans to implement strict laws.
The Nation says it well here:
http://www.thenation.com/...
Now, it just so happens Dunn’s term is up in June and last night MSNBC’s Ed Show reported that the White House has begun vetting his replacement. This may seem obscure and technical, but given the precariousness of the recovery and political explosiveness of gas prices, nominating a replacement enthusiastic about reigning in excessive speculation may be the single most important decision the White House makes between now and Election Day.
While waiting for Wetjen to be approved by the Senate, 17 Senators (including Senator Collins) went on the offense on the CFTC sending that agency a letter on May 12th that they want the CFTC to specifically have a plan on implementing curbing oil speculation by May 23rd.
http://www.ktvz.com/...
Sens. Maria Cantwell (D-WA) and Ron Wyden (D-OR) led a bipartisan group of 17 senators Wednesday in calling on federal regulators to expedite long-stalled rules to rein in excessive Wall Street speculation in West Texas Intermediate (WTI) crude oil futures and other energy commodities.
They said numerous experts have concluded that excessive trading in oil futures is causing oil price volatility unrelated to supply-and-demand fundamentals, and contributing to rising gas prices. According to the U.S. Commodity Futures Trading Commission’s (CFTC) own report, speculators hold futures and options on more than 258 million barrels of oil. That is more than one-third of the amount in the Strategic Petroleum Reserve.
In a letter sent Wednesday to the CFTC, Cantwell, Wyden and 15 senators called on the regulatory body to immediately implement overdue rules on speculative position limits in all energy futures markets, beginning with the crude oil futures market. The senators asked to see the CFTC’s implementation plan no later than May 23.