Today Barack Obama became the first national figure to enunciate a plan to deal with the speculation-driven increase in the price of oil.
Dribs and drabs of concern have come from the Administration, usually via the SecTreas, but Obama today leaps beyond anything yet proposed and gives some coherence to a multifaceted plan of action to address another new and unique issue.
Oil price rises have the same effect as tax increases, and are brutally regressive to boot. Money is extorted from individuals pockets; but instead of flowing INTO the USG, it flow OUTWARD into the pockets of such wonderful organizations as the House of Saud, the Iranian Gov't, Putin, Inc., Chavez' Venezuela.
It is the greatest transfer of wealth in world history. And the wealth is being transferred from the Western & Eastern (Japan) Democracies to the boys listed above. [Granted, some of this wealth returns in the form of investments made in the US by various foreign entities.]
It also means, obviously, that oil consumers have less in their pockets to pay for other goods and services, thereby slowing the economy.
The oil market, until very recently, was composed primarily of those players who actually were in the oil business. They made their buy/sell decisions based on fundamental supply/demand equations.
Recently, the same guys who brought us the Tech Bubble in US stocks in the late 1990's realized that the actual supply/demand equations need not be the primary factor in moving oil prices. Rather, the mere purchase of oil futures contracts in great volume was enough to drive the price of oil up. These speculators have/had no intention of actually taking delivery of an oil tanker full of crude: they only want their pieces of paper, the contracts, to go up in value.
They also noticed that these futures markets were subject to limited regulation and disclosure requirements. Yum Yum.
Just as in the Tech Bubble when company share prices rose to the moon, irrespective of the actual economic worth of the company itself, so now we see the value of oil contracts going to the moon, irrespective of the actual "value" of a barrel of oil.
Obama proposes closing the "Enron Loophole" which permits domestic companies from escaping regulation on their oil futures trading activities; it calls for a draconian increase in international regulation of futures trading; and it calls for the opening of investigations by the DoJ and another regulatory authority currently charged with monitoring futures trading.
The importance of this proposal, and the fact that the man who is likely to be the next Prez, has shown he takes the issue seriously and is not merely saying we should bike to work, cannot be overestimated.
It's Bold. It's Brave. And it shows Barack's got some good economic advisers on his team.