Image: Barack Obama
Hans Deryk  /  AP
Sen. Barack Obama speaks to U.S. mayors at their annual meeting in Miami on Saturday.
updated 6/22/2008 5:50:10 PM ET 2008-06-22T21:50:10

Sen. Barack Obama on Sunday said as president he would strengthen government oversight of energy traders he blames in large part for the skyrocketing price of oil.

The Democratic candidate's campaign singled out the so-called "Enron loophole" for allowing speculators to run up the cost of fuel by operating outside federal regulation. Oil closed near $135 a barrel on Friday — almost double the price a year ago.

"My plan fully closes the Enron loophole and restores commonsense regulation as part of my broader plan to ease the burden for struggling families today while investing in a better future," Obama said in a campaign statement.

Obama's campaign blamed the loophole on former Sen. Phil Gramm, a Texas Republican who serves as Republican candidate Sen. John McCain's co-chairman and economic adviser. The Obama campaign accused Gramm of inserting a provision into a bill in late 2000 "at the behest of Enron lobbyists" that exempted some energy traders from government oversight.

The 'Enron loophole'
Houston-based Enron collapsed in scandal in 2001 when it was discovered the company had vastly overstated its income.

McCain spokesman Tucker Bonds said McCain has supported efforts to close the loophole and noted the bill in question was signed into law by former President Clinton.

"The fact that Barack Obama is attacking John McCain, despite McCain's leadership on the issue, shows that Barack Obama is driven by the partisan attacks that Americans are tired of," Bounds said.

McCain's campaign supplied a copy of a letter Gramm wrote to Sen. Byron Dorgan, D-N.D., on June 13 in which the former senator denied charges that the adoption of the bill was a "secret maneuver." Gramm said he had "nothing to do with the writing of the provision" on regulation of energy trading.

Obama's plan was outlined Sunday by New Jersey Gov. Jon Corzine, former chairman and CEO of Wall Street investment firm Goldman Sachs, during a conference call with reporters. Corzine said the volatility in the price of oil "is absolutely indicative of speculation in the markets."

Congress already has acted to close the loophole, including a provision in the huge farm bill that passed earlier this year. But Obama's campaign said the candidate would go further by requiring that U.S. energy futures be traded on regulated exchanges.

Obama also would ask the Commodity Futures Trading Commission to consider whether traders should be subject to higher margin requirements. He also would work with other countries to regulate energy markets and press the Federal Trade Commission and the Department of Justice to investigate possible market manipulation.

The campaign said Obama's proposal is part of his broader energy strategy that calls for reducing oil consumption by 35 percent by 2030.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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