2-19-08 by dugan
If I told you that Venezuela’s crackpot leader Hugo Chavez is
responsible for crude oil hitting $100 a barrel in futures trading
today, would you believe me? I hope not. But the speculators who drove
up the price are pointing wildly
at Chavez’s spat with Exxon, at a refinery fire in Texas and at OPEC.
Meantime the hedge fund speculators are hauling in dough, with a big
side benefit for oil company profits. You and I and the national
economy pay the price.
We’ll never know exactly how the trick
was pulled off, or by who, because so much energy trading is done in
unregulated markets created by the corporate criminals of Enron.
Congress has in its hands a partial cure for the speculative excess. If
lawmakers don’t have the guts to act now, closing the loophole opened
by Enron, they should have their heads handed to them by consumers.
Here, thanks to a tip from Tyson Slocum of Public Citizen, is an expert explanation by
securities expert Jim Hamilton of how the legislation would at least
shine enough light to see what’s going on inside the unregulated "dark
markets" of energy trading. The measure is part of the farm bill passed
by the Senate. It was attached to the big omnibus bill after Sen.
Dianne Feinstein and others failed to get the trading loophole closed
in six years of effort.
The lack of regulation is due to what’s
actually called the "Enron Loophole." Enron Chairman Ken Lay and his
market-manipulating buddies persuaded Congress and federal regulators
in 2000 that electronic trading markets would be more "efficient" if
they didn’t suffer the weight of regulation. An attempt by a hedge fund
in 2005 to corner the market in natural gas finally forced federal
commodity regulators to quit denying the truth: speculation, not market
conditions, was driving prices. Unregulated markets are not efficient,
they’re an invitation to gaming by big money and Big Oil.
we’ve got $100 oil. We’ve got gasoline above $3.03 a gallon nationally,
up 2 cents in a day and certain to keep rising. Regular grade in
California is $3.20 and diesel is a shocking $3.65, adding an
ever-larger fuel surcharge to nearly every manufactured product and
grocery item we buy.
Oil companies’ dealings with corrupt and
often despotic governments in Venezuela, Nigeria, Angola, Chad, Myanmar
and elsewhere help keep these governments in power and destabilize
whole regions. The companies are desperate to make deals in Iraq, where
U.S. armed forces will be expensively on the hook to protect them,
their employees and their shipping routes. But that doesn’t translate
to $100 oil today. U.S. and global demand are flat to down. There’s no
shortage of oil and no shortage of gasoline, except where oil companies
and refineries have deliberately cut back on refining to boost retail
The farm bill is in a House-Senate conference committee,
where evil mischief often takes place. Sen. Tom Harkin of Iowa is
leading the Senate side of the committee. Sen. Feinstein’s office says
there’s so far no indication the Enron loophole amendment is in
trouble. But conference committee is where these things get weakened,
sometimes fatally, and energy regulation wold be easy to trade away in
return for more favors to farm states.
We’re working to make
sure the final bill contains energy market regulation without further
amendment. If it looks like the measure is in danger, OilWatchdog will
be calling for your help.
For the record, here are the Senate members of the farm bill conference committee:
Democratic members: Sen. Tom Harkin of Iowa, Sen. Max Baucus of Montana, chairman of the Senate Finance
Committee; Sen. Kent Conrad of North Dakota, chairman of the Budget
Committee; Sen. Patrick Leahy of Vermont, chairman of the Judiciary
Committee; Sen. Blanche Lincoln of Arkansas; and Sen. Debbie Stabenow of Michigan.
members: Sen. Saxby Chambliss of Georgia; former Senate Agriculture
Committee Chairman Sen. Richard Lugar of Indiana; Sen. Charles Grassley of Iowa,
ranking member of the Finance Committee; Sen. Thad Cochran of Mississippi,
ranking member of the Appropriations Committee; and Sen. Pat Roberts of