Obama's Gas Plan

.

Later today, Barack Obama is expected to release a statement calling for the closure of the "Enron Loophole" and a crackdown on excessive energy speculation. This is the same loophole I referenced last week after seeing Keith Olbermann's story on June 18th.

The loophole was added on to an essential government reauthorization bill by Senator Phil Gramm in 2000, and it passed with little debate just moments before that year's Congressional Christmas break.

Congress heard testimony about the loophole on June 3rd. Investor's Insight reported:

"Professor [I. Michael] Greenberger argued that the “Enron Loophole” provision in the CFMA produced a change in the supervision of certain commodities (energy, for example) that had been in place since 1922 thereby enabling Enron to engage in their trading practices (with led to the electricity crisis in California in 2001) and the development of “dark markets” (Intercontinental Commodities Exchange in Atlanta, for example) enabling unlimited positions and limited transparency to be established by speculators. All outside the purview of the US regulatory bodies such as the CFTC."

Since this loophole took effect, speculators have been able to manipulate the price of oil and other commodities without oversight. According to Greenberger, closing the loophole would create a drop in oil prices of between 25 and 50 percent overnight.

By comparison, John McCain's plan to lower gas prices by lifting the federal ban on offshore oil drilling would take years to have even a minimal effect. From USA TODAY:

The U.S. Energy Information Administration recently estimated that drilling in the Arctic refuge would reduce the global price of oil between 41 cents and $1.44 per barrel [off the current price of $135 per barrel] and take 20 years to have much effect on the domestic oil supply. It would take about the same amount of time for offshore oil drilling to make any real difference, according to the EIA.

In response to Senator Obama's statement today, the McCain camp said that Obama is simply following John McCain's lead in working to close this loophole, and that McCain will work to address abuses in oil speculation.

In fact, McCain was once a champion of this cause. However, since beginning his presidential campaign, he has avoided the topic completely. Until today.

This might have to do with the fact that McCain's campaign co-chair and chief economic adviser is none other than Phil Gramm, the former Senator who originally introduced the loophole in 2000 at the behest of Enron CEO Ken Lay. Other possible zingers for McCain: Gramm’s 1992 re-election campaign was chaired by Lay, and Gramm’s wife, Wendy, earned $50,000 per year as an Enron director from 1993 to 2001.

.

Comments

[TMM]

I hope more people hear about this. Good article!

[Nina]

Very informative article that more people should be aware of.

[Tim]

Agreed. I'm surprised that it took Obama's announcement to bring this out into the mainstream media.

[Ambrosiality]

hmm interesting... I'm trying really hard not to get into American politics especially since I can't vote here.