Guest blogged by Jon Ponder, Pensito Review.
Drilling off the coast of California, Florida and elsewhere would increase domestic oil production by 7 percent by 2030, according to the Energy Information Administration. But “because oil prices are determined on the international market…any impact on average wellhead prices is expected to be insignificant.†There is no short-term benefit to drilling, says the EIA, because it would take at least five years for oil production to begin. (Source: Center for American Progress.)
On the other hand, in a single step tomorrow — closing the Enron Loophole — Congress and George Bush could create an overnight drop in oil prices of between 25 and 50 percent. This is according to testimony before a Senate Committee two weeks ago by Michael Greenberger, the former director of Trading & Markets for the Commodities Future Trading Commission (CFTC), the government board that oversees commodities markets.
“Yes,” Greenberger testified, “overnight [closing the Enron Loophole] will bring down the price of crude oil to get at least a 25 percent drop in the cost of oil and a corresponding drop in the cost of gasoline. Some people estimate 50 percent.”
Greenberger’s testimony was brought to light by an investigation into the Enron Loophole by Keith Olbermann on MSNBC’s “Countdown” last week. (A transcript of Olbermann’s report follows.)
The Enron Loophole is the nickname for a provision written into the Commodity Futures Modernization Act (CFMA) of 2000 that was drafted by lobbyists for Enron and inserted in the bill by then Sen. Phil Gramm (R-Texas) that deregulated an aspect of the market Enron sought to exploit with its “Enron On-Line” trading program, the first Internet-based commodities transaction system. Phil Gramm is now a key economic adviser for the John McCain campaign.
While it was a technical success, Enron On-Line was based on a flawed business model that drained corporate revenues — even while the company was manipulating the rates consumers paid for electricity in California. Enron On-Line eventually drove the company into bankruptcy, and the cooking of the books to hide its losses led to charges of conspiracy and fraud against Enron executives.
The Republicans’ sudden rollout of the campaign to lift the ban on offshore drilling is really meant to shift the blame from Bush and the GOP to the Democrats and their opposition to offshore drilling. To their credit, they have done a masterful job — and all it has cost them is the credibility of Florida Gov. Charlie Crist, who broke tradition in the state and came out in favor of lifting the ban. (It has also cost whatever meager credibility Crist’s predecessor, Jeb Bush, had left. Bush opposed lifting the ban when he was in office but came out wholeheartedly in favor of it this weekend.)
*
Here’s the transcript of the video of the report on the June 18 edition of “Countdown”:
Since this legislation passed, gasoline prices have more than doubled and commodity traders have made tens of millions of dollars, devastating thousands of small companies that deal in oil, and creating the risk of a speculative bubble popping.
How does McCain fit in? The road connecting him to four dollar gas begins with Enron.
(BEGIN VIDEOTAPE)
OLBERMANN (voice-over): Soon after Enron‘s birth as a power supplier in the 1980s, CEO Ken Lay decided he could make more money betting on electricity futures, especially if government regulators didn‘t stop him from cornering the market and gaming the system. Under the first President Bush, an obscure agency called the Commodities Future Trading Commission obliged Ken Lay. The CFTC chairwoman, Wendy Gramm, left Enron alone.
When Bill Clinton beat Bush, it took only one week before Enron asked Gramm to lock in her hands-off position as official CFTC policy. Gramm started the process. The CFTC approved it after she left on Clinton‘s inauguration day. Five weeks later, she took a part-time post on Enron‘s board of directors and wound up earning more than 900,000 dollars over the next decade. Clinton never undid Gramm‘s changes.
Fast forward to the year 2000 and Bush v. Gore. In the chaos of constitutional crisis, Enron got a law passed containing what is now known as the Enron loophole. Where Gramm deregulated individual trades, the Enron loophole deregulated entire markets, online markets. Enron had just started its own online market, and set its sites on the state of California.
Over the next six months, California suffered 38 rolling blackouts, as Enron used artificial shortages, bogus deals and total knowledge of the market as sole owner of its own online market to triple California‘s energy bills. In the dark, regulators had less power than California did, leaving Enron laughing about it.
UNIDENTIFIED MALE: The money you stole from those poor grandmothers in California.
UNIDENTIFIED MALE: Yes, Grandma Millie, man.
UNIDENTIFIED MALE: Yes, now she wants her (EXPLETIVE DELETED) money back for all the power you charged—jammed up her (EXPLETIVE DELETED) at 250 dollars a megawatt hour.
OLBERMANN: The Enron loophole applied to all energy commodities, oil, propane, natural gas. So, today, oil futures are driven by speculators, free from any regulatory oversight. Now, you can‘t just blame OPEC any more. British Petroleum paid 303 million dollars to settle charges it cornered the propane market in 2004, inflating heating costs for seven million American homes.
Two years ago, a Republican Senate report recognized what speculators have done and blamed the Enron loophole. Two weeks ago, the Senate Commerce Committee heard testimony about the Enron loophole‘s effect on the price of a barrel of oil.
MICHAEL GREENBERGER, FMR. CFTC DIR OF TRADING & MARKETS: The speculators are not just placing bets in these futures markets, they‘re saying, gosh, if I can control the price of heating oil, I‘ll go out and buy heating oil. So you have Morgan Stanley as the biggest heating oil owner in New England.
SEN AMY KLOBUCHAR (D), MINNESOTA: The idea is to put the words energy back in so that we can actually go back to where we were before this, what Dr. Cooper calls the foolish but affectionately called Enron loophole.
GREENBERGER: Yes, overnight that will bring down the price of crude oil to get at least a 25 percent drop in the cost of oil and a corresponding drop in the cost of gasoline. Some people estimate 50 percent.
MARK COOPER, CONSUMER FEDERATION OF AMERICA: The speculative bubble in petroleum markets has cost the average American household about 1,500 dollars in increased gasoline, natural gas and electricity expenditures in the two years since the Senate committee on investigations first called attention to the problem. The Senate knew about this problem two years ago.
OLBERMANN: John McCain seemed to understand this problem even earlier. In 2002 and 2003, he voted with the minorities to close the Enron loophole. “We‘re all tainted by Enron‘s money,†he said. “Enron made a sound investment in Washington. It did them a lot of good. Where they really do well is around the edges, the insertion of an amendment, the Enron loophole, into an appropriations bill.â€
But for most of this campaign, McCain has offered explanations other than the influence of speculators and remedies other than regulation.
MCCAIN: We can develop alternate energy sources.
OLBERMANN: Will alternative energy fix things without closing the Enron loophole?
GREENBERGER: What‘s going to happen when you get all this new, clean energy is the banks are going to go into those markets and rob those guys blind, like they‘re robbing the gas station owners and heating oil dealers in this country right now.
OLBERMANN: What about McCain‘s idea to stop filling America‘s strategic reserve?
GEORGE SOROS, CHAIRMAN, SOROS FUND MANAGEMENT: The institutions acting as a herd are accumulating much larger—setting aside much larger reserves than the strategic reserve is. It‘s a multiple.
OLBERMANN: John McCain doesn‘t talk about the Enron loophole any more. One McCain adviser reportedly said he no longer even has a position on it. When the bipartisan Farm Bill shut the Enron loophole last month, John McCain opposed the Farm Bill, citing its spending levels.
What changed? Since 2006, John McCain‘s top economic adviser has been former Texas Senator Phil Gramm, husband of the former CFTC head who then joined Enron. McCain chaired Gramm‘s 1996 presidential race, with Ken Lay as regional chairman. It was Gramm who passed the Enron loophole, partially written by Enron itself, with no hearings, with no debate.
It was Gramm who stopped Democrats from closing the Enron loophole, and it was Gramm who became vice chairman at the Swiss financial firm UBS in 2002, less than a year after UBS bought the shattered remains of Enron‘s energy trading arm.
Federal lobbying forms reviewed by COUNTDOWN show that Gramm lobbied Congress about commodity trading rules in 2006 and that his company, specifically, his former aide John Sabercool (ph), now a UBS lobbyist, lobbied the Senate as recently as last year against the close the Enron loophole act, without actually calling it that.
McCain‘s finance co-chair, Wayne Berman, lobbied just last year for Chevron and for the American Petroleum Institute against the Price Gouging Prevention Act. And this year the lobbying firm for which Berman serves as managing director was hired by the New York Mercantile Exchange to lobby against the Close the Enron Loophole Act.
In fact, McCain‘s top campaign adviser, controversial lobbyist Charlie Black, was paid 140,000 dollars by JP Morgan back in 2000 for the sole purpose of lobbying Congress to pass the Commodities Future Modernization Act, the same act that contained the Enron loophole.
McCain skipped this month‘s hearing on gas prices, but this week after committee member Maria Cantwell pushed the Bush administration to investigate, McCain finally changed his tune in public.
MCCAIN: We must reform the laws and regulations governing the oil futures market.
OLBERMANN: Senator John McCain, however, still has not mentioned the Enron loophole, still has Gramm and Berman and Black heading his campaign, writing his economic policy. When Senator Cantwell sent a letter asking the CFTC cut off a new loophole that allows U.S. speculators to channel trades unregulated through London and Dubai, John McCain declined to sign it.
(END VIDEOTAPE)
OLBERMANN: Senator Obama as well has an adviser who has lobbied for the American Petroleum Institute. Obama reportedly opposed the Enron loophole and voted for that farm bill that contained a closure of it. In an e-mail today, the McCain committee did not address our reporting on his advisers, but pointed instead to his 2003 vote against the Enron loophole and said, quote, “Senator McCain‘s opposition to the Farm Bill had absolutely nothing to do with this issue, but rather the billions in pork barrel projects and subsidies in the bill that are sure to do more harm than good for most farmer, consumers and taxpayers.â€
Terrific post. My readers will love this.
Why isn’t this on the front page! Guess cuz of the oil baron adm currently in power! Reflecting on the past 8 years, it is clear to see why 2000 was handed to gw and 2004 was rigged.
They’re afraid that the market will tank if they close this loophole suddenly because it’s the only place left for hedge funds to play with your money.
All I can say is to get out soon if your retirement fund is into this because you’re going to get Enron-ed again. The big boys are going to swipe it all and oil will be stuck at 110 bucks a barrel instead of dropping back down to $75 if they were to close this loophole now before the big swipe happens
Damn, make that spaghetti stick to the wall please$
http://www.youtube.com/watch?v=NkbazzqVW9M
If this legislation was passed in 2000, President Clinton would have had to sign it into law. Also why didn’t this law have an immediate effect on the price of oil as it allegedly did on the price of electricity.
Investment banking and hedge funds are using the profit from oil trading to pad the bottom line. The “Federal Reserve Bank” is involved in this little scam.
The taxpayer always pays.
G.
As I coincidentally mentioned in an email to Brad on Friday, the May 6 2008 edition of Asia Times Online attributes the oil price crisis not merely to the Enron loophole of 2000 but to a specific decision by the Bush Administration’s CFTC in January of 2006 to permit the London-based International Commodities Exchange (ICE)to sell essentially unregulated oil futures on-line in the American market (“futures look-alikes”) The article is at
http://www.atimes.com/atimes/Global_Economy/JE06Dj07.html
This was the subject of a June 2006 US Senate Permanent Subcommittee on Investigations report on “The Role of Market Speculation in rising oil and gas prices.” The report seems to be no longer available on line. The article reports:
“In January 2006, when the CFTC allowed the ICE Futures the gaping exception, oil prices were trading in the range of US$59-60 a barrel. Today, some two years later, we see prices tapping $120 and trending upwards. This is not an OPEC problem. It is a US government regulatory problem of malign neglect.”
. . . why in the world would you want to upset a “level playing field” and take away opportunities from millionaires to become billionaires … not all of
_ _ _ _ _ obedient cronies have made a killing …YET !
Brad dioesnt mention who signed this bill into law and tries to pin it on Bush. What a joke.
To Smitty….
Yes, the Enron loophole became law under Slick Willy. But who was the lobbyist that advocated for and ultimately crafted this horribly flawed legislation?
None other than Wendy Gramm, wife of Mcain Senior advisor and former Senator from Texas and current energy industry lobbyist Phil Gramm.
Wendy was rewarded with a cushy Board of director’s position with Enron.
And all by itself, this loophole isn’t enough for the big money movers. Our current “dear leader” in 2006, opened up the regulated futures speculation market by allowing foreign entities (the London ICE exchange) to trade in an unregulated fashion in energy futures. The Bush administration is “allowing” a loophole in current law which did not regulate foreign entities, then allowed these same entities to trade on American soil. (London exchange extended to same courtesy to American traders in London.) By buying up huge blocks of futures (promised delivery of quantities), the price is driven up, outside of normal market demand.
It is the CFTC (a federal agency) tasked with oversight of futures trading, under direction from the GWB managed justice department. The CFTC has been handcuffed and prevented from regulating this formerly illegal form of market manipulation.
The Politicing you cling to, (but, but, but…Clinton!) is nothing but the same smoke and mirrors which your corporate overloards cloud all issues with. This isn’t a republican vs democrat issue.
BOTH PARTIES CATER TO CORPORATE “BIG MONEY” INTERESTS….and THAT is the problem.
I suspect that, since the exchanges were opened in 2006 by the Bush administration, based solely upon the date, and since it’s the same financial houses burned so badly in the mortgage and credit implosion, these finance industry criminals are being allowed to recoup “some” of their losses through this back door unregulated speculation.
Some recommended reading for you, in the hopes of curing your ignorance:
Greg Palast:
http://www.gregpalast.com/
(he’s the economics investigator that dissected Enron’s books, can’t find work in America anymore…funny that…)
And:
F. W. Engdahl:
http://www.engdahl.oilgeopolitics.net/
(Engdahl is an economist and authoer who has specialized in geopolitics and energy for over 30 years)
Please educate yourself, for the good of America and the world at large and please stop pretending it’s politics, stop piling on more bullshit. It’s already too deep.
Hmmm… Wilber ~ my carrots please . . .
These shysters never let up, do they?
A Republican inspired bubble–futures contracts per barrel of oil quadrupled $ is now turned into a must drill ANWR and the coasts when they’re capping 98% of the wells already drilled in the gulf for future exploitation when world supply runs short.
And the American public is falling for it hook, line and sinker…again
Unbelievable
part 2 of Engdahl’s article
http://www.engdahl.oilgeopolitics.net/Financial_Tsunami/Oil_Speculation_II/oil_speculation_ii.html
Floridiot…
Republican inspired, Democrat enabled.
Don’t fall for the foolish argument that things would be different under a Democratic executive.
You’re kidding yourself if you do.
Allow me to clarify…
The middle and lower classes might do a bit better, but…
The erosion of civil liberties has continued unabated through democratic and republican congresses and executives.
Nothing will change until “We The People” begin to hold our congress accountable.
Three solid years of a Middle East in which true peace held sway could halve the price of oil, provided cartel penumbral profiteering could be reported and discouraged somewhat. Oil always has been sensitive to any hint of possible disturbance of its requisite safety of extractive and export prospects, as with many finite resource commodities; yet, its centrality to global economies heightens its price’s volitility. Monopoly rights to the deposits complicate efforts to achieve fairness in price structures.
the answer is, “kick them all out” it’s the only answer to deal with con game being played out on the People by Congress, as evidenced by how far they will go to pass new FISA legislation giving the Telecom carrieres immunity from lawsuits filed against them for their actions before 9/11
fuck OIL, I want to run my car on water right now
The various politicians are not all equally responsible for this, and it seems the first step for any kind of change has to be to get the Bush regime out of there. As Engdahl’s various articles show, most of this villany has been conducted by UNelected officials…
Great forum. [/sarcasm] People like Floridiot continue to get attacked for not dissing the Democratic Party as much as Erma Inc. or Agent99 want.
As for this Bamboo Harvester- How long have you been saying this Wilbur thing? Did you say it too when you were posting as Judge of Judges? Why did you feel the need for more than one id at a forum? Were those the only two usernames?
For those who get to read this post, who knows if it will remain. The moderator here likes to delete them at will and apply the rules unevenly.
Floridiot is never attacked by anyone, and I’d have to kill whoever did. Everyone has a right to express their opinions here, Soc, as long as they stick within the rules. Erma is disagreeable as heck here, but not attacking fellow commenters. The Dems are not sacred, just as the Reps are not always wrong. There have been people coming here to stump for third parties for as long as I’ve known.
BH duly announced his change of screen name. It’s none of your business why, and did someone ask you to police Brad Blog, Soc?
99 and Socrates, thanks for the support, I have more ass than Erma’s persona has teeth I’m sure. I can take a pretty good ass chewing if need be for the team.
I could post this downthread in ‘Big John’, but it’ll read just fine here all the same
Progressives Need To Cut Obama Some Slack
Ok, I’m mixing up previous threads into this one and apologize for that.
It’s tiresome to keep getting called kool-ade drinking Democrats. As Floridiot pointed out before, most of us agree with Erma’s general point anyway.
It’s none of our business that someone was using a sock puppet?
I actually stood up for you a few days ago at my humble forum. I wrote that I didn’t think you were a fake but perhaps simply a bad moderator. I even looked into something that seemed to be a troll attack on yourself. There was/is someone who posts at the Randi Rhodes Message Board who used to sign off as Agent99. Since the old board has been deleted, there is really not much for links to provide. The person doing that was not a very nice person. So anyone seeing that Agent99 and then yourself here might have become confused or thought you were the same people.
Maybe if I got an apology for how I was mistreated here months ago, I would let these creeping doubts towards you go. You did delete my posts, and you did edit them.
Now here’s a question. Erma has been putting in strange bold edits as if someone from BradBlog was adding in the comments. The last time, he or she added in the predictable Democrats suck meme.
Anyone else find it strange that Erma is doing that?
Finally, it is distressing how the moderator Agent99 fails to see how the use of sock puppets damages the credibility of a board. But then again, she referred to me as Sock before, so I think she knows exactly what she is doing on this forum.
“Preventing Runaway Fascism”
(the post WWII book with all-blank pages)
There’s no stopping these guys.
Like it & comply, or lose your electricity….
In examining Orville “Buck” Revell, what an interesting and powerful guy! He’s in global consulting, Synfuels, experienced with US marines, AND the FBI. He’s in Canada, too.
(Is he a Republican?)
This is one of those stories that you wish would get wings; some kind of blog grass root uprising.
The word “kool-aid” always reminds me,not of the Heaven’s Gate suicidal cult, which is the allusion the critics of Obama fans are always drawing, but of Kurt Vonnegut,Jr.’s novel I think it was “Slaughterhouse Five”, and the character of the “Kool-Aid wino”, the kid with the hernia who drank kool-aid but whose family couldn’t afford sugar so he drank it straight. When I was a kid,our parents let us drink Kool-Aid but would not let us put sugar in it, either, because sugar rotted your teeth, and so we drank it anyway, though it tasted nasty without sugar.
Back to the subject: Although Engdahl slams the Democrats as well as the Republicans, the most villanous character in all of this appears to be Alan Greenspan, head of the fed, who was a Reagan appointee.
I suggest people look at Engdahl’s five part series “Financial Tsunami”, which you can find on http://www.engdahl.oilgeopolitics.net/
I’m sure everyone can take a shot now and then for upping the level of discoarse…(thanks Erma) or constructive criticism (hear that Dredd) for craps sake. That was the original draw to this spot.
Hey Zapper, did you see Ffeingold talking on fisa today? What I wanted to know is what he thought of the isreali flyovers. Sure would like to hear the people speak to that issue!
http://www.democracynow.org/
Personally, I’ve been thinking we need to surround the US Patent Office with Guardsmen and review every energy patent in the joint, revolking or buying back the useful ones for NATIONAL SECURITY!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
F*** THE MONOPOLY!
And oh yeah, thanks Keith for breaking the story.
Well the Democrats ARE equally as guilty in this debacle and they ARE bought and paid for by Big Oil & the top 2%.
The Democrats have thrown us ALL under the bus just as much as the Rethuglicans have the past 6+ years.
There are only about 2-3 Congress Critters that are worth a damn the rest need to be marched out of Washington and into prison or hanging from a rope.
Erma & Agent99 are 100% correct.
maj DEM party + maj REP party = 1 ELITE ILUMINATI
When are you people going to learn that you are serving the same master?
This story will get out after big oil with their record of 1. permanently destroying prestine habitat 2. inability to restore an area damaged by an oil spill 3. The general degredation of an area where conducting operations starts digging off our coastal water way instead of the immediate impact of this otherwise illegal scam on the the American people is ever closed.
The only encouraging sign is that this story even got out out at all. Thank you Mr. Olbermann and Bblog.
previous post#32: EXCUSE ME “LEGAL SCAM”
How to resolve the “oil crisis” on CNN.
They had 10 minutes on this and not one word was mentioned about the Enron loophole or the on line overseas hedge fund speculation going on.
The march towards The Great Depression II continues…
…gee I wonder what would happen if we were to grow massive fields of HEMP like say out here in Kansas? Hemp could sustain our energy needs easily as well as making timber products obsolete…could it be that lobbyists from both the oil & timber industry as well as certain pharmaceutical interests were involved in insuring that this wonderful plant never saw the light of day in this country? China grows the shit everywhere. The emperor truly wears no clothes…is this info new to some? This site will clear it all up for you…happy reading!
Floridiot # 34
Obama made reference to closing the Enron loophole while answering questions from the press that ran on CNN this afternoon around 2 pm. Just doing that should reduce your gas prices by at least 30%.
#35 – Pat #1
Wonderful idea, but make it countrywide.
Thanks for the link……very informative site..!
…I should have gone further…
It would only take a small chunk of the state of Kansas to supply the entire country with plenty of goodies. Shows the importance of it’s energy possibilities. If we grew it everywhere, or as an alternative to farmers, this oil and gas bullshit would be a thing of the past…some would say it would hurt our “oil-based-economy”, and I say good it needs some hurting.
Ancient said on 6/24/2008 @ 11:38 am PT…
“Personally, I’ve been thinking we need to surround the US Patent Office with Guardsmen and review every energy patent in the joint, revolking or buying back the useful ones for NATIONAL SECURITY!”
——-
Interesting idea. Do you really think there are that many patents the oil industry is sitting on?
ARCO- Atlantic Richfield- They were involved with the origins of HAARP. Now why would an oil company have anything to do with Bernard Eastlund and patents having to do with weather manipulation?
The reason the skies are getting plastered deliberately is because the ptb’s think it is cheaper to disperse barium and aluminum salts and whatever else they are using than to change the fundamental ways our economies are run. The Aerosol operations are all over the world. It is a NATO thing. China and Russia also have extensive programs concerning Frankensteinian weather manipulation. Perhaps the fake cloud cover is used to block out uv-b rays, dry out weather fronts, perhaps they are used to block out view of any Dr. Evil geoengineering going on in the stratosphere.