In the loophole

Obama calls for regulation of oil markets and decreased dependence on oil

Posted by Kate Sheppard at 10:58 AM on 23 Jun 2008

On Sunday, Barack Obama promised to end unregulated oil speculation and close the "Enron loophole," which he says are at least partly to blame for rising gasoline prices.

"For the past years, our energy policy in this country has been simply to let the special interests have their way -- opening up loopholes for the oil companies and speculators so that they could reap record profits while the rest of us pay $4.00 a gallon," Obama said in a statement. "My plan fully closes the Enron loophole and restores common-sense regulation as part of my broader plan to ease the burden for struggling families today while investing in a better future."

The so-called "Enron loophole" is a provision that was included in the Commodities Futures Modernization Act in 2000 that exempted energy trading on electronic platforms from regulation. Democrats say that the measure was added to the bill by former Sen. Phil Gramm (R-Texas), who now serves as a chief economic adviser to John McCain.

Gramm's wife Wendy served on the board of directors at Enron, the company that created false electricity shortages in California in 2001 and wrung something in the neighborhood of $40 billion out of consumers. Closing the loophole would make energy markets less vulnerable to speculation.

The McCain campaign has argued back against the suggestion that the candidate is somehow implicit in perpetuating the Enron loophole, noting that many Democrats, including Bill Clinton, supported the measure. They also noted that McCain voted in 2003 to close the loophole, and said that Obama is merely "following John McCain's lead" in opposing the Enron loophole.

In his energy speech last week, McCain also offered some criticism of oil speculation: "We all know that some people on Wall Street are not above gaming the system. When you have enough speculators betting on the rising price of oil, that itself can cause oil prices to keep on rising."

In an interview with the Houston Chronicle, Gramm denied that he authored the loophole legislation: "The reality is that the bill was the result of hearings in the House and Senate," Gramm told the Chronicle on Friday. "The language on energy -- I had nothing to do with that provision. I did have something to do with provisions on banks."

In his speech on Sunday, Obama also touted his plans to impose a penalty on windfall profits for oil sales above $80 a barrel. He also pushed conservation, the development of alternative fuels, and investments in new technologies that could reduce our dependence on foreign oil and overall oil consumption by 35 percent by 2030, or 10 million barrels.

The Obama campaign dispatched Jon Corzine, New Jersey governor and former CEO of Goldman Sachs, to talk up the candidate's energy platform. You can watch Corzine talk about the plan on CNBC.

For story: In the loophole
6 Comments | Post a Comment

Windfall taxes and investment

Winfall taxes are only going to increase prices in the long run because they decrease the funds available for exploration and development.

They also make oil companies less appealing investment possibilities, since you never know when government will claw back profits they invested billions of dollars in.

By all means, we need to price carbon to take into account its broad social and environmental impacts. Slamming oil companies at a time when scarcity is making their job harder will not serve the interests of anybody in the long run.

a sibilant intake of breath

by sindark at 12:26 PM on 23 Jun 2008

Great Kate!

Thanks for covering Barack's outstanding move to call for closure of the loophole. It is big enough to drive an economy through and take the stolen cash to Dubai and Switzerland.

Which is what has happened. The good news is that oil prices will drop if it is closed. According to recent testimony before congress.

I informed every friendly politician's staff that would listen last thursday and asked them to please tell Barack's staff about it. Maybe a few thousand more people did too. I wonder if we helped get his attention?

It's an election winning issue, it's the gas prices (economy) stupid.

http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin

by amazingdrx at 8:50 PM on 24 Jun 2008

Viral Marketing Campaign to Close the Enron Loopho

There is a grassroots viral advocacy/marketing campaign to close the Enron Loophole, located at EnronLoophole.org. Visitors can research the Enron Loophole and are encouraged to take three steps:

1. Email their Senators about closing the Enron Loophole, completely (contact info provided).
2. Email their friends, and let them know how they can be part of closing the loophole and lowering gas prices.
3. Sign the online petition showing your support to close the Enron Loophole.

by espeed at 8:41 AM on 25 Jun 2008

Excellent espeed!

I got my Congressman and Senators to view the Olbermann coverage of the Enron loophole.

Here's how I did it. I called their offices and asked them to give the staff a simple message, namely.. enter the words "enron loophole video olbermann" in google. There it is.

Then I asked them to please call the Obama campaign and relay this same information, since it is much easier for insiders to contacty oher insiders.

As Kate wrote here, Obama talked about closing the loophole last Sunday.

I called around last thursday, the day after the Olbermann piece. Along with thousands of others? Probably.

An idiot shill just on CNBC just asked a loaded question of the Oracle of Omaha. On windfall profits tax? Oh gee, do you think he would oppose that?

Try asking him if the Enron loophol;e closure would revive the economy by cutting oil prices in half. Damn GOP shill "reporters".

Good old Buffet says close these tax breaks for the super rich. Good man! That's how to show up a shill. Maybe Buffet could consult with Barack?

There's a real patriot you can trust Barack, incorruptible as you yourself are.

http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin

by amazingdrx at 9:15 AM on 25 Jun 2008

Guess what

Oil starting to drop. Why?

Fear, we have helped create fear of regulation in the futures traders espeed.

Are institutions withdrawing from this risk? Are individuals, like politicians (quietly) divesting from hedge fund positions?

Can you feel the fear in the market? Panic is next. They all suspect oil could drop in half, given a re-regulation of future's trading. Closure of that huge enron loophole.

Get ready to bail out more investment "banks" Bernanke (bushboy). Hehehey.

http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin

by amazingdrx at 9:41 AM on 25 Jun 2008

The Dems are confused.

(And for that matter, probably the Rs as well.)

I'm not intimately familiar with the legislation, but on it's surface, this sure sounds like trying to have our cake and eat it too. Should energy prices reflect fundamentals of supply and demand (and yes, including the demand of hedge funds and other traders), or should it simply reflect a price that the government thinks is "fair"? If the former, scarcity will drive up prices and make alternatives more competitive. If the latter, we will subsidize dirty energy and slow the advent of alternates - in the name of keeping energy cheap(er).

There are arguments on both sides of this, but you cannot have it both ways. Either energy is a right, subject to government subsidization or it is a privilege available only to those who can afford it. Historically, US policy has leaned towards the former, and the last 10 years have seen a shift towards the latter - explaining in part the rising volatility of energy costs (and growing private investment in the alternative energy space).

But you cannot have both, and the democrats at some point need to confront this. Either we stop subsidizing the energy industry and remove the barriers to entry for their competitors or else we focus on making sure that Joe Q. Public still has cheap energy. In the long run, the former avoids the need for the latter, and seems the more responsible path to me, especially since the latter never leads to the former. But in any event, let's be honest about the choice.

by Sean Casten at 7:37 AM on 30 Jun 2008

ADVERTISING POLICY

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