Enron Loophole: By Eliminating It, Oil Prices Can Be Cut 50 Percent In Thirty Days.

Oregon US Representative Peter DeFazio in his recent report: “Special Report on Energy Solutions” indicates there are three ways we can quickly reduce gas prices. A primary way to have quick results is to close the Enron Loophole.

What is the Enron Loophole?
Back in 2000, Congress passed and Bill Clinton signed into law the “Commodities Future Modernization Act of 2000 [CFMA]. This bill has direct impact because it limits the transparency of speculators and hedge funds operators. These investors can hide in the financial shadows and do business under cover.

It is a Republican effort to manipulate oil prices. Oil, natural gas and other commodity markets deregulated by the Republican led Congress to the benefit of vast corporations like Enron.

How it happened
While Ken Lay, Enron CEO was convicted of massive corporate fraud, and his company went bankrupt, the “Enron Loophole” a provision that was slipped into the bill in the dead of night at the behest of McCain’s buddy, Senator Phil Gramm [R-TX], exempts from regulation energy trading on electronic platforms. This bill lives on, and under the protection of John McCain and his Republican cohorts covering for his speculator and hedge fund friends. John McCain shifts his emphasis for reducing gas prices by shifting and consistently talking about drilling for oil offshore and ANWAR. It is a political ploy and deception to divert from the truth of the catastrophic Enron Loophole and its Republican protection for the oil industry.

Speculators unchallenged by federal regulations
As a result, $260 billion of speculative money has flowed into the commodity markets in the last five years, unnecessarily driving up the price of nearly everything. The speculators and hedge fund investors go unregulated by the federal government. It is rumored, one Wall Street brokerage firm controls more oil and gas in the current marketplace through speculation contracts than Exxon/Mobile, the largest US oil company.

1. Closing the loophole means big savings at the pump

According to testimony before Congress, in June from three Wall Street analysts, oil prices could be cut up to 50 percent by elimination price manipulation in the oil market, this means closing the Enron Loophole. Barack Obama said, “As president he would strengthen government oversight of energy traders he blames in a large part for the skyrocketing price of oil.” Obama particularly cited the ‘Enron Loophole’ as allowing speculators to run up the cost of fuel by operating outside federal regulation.

First steps in closing the loophole
According to Representative DeFazio, the House recently took the first step in closing the loophole by passing H.R. 6377, Energy Markets Emergency Act that will direct the Commodity Futures Trade Commission (CTFC) to uses its full authority to curtail speculation and other practices distorting the energy market. The Senate has yet to act on this legislation.

Congress needs to pass comprehensive to stop price manipulation. Representative Peter DeFazio is the original co-sponsor for H.R. 6330. The 2008 Prevent Unfair Manipulation of Prices (PUMP) Act, it is a comprehensive bill aimed at closing several loopholes allowing price manipulation.

2. Oil leases: Use them, or lose them

Representative DeFazio says Republican’s in Congress claim prices would fall if we sell more leases for drilling offshore and in the Alaska National Wildlife Refuge (ANWR). This argument completely ignores the fact that oil companies currently hold over 10,000 leases they are not drilling. In addition, these unused leases they can access 80 percent of the available oil and gas reserves. If we are to reduce our dependency on foreign in the next few years, Congress must force the oil industry to producing more domestic gas and oil in the next few years.

To expedite development Representative DeFazio co-sponsored H.R. 6251, the Use It or Lose It Act, a common sense bill requiring the oil industry to use the leases they already have, or risk losing the right to bid on future leases.

Alaska is open and sanctioned for drilling
More than 91 million acres in Alaska are open for drilling. The single proven biggest pool of oil is in the United States is not under ANWAR, but next door in the National Petroleum Reserve Alaska (NPRA), which has at least 10.6 billion barrels of recoverable oil. The reserve is open for business with billions of barrels of oil for the taking, but is disregarded by the oil industry. With high gas prices at the pump and record profits, they are clearly saving their assets in the ground.

3. End OPEC stranglehold price fixing

The world demand for oil has escalated at an alarming rate , but the Organization of Petroleum Exporting Countries (OPEC) has conspired to decrease production. In 2007, the Middle East’s six largest oil exporters-Saudia Arabia, United Arab Emiratres, Iran, Kuwait, Iraq, and Qatar- reduced their exports by 862,000 barrels a day. OPEC’s oil production peaked in 2005 and has been capped or cut ever since. The amount of crude oil exported by the world’s top oil producers was reduced 2.5 last year, despite a 57 percent increase in prices.

Legally challenge OPEC for violating WTO rules
Last month, Bush-for the second time this year pleaded with the Saudis to increase their oil production. His pleas were unsuccessful. Representative DeFazio has called on the administration to file a trade complaint against OPEC for violating WTO rules. There is strong legal basis for the US to pursue this trade complaint because colluding to set production levels violates WTO rules, specifically Article Xl.

The US government has filed a number of cases with the WTO on behalf of large multinational corporations. It is about time the administration file a complaint to break the pricing stranglehold of the OPEC cartel.

Domestic Energy Supplies

The US uses about 25 percent of the world's oil production, but holds only three percent of the world oil reserves. We simply cannot drill our way out of this crisis over the long term, but we can moderate he current price spike with domestic production. The Bush Administration and big oil are perpetuating a great myth; drilling restrictions are blocking supply and driving up the price of oil. However, according to the Department of the Interior, 82 percent of the natural gas deposits and 79 percent of the oil deposits thought to exist in the Outer Continental Shelf (OCS) is located in areas currently leased and fully accessible.

Republicans mislead and lie to confuse
Republicans in Congress claim that 85 percent of the OCS is blocked from oil and gas drilling is a misleading statistic that refers to acrage, not actual oil and gas deposits. When it comes to boosting supply, available deposits matter, acres do not. The vast majority of viable oil and deposits are already available for development and are sitting idle. John McCain knows this, still he cries the mantra about off shore drilling, a bullshit cry to irritate and confuse Americans with a deceptive a message, he whines it with a straight face and dishonest mouth.

The fact is 79 percent of the oil potentially available on the OCS is already open for leasing, however the oil companies have not made it any priority to drill there. These untapped resources equal more than 14 years of the current US oil consumption.