Closing Enron Loophole Would Drop Oil Prices 25% - 50% Overnight
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The way Republicans tell it, the minute we start drilling off the coasts of California, Florida and elsewhere, the price of gas will go down. In fact, it would take five years after the ban on offshore drilling was lifted for oil production to start, and, if it were lifted right now, in 22 years domestic oil production would have increased by only seven percent, according to the Energy Information Administration. Even so, “because oil prices are determined on the international market … any impact on average wellhead prices is expected to be insignificant.”
On the other hand, Congress and George Bush could take a step tomorrow that would create a drop in oil prices of between 25 and 50 percent overnight, simply by closing the Enron Loophole.
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.
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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-Ga.) 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.
CloseLoophole.org is a viral-marketing campaign to let our Senators know that we want them to close the Enron Loophole completely and immediately. Click on your state, and you will get the phone number and e-mail for your Senators. Email your Senators and let them know how you feel, and then email your friends to do the same. Go to http://closeloophole.org
Unfortunately, this quote doesn’t convey any information about what the loophole actually is and how it affects market pricing.
Start here: http://en.wikipedia.org/wiki/Enron_loophole