The U.S. Senate overwhelmingly overrode President Bush’s veto of the Farm Bill last week, voting 82-13 to approve the bill that also aims to close a legal loophole championed by Enron, which allows energy commodities to inflate gas and diesel prices.
Any closing of the “Enron” loophole could have a profound effect on trucking. Energy industry insiders have estimated as much as a third of the per-barrel cost of crude oil is driven by investment speculation.
The bill would close a loophole in market trading regs that currently allows for “over-the-counter” trading of energy futures – essentially allowing investors to gamble and reap large rewards on the escalation of oil prices.
Hedge fund manager Michael Masters reportedly told a U.S. Senate committee last week that oil prices are being driven almost as much by speculators as they are by Chinese demand. According to Financial Post, annual Chinese petroleum demands increased 920 million barrels in the past five years, while demand driven by speculation tallied 848 million barrels.
The Farm Bill isn’t likely to be the last legislation aimed at reforming energy trade.
Several Senate Democrats are backing the Consumer-First Energy Act.
A statement from Sen. Sherrod Brown, D-OH, said the proposed act would:
- protect consumers from price gouging during an official “energy emergency;”
- would prevent traders of U.S. crude oil from routing transactions through off-shore markets without speculative limits;
- would allow the U.S. to enforce penalties against countries or companies colluding to set oil prices; and
- would roll back $17 billion in tax breaks for oil and gas companies.
“Instead of protecting consumers from unfair speculation, the president sided with Big Oil,” said Brown, a co-sponsor for the proposed act. “I’ve talked with Ohio truckers, farmers and families. We agree the gas crisis isn’t a minor problem; it’s a major disaster. I applaud the Senate for overriding the president’s farm bill veto and will continue to work toward achieving a renewable, self-sustaining energy policy.”
– By Charlie Morasch, staff writer
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