Good times, good times....

Yeah, there used to be a picture here, but the LA Times and/or the AP took it down.

Apparently it was just too revealing. Here is the caption:

Traders share a laugh in the crude oil options pit of the New York Mercantile Exchange, where the price of oil futures swept toward $130 a barrel. The record-shattering run-up in energy and food prices has prompted Congress to consider taking action against speculative investing.

Photo: Henny Ray Abrams/AP

So, the husband tells me the other day that he's really getting pissed off about gas prices. Mmm-hmm, I say.

Ever since we passed the psychological barrier of $100 a barrel, it's been pretty much a runaway train. The Peak Oil theory doesn't really explain how gas prices can jump ten cents a gallon in one day. The thing about Peak Oil is that it's a long term geological problem, so there must be another gremlin in the works here messing with the day-to-day prices, you know? I think it has something to do with these happy, happy guys. I mean, they are having a damn good laugh.

"The American people are about to take out pitchforks" because of the cost of groceries and gasoline, Sen. Claire McCaskill (D-Mo.) said during a Senate hearing on whether commodities are being pushed higher by investors' high-stakes bets that prices will keep going up. Given the uproar from consumers, McCaskill warned an official from the U.S. Commodity Futures Trading Commission, "if you don't do something, Congress will."

...Economists, traders and regulators routinely dismiss the notion that excessive trading is the culprit instead of traditional market forces such as supply and demand. And they warn that increased regulation could interfere with trading programs used by airlines and others to blunt the negative effects of rising commodity prices.

Jeffrey Harris, chief economist at the Commodity Futures Trading Commission, told lawmakers Tuesday that the high prices reflected increased demand from emerging markets and decreased supply because of bad weather or geopolitical events.

Harris and others also pointed to broader economic factors such as the sinking value of the dollar, which has made commodities traded in the United States a relative bargain for foreign investors. Commodities also have recently offered more certain returns than the stock market.

The happy guys tell us that it's so much demand, so little supply, the weak dollar, bad weather, wars, etc. They're doing the best they can to regulate the prices and protect consumers. Seriously. They really are. They have a lot of data to crunch every day, and whenever there are incidents of potential abuse, they take those very seriously on a case-by-case basis. (blink blink blink)

They do!

This happened on Tuesday, May 20, 2008. Senator McCaskill said, "If you don't do something, Congress will." If you click through the link in that story to this site, you will see that the House passed legislation to close the Enron loophole on May 14, 2008. Excellent!

The legislation closing the loophole is meaningless unless the federal Commodities and Futures Trading Commission, the agency charged with regulating energy trades, enforces the law. To do that, they need to the tools and the resources and, perhaps more importantly, the political will to put the cop back on the beat.

Moreover, speculators still have a free hand to continue gaming the market using the “Foreign Exchange” loophole. Similar to the Enron Loophole, this aspect of commodities law allows commodities markets that are owned by foreign entities to operate beyond the reach of federal oversight – despite the fact that their offices are open for business right here in the United States.

There's another loophole???? For foreign entities????

You know what? I'm getting suspicious.

This problem has been on the table for some time. Back in July 2007 Congress held hearings on the very same thing.

IN A SERIES of hearings last week on Capitol Hill, members of Congress shed light on the most significant source of volatile energy prices -- excessive speculation and manipulation on the unregulated energy commodity futures markets.

Seven years ago, Enron lobbyists sought to free their new experiment in electronic trading, "Enron Online," from oversight by the principle regulator of energy futures and derivatives, the Commodity Futures Trading Commission. They managed to drop a loophole into an appropriations bill that has effectively exempted all electronic over-the-counter energy commodity markets from US regulation. Before this bill was passed, crude oil was under $25 per barrel and motorists enjoyed affordable gasoline.

Since then, energy commodity traders and hedge funds have poured billions of dollars into these "dark markets." According to a bipartisan report published by the US Senate Permanent Subcommittee on Investigations, excessive speculation may be responsible for as much as $20-$25 of a barrel of crude oil. Between 50 cents to $1 per gallon of gasoline may be a direct result of irrational and unethical behavior in the commodity markets. Enron may be long gone, but its legacy remains.

Few Americans realize the extent to which futures trading on dark markets determines the price they pay for energy. [And why is that, pray telll?? - Ed.] Daily trading has an immediate impact on the price of gasoline, heating oil, natural gas, and other fuels. A large majority of futures trading -- as much as 75 percent, according to experts -- is conducted on unregulated dark markets, as opposed to trading on regulated markets, including the New York Mercantile Exchange.

The Federal Trade Commission concluded last year that retail price gouging is not only hard to define but is virtually nonexistent, whereas "price gouging" on the commodity markets is very real. Insufficient or nonexistent US oversight has given profiteering traders and hedge funds the wiggle room they need to distort prices for personal profit -- at the expense of the American consumer.

...A bill called the "Oil and Gas Traders Oversight Act" would close this loophole and bring accountability to the dark markets. Congress should pass this bill, put an end to the real "price gouging," and tell commodity market profiteers to stop playing with their constituents' wallets.

Let's recap. Speculators have been gouging American consumers for eight years now. Congress has known about it. Now the behavior has become so insanely greedy under cover of supply and demand, the weak dollar, geopolitics, bad weather, wars, and every other possible excuse that is out of the CFTC's control that finally, at long last, somebody has to do something or else the American people will rise up with their pitchforks and skewer the nearest Mobil Gas Station owner, who the FTC has determined really doesn't participate in any price gouging, but is a handy target and possibly an Arab.

So, ahh, is somebody on this, guys, before it gets really ugly?

Why yes! Not to worry. Our congresspeople are right on top of it. Just be patient for a little while longer and it will all be straightened out, 'kay?

Status of this bill: in committee.

The bill's sponsor: Dianne Feinstein.

The bill's co-sponsors:
Sen Bingaman, Jeff [NM] - 2/13/2007
Sen Boxer, Barbara [CA] - 2/13/2007
Sen Cantwell, Maria [WA] - 2/13/2007
Sen Feingold, Russell D. [WI] - 2/13/2007
Sen Kerry, John F. [MA] - 2/26/2007
Sen Lautenberg, Frank R. [NJ] - 2/13/2007
Sen Levin, Carl [MI] - 2/13/2007
Sen Lieberman, Joseph I. [CT] - 2/13/2007
Sen Mikulski, Barbara A. [MD] - 2/13/2007
Sen Sanders, Bernard [VT] - 2/26/2007
Sen Snowe, Olympia J. [ME] - 2/13/2007

Maybe I'm just very cynical, but this looks like an elaborate kabuki display that will, in the end, fail. People will be able to express 'regret', however, because they 'tried'. And that will make up for everything.

Who's in for drinks at the Hamptons?