The Renewable Energy Blog

Have you heard of the Enron Loophole (see end of post)? 

Up to now I hadn’t. I’ve been introduced to it by a good friend of mine, Harry Van Twistern, and the next morning I heard an ad on the radio. 

It seems that oil futures have fallen under manipulation using the guise of deregulation. Don’t get me wrong. A market economy is by and far the best system, but there needs to be some limitations. 

Every time there’s a burp–saber rattling in the Middle East or a "possible" hurricane or "shortage" in the flow or inventory–futures take off. Not only our economy, but the world’s economy depends on energy too much to allow it to be manipulated to the extent that it has.

If Big Oil was truly doing the right thing for the community, the country, and the world they would be taking a larger chunk of their quarterly billions and put it into research for a sustainable energy solution for the future. We all know oil won’t last forever, but the oil companies are looking to milk it for everything, excuse me, milk us for everything we have. Putting a few million into research, most of it to look for more oil, is irresponsible. 

I’m not into big government, but they need to step back in. 

Go to http://www.closetheenronloophole.com/ to learn more and take action. 

According to a CNN news report last month, without the Enron Loophole in effect, oil would still be trading at around $60 per barrel. Sounds a lot more fair than $90-100. And everyone in the oil industry, from traders to drillers, would still be reaping enormous profits. 

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The Commodity Futures Modernization Act of 2000 or CFMA (Public Law 106–554, §1(a)(5) [H.R. 5660], December 21, 2000, 114 Stat. 2763, 2763A–365, 7 U.S.C. 

§ 1), was passed by the United States Congress and signed by President Bill Clinton in December 2000 in large part to allow for the creation of U.S. exchanges for the listing of a new sort of derivative security, the single-stock future.

The "Enron Loophole"

The CFMA has received criticism for the so-called "Enron Loophole," 7 U.S.C. §2(h)(3) and (g), which exempts most over-the-counter energy trades and trading on electronic energy commodity markets. The "loophole" was drafted by Enron Lobbyists seeking a deregulated atmosphere for their new experiment, "Enron On-line"[citation needed].

The prohibition on single-stock futures and narrow-based indices that had been in effect until the passage of this act was known as the Shad-Johnson Accord because it was first announced in 1982, as part of a jurisdictional pact between John S.R. Shad, then chairman of the U.S. Securities and Exchange Commission and Phil Johnson, then chairman of the Commodity Futures Trading Commission. 

Pasted from <http://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000>