Keep digging for facts on oil speculation

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Count us among those less than enthralled with the usual congressional investigations, which involve much posturing and excess rhetoric and generally create more smoke than light.

Nonetheless, the congressional hearings into the price of oil have uncovered some intriguing nuggets of information.

Here’s some of what we’ve learned so far:

* In 2000, Enron persuaded Congress to exempt electronic energy trading from most regulatory oversight. Critics say the “Enron loophole” has been exploited by commodity traders to artificially increase the price of oil. The Commodity Futures Trading Commission says it has already closed the loophole. Not all members of Congress agree.

* Much oil trading takes place in overseas markets not overseen by U.S. regulators. Critics, including former CTFC official Michael Greenberg, who was quoted in a Q and A story in last Sunday’s Journal Star, say this gives traders freedom to take huge position and dominate the market.

* Traders can buy oil futures for as little as 6 percent of its value for payment, which also gives speculators leeway to take huge positions.

* The roster of those blaming speculation includes Big Oil, the Saudi family, airlines, the International Monetary Fund, Barack Obama, John McCain and a host of experts.

* The roster of those blaming fundamental supply-and-demand includes the Bush administration, Wall Street officials, federal regulators and a host of experts.

* Demand for fuel actually dropped in the U.S. during the first six months of the year. Consumption is down 2.5 percent.

* The forces of supply and demand are skewed by various factors. The Chinese government sets the price of gasoline in that vast growing market. Currently gasoline sells in China for about $3.06 a gallon. In Russia the price is roughly the same as the United States. In oil-producing Venezuela motorists can buy gas for 19 cents a gallon.

* Some experts point to the falling value of U.S. currency as a factor in rising prices. Since a dollar buys less, it takes more of them to purchase a barrel of oil.

There’s little doubt that fundamental supply-and-demand is the basic force propelling the rise in prices. Warren Buffett says it’s so; we’ll concede the point.

But if any portion of the $4 or so we’re paying at the pump is going into the pockets of Enron wannabes, we want to know about it. The CFTC said it has begun gathering more information on unregulated trading and will report by September.

That prompted Sen. Ben Nelson earlier this month to ask, “Why didn’t we do this nine to 10 months ago. … The sense of urgency on the street seems to be different from the sense of the bureaucracy. We need to match that urgency.”

Yes indeed. The price of crude hit a record $142.26 a barrel last week.

The congressional hearings so far have uncovered fascinating bits of information. As the hearings continue, we hope that we’ll be able to connect the dots.