Proposal targets oil futures speculators

What's the biggest issue confronting Indiana 9th District candidates these days?

That's easy: Gasoline prices.

9th District Rep. Baron Hill introduced H.R. 6372 Wednesday to re-establish oversight of U.S. commodity markets to stabilize markets and lower gas prices.

"We need to close loopholes and help re-establish oversight of the commodities markets to ensure that gas prices truly reflect the laws of supply and demand," Hill said.

His opponents, Republican Mike Sodrel and Libertarian Eric Schansberg, both of New Albany,  agree the cost of gas is the No. 1 issue on the minds of 9th District residents,  but they disagree on whether regulation is the answer.Schansberg said ex-panding the oil supply, not regulating markets, is the better solution.

"It doesn't surprise me to see Baron wanting to regulate markets, thinking that more government is the solution to a problem," Schansberg said. "It would be a far better idea to expand the supply of domestic oil -  to allow drilling off the Gulf Coast and in ANWR. From there, speculators will speculate in the opposite direction - that prices will be heading lower in the future."

Schansberg took a swipe at Republicans and Democrats alike over the energy issue.

"Why didn't Republicans push for expanded drilling when they controlled Congress for 12 years?" he asked. "Why are Democrats so beholden to environmental interests at the expense of the general public?"

Sodrel said he's a " little tired of listening to all the things we can't do and things that won't work.

"Nobody has a plan," he said. "All I've heard from this Congress is we need to sue (OPEC), tax, investigate and regulate."

Sodrel also backs drilling for oil, tapping natural resources already available in the United States. He also backs offering a prize for entrepreneurs who develop inventions that could yield new energy sources or new conservation measures, similar to Republican presidential candidate John McCain's plan to offer a $300 million prize for development of long-lasting batteries that could power an auto.

"Exploring your existing natural resources must be part of an energy plan as we're transitioning," Sodrel said. He suggested possibilities such as developing an ethanol from kudzu or generating energy from algae.

Concerning Hill's proposal, the Bush administration and Congress in 2000 deregulated energy commodity trading and created new loopholes that have fostered excessive speculation in U.S. futures markets, Hill said.

"Many economists have estimated that excessive speculation is adding between $20 to $50 to the price of a barrel of oil," Hill said.

The proposal would close what is referred to as the Enron Loophole by re-establishing the Commodity Futures Trading Commission's jurisdiction over energy commodities futures and close what has been termed the Foreign Board of Trade Loophole, which allows electronic exchanges that are trading U.S.-delivered energy commodities to be regulated by foreign entities, Hill said.

The third target of the bill is the so-called Swaps Loophole, a dealer exemption that allows banks to hedge their investors' positions without facing any position limits.

Sodrel said that now everyone dealing in energy futures is speculating.

"Southwest Airlines bought futures to stabilize their costs and protect their core business," he said. "I don't think this constant looking for the boogeyman is going to fix this problem."

One thing the candidates agree on is the pervasive effect of high gas prices on Hoosiers.

"I think it's become number one because it has such an impact on jobs and the economy," Sodrel said. "It seems like the first thing I hear from people is what are we going to do about gas prices, and diesel is even higher."

Hill agreed.

"When I go back home to southern Indiana, I hear about gas prices from just about everyone," Hill said.  "This Congress has got to do something to provide immediate relief, and enacting this bill would do just that.  Speculators are reaping in huge profits on the backs of American consumers, and this needs to stop."