Hearing of the Democratic Policy Committee on Energy Market Transparency

Hearing of the Democratic Policy Committee on Energy Market Transparency

Cantwell Hearing on Energy Market Transparency Exposes Anomalies in Oil and Gas Prices
Industry Representatives, Former Regulators, State Officials Call on Congress to Immediately Pass Transparency Legislation Report Showing Oil and Gas Market Anomalies Consistent with "Wash Trading" Available Upon Request

[Cantwell's opening statement, as prepared for delivery, follows below]

"Thank you, Mr. Chairman, for holding this important hearing today. And I want to say a special welcome to our witnesses from the Pacific Northwest, Eric Christiansen and Robert McCullough. It is a pleasure to see you gentleman once again today.

"As some of my colleagues know, Eric and Robert have been on the forefront of the investigation of the Enron Corporation, and each played a crucial role in exposing the Enron audiotapes that, essentially, blew the case wide open as it relates to the bankrupt company's market manipulation schemes in the West.

"I know my colleague from California, Sen. Feinstein, remembers this recent history all too well. For two years or more, she and I would sit in the Senate Energy Committee or stand on the Senate floor, arguing our case that something was horribly amiss with the Western energy markets.

"All we knew at that time was that our economy-the economies of California, Oregon and Washington, which alone account for something like 15 percent of our nations' entire GDP-was being devastated. And we knew that something didn't quite add up, when it came to the claims of the power marketers who blamed the simple laws of supply and demand for the explosion in energy prices.

"People lost their jobs; utilities went bankrupt; workers lost their pensions; as you'll hear from Eric, disconnection rates soared for low-income citizens. I still remember one letter I received quite early on, from a girl whose mother had just purchased their first family home, in Wenatchee, Washington. She was afraid of what was going to happen, because her mother's job at the local aluminum smelter was severely threatened.

"I remember a woman from Okanogan County, living on a fixed income, who wrote in to tell me about the choice between keeping her heat on in the winter or buying prescription drugs. These are the kinds of stories you don't forget.

"And you especially don't forget them when that history starts to repeat itself. And that seems to be exactly where we are heading, this time as it relates to soaring oil and gasoline costs.

"So as policymakers, we need to think about it this way: Fool us once, shame on you. Fool us twice, shame on us.

"Now, Sen. Feinstein and I and a number of our colleagues on the Energy Committee including our Chairman here today fought very hard to include some new market manipulation and consumer protection provisions in the energy bill we passed last year. But we still haven't been able to do one thing we've been working hard on since 2002.

"That is, to close the so-called Enron Loophole in our nation's commodity laws, which I believe is quite possibly contributing to the spectacular volatility we are seeing in the prices of oil and gas today.

"As you'll hear today, there remain significant questions about the thoroughness of the federal government's investigation of Enron-or at least, questions about whatever happened to the evidence. And at the same time, we know that former Enron traders are back at it, making millions trading in energy commodities.

"The evidence also shows that Enron and others used some of the same unregulated energy exchanges posting profits and increased volumes in oil and gas trading today-to engage in their infamous schemes such as wash trading. Is wash trading going on today, as it relates to oil and gas markets? Unless we close the Enron loophole, the federal government doesn't even have the tools to find out.

"Speaking as a Westerner, we know all too well the cost of dysfunctional energy markets. The Western energy crisis cost us $35 billion to $40 billion, by most estimates. But increased volatility in oil and gasoline markets is something that is affecting every consumer in every part of the country.

"As the saying goes, those who fail to learn from history are doomed to repeat it.

"I think the American economy cannot afford to let this history repeat itself-especially, so soon after the Enron debacle, of such historic proportions.

"So, I look forward to the testimony of all our witnesses here today, as we delve into this complicated but crucial issue.

"American consumers deserve to have confidence in the prices they are paying at the pump, and they deserve to know that the federal government is taking the steps necessary to ensure markets are operating in a fair and transparent fashion.

"Once again, thank you Mr. Chairman for holding this important hearing."

http://cantwell.senate.gov/news/record.cfm?id=255299&&days=30&