Feeling Pain at the Pump ? Congress needs to pass the PUMP Act

Congresswoman Bachmann, Congressman Kline and Senator Norm Coleman, all seem to believe that by opening areas for drilling will reduce oil prices.
That may be true, but how long and how much ?

Guy Caruso of the Department of Energy’s Energy Information Administration said “Drilling in U.S. waters offshore would produce nothing for five or 10 years and even then only add a minimal amount of oil for the supplies. And so, in the year 2018, it would not knock more than a nickel off your gallon of gas.”

While ANWR and OCS may part of the solution, the emphasis on those proposals will take too long. Plus, no one mentions how much the royalties will be nor who will get those royalties (individual states or the US Treasury) nor if they will be subject to any cap.

At a hearing held by the Oversight and Investigations Subcommittee of the House Energy and Commerce Committee on June 23rd, Congressman Jay Inslee (D-WA) posed a timely question. Inslee forced witnesses to chose between opening up undeveloped Alaskan oil fields and increased government regulation. All panelists said regulation would have an immediate impact, whereas new Alaska oil would take years to affect the market.

The solution must address the abilities of speculators to impact the market price.

Don’t believe that speculators are driving the price?
Americans are consuming less (as of March highway travel is down 4.3% and the auto industry is seeing a dramatic drop in sales of SUVs and trucks as people look to more fuel efficient vehicles) but prices have continued to rise.
The Saudi petroleum minister, Ali I. Al-Naimi, said his country will reach the 9.7 million level by July (up from 9 million) and the Saudi government will invest in oil projects that would allow Saudi Arabia to have the capacity to produce 12.5 million barrels per day by the end of next year; yet prices have continued to go up.

So while our consumption is going down and world production is increasing, prices are rising.

To address the problem, the government needs to have all the tools it needs.

There are two types of oil futures speculation. Market trading takes place through the New York Mercantile Exchange and is overseen through the Commodity Futures Trading Commission (CFTC). However, most oil futures speculation occurs “over-the-counter.” This speculation is conducted off of the market, without any regulation or oversight by the CFTC. The CFTC needs to have the manpower and mission to address this problem. It is not unreasonable that a 30% reduction in price could occur if the CFTC had greater control to collect trading data on foreign trading boards.

This legislation would make immediate impacts … not years.

Congress has a number of bills pending, but the most comprehensive was proposed by Congressman Bart Stupak (D-MI) in the “Prevent Unfair Manipulation of Prices Act of 2008″ ( HR 6330 ) – aka the PUMP Act. It was initiated June 20 and already has bi-partisan support. There are 58 co-sponsors including Jim Oberstar (MN-08) and Tim Walz (MN-01) .
The Minnesota delegation needs to expedite the passage of this bill. It has been assigned to the Agriculture Committee where Collin Peterson (MN-07) is the chairman and Walz is a member. Peterson and Walz were effective earlier this year in the farm bill when Congress addressed the controversial “Enron loophole”; however that piece of legislation only closed the door to natural gas trades on unregulated exchanges - not oil trades.
Please contact your member of Congress to encourage them to become a co-sponsor of this legislation. If they do not wish to support it, then ask the question how they will address the speculators influence on the price of oil. Those that do not have a plan are the problem -- and those that only believe that drilling is the answer -- are dictating a decade of higher prices.

FYI - a companion bill has been introduced in the Senate - S 3185
Please encourage Senators Coleman and Klobuchar to support this bill. Once again, because their positions on the Agriculture Committee, they will be the first to address the legislation.

Regardless of your opinion on drilling, this legislation can only help.

VOTE 60 : Klobuchar loses Fiscal Fight to Coleman & Coburn

FYI – The VOTE 60 in the title of this commentary refers to my effort to promote the importance of the US Senate races in 2008. VOTE 60 will be the headline of future commentaries and you can read about it here .


Wanna get a Fiscal Conservatives blood to boil ?

Ask if it is right that $3.1 million in farm payments went to the District of Columbia … or $4.2 million has gone to people living in Manhattan … And $1 billion of taxpayer money for farm payments has gone to Beverly Hills 90210 ?

Fiscal Conservatives see that as wasteful government spending.

Farm subsidies have been getting a lot of media attention … and rightfully so.

Good news for Fiscal Conservatives … we have a Senator who wants to fight for taxpayers’ monies and added an amendment to the Farm Bill to address those excessive payments.

Bad news for Fiscal Conservatives … we have too many Senators that talk about the need for fiscal conservatism, but when it comes to the vote, they side with special interests.

The Fiscal-Fraud Du Jour is Oklahoma’s Tom Coburn (R). There doesn’t seem to be a bill that comes to final vote in the Senate without Senator Coburn offering an amendment … that’s why I call him Doctor Death .
The Farm Bill was no exception as Coburn offered Amendment 3807 : To ensure the priority of the farm bill remains farmers by eliminating wasteful Department of Agriculture spending on golf courses, junkets, cheese centers, and aging barns.
Sounds like a reasonable suggestion … but seven days later the amendment was withdrawn.

The efforts to reign in subsidies had an aggressive amendment known as the Dorgan-Grassley amendment (of which Senator Klobuchar was a co-sponsor.) It would have closed loopholes, placed a hard cap of $250,000 on payments and invested the savings in small business development, beginning farmers and other initiatives to create future in rural America.
Coburn and Coleman voted against this amendment and it failed the SuperMajority requirement (see VOTE60).

Despite that aggressive amendment failing, Senator Klobuchar offered an amendment Roll Call 426 which would allow payments only to full-time farmers making less than $750,000 a year and part-time farmers making less than $250,000, after expenses and use the savings to provide additional funding for certain programs and reduce the Federal deficit.
Once again, Coburn and Coleman voted against this amendment.

Former First District Congressman Tim Penny interviewed Coleman on Friday. Penney is the ultimate Fiscal Conservative and a former member of the House Agriculture Committee and his first question was, “Why did you vote against this?” After hedging for a bit about how others voted, Coleman answered that there are some farmers with million dollar loans and they needed coverage.

Wow. I thought subsidies were to provide a safety net.
IF someone has a million dollar loan, they must also have the collateral and asset base to support that loan. Why one million … what about the poor farmer with $1,000,001 loan ? What about the $2 million dollar farmer?
Isn’t this argument akin to the Social Security argument concerning means testing ?
What is more important subsidizing mega farms or family farms? When smaller operations are driven out of business that destroys the culture of family farming and undermining rural communities.

What is a reasonable safety net ? According to Coleman, not $250,000 … not $750,000 but One Million Dollars !

That’s not a safety net.
That’s protecting a system that ensures subsidies for special interests.
According to Senator Klobuchar the average income of a Minnesota farmer is $54,000 yet there were only TWO Farm Business receiving Crop Subsidy Payments in Minnesota for 2005 that exceeded $750,000 ( oh by the way, they also exceeded $1 million ) and a total of 71 that exceeded the $250,000 threshold.

The bill will now go to a conference committee at which Congressman Collin Peterson (D-MN) wants to get the threshold down to $900,000.

As a Fiscal Conservative, I do not have a lot of hope for Congressman Peterson’s efforts as Republicans Love Farm Subsidies .

Coleman is Fiscal Irresponsibility in Action !