Watching Our Water Ways

I can’t believe it’s been nearly four years since we’ve held a discussion on Water Ways about how commodities markets may affect the price of gasoline at the pump.

I guess I’ve been watching and waiting for something to happen. Well, a couple weeks ago, Washington Sen. Maria Cantwell began stirring the pot again.

Here’s what she said during a March 29 hearing of the Senate Energy and Natural Resources Committee:

“I definitely believe that we should get these asset class investors out of this market. Saying that we are going to allow a bunch of investors to treat the commodities market like they want to treat the rest of Wall Street from a securities and investment perspective I think is the wrong idea for commodities, something particularly as vital as gasoline.”

(more…)

Share on Facebook

UPDATE, OCTOBER 15
President Obama signed the Coast Guard Authorization Bill today. For details, check out the news release from U.S. Sen. Maria Cantwell.
—–

President Obama is expected to sign a sweeping authorization bill that reorganizes U.S Coast Guard operations, increases maritime safety rules and calls for improved oil-spill prevention and response in the Strait of Juan de Fuca.

It seems this bill has something for everyone, at least among those of us living in coastal states. By skimming through the Coast Guard bill or reading a summary, you get an idea of just how sweeping these changes will be for the Coast Guard.

The legislation, largely written by Sen. Maria Cantwell of Washington, was blocked by Republican leaders in the Senate for the past four years. To get approval, several provisions were stripped from the bill in the Senate. Then in the House, many of these ideas were put back in and ultimately approved when it came back to the Senate.

What are the most important parts of the bill? Well, that depends on whether you are involved in the Coast Guard, the shipping industry, the fishing fleet or just want to protect against oil spills or terrorists.
(more…)

Share on Facebook

It’s not really new, this plan to protect the “last best salmon habitat,” as proposed in a bill submitted to Congress by Washington Sen. Maria Cantwell and several of her fellow senators. See my story in today’s Kitsap Sun.

The legislation is called the Pacific Salmon Stronghold Conservation Act.

Cantwell acknowledges that the focus of the bill is consistent with a basic principle of conservation biology: protect the best first. See Cantwell’s press release.

In Washington state, “Critical areas ordinances,” adopted by local governments as a requirement of the Growth Management Act, require protection of fish and wildlife habitat, not just for endangered species. But these are considered minimal standards, probably not the kind of protection envisioned by the new Salmon Stronghold Act.

While the idea of protecting the best is not new, this may be the first time anyone has proposed a dedicated pot of money for such a cause, money to be overseen by a partnership of state and federal officials throughout the region.

Cantwell is quick to point out that the bill doesn’t need to take away from ongoing efforts to restore salmon.

“While current federal salmon recovery efforts focus on recovering salmon listed under the Endangered Species Act aiming to restore what we’ve lost, the Salmon Stronghold Act aims to protect what we already have,” said Cantwell. “This legislation complements ongoing recovery efforts to ensure the future viability of healthy wild Pacific salmon runs for generations to come.”

Bill Ruckelshaus of the Puget Sound Partnership endorses the concept:
“This bill is an excellent complement to the Endangered Species Act and international salmon treaties. By protecting the best remaining Pacific salmon ecosystems throughout their range, wild salmon cannot only survive, but thrive, for generations to come.”

Download a copy of the bill and check out some additional background on the Web site of the Oregon-based Wild Salmon Center.

Share on Facebook

Get ready for a furious congressional debate over energy for the next three weeks. Democrats appear ready to give in to the drill-drill-drill mentality, but only on the condition that clean energy be part of the picture.

One idea is to drop the federal moratorium on drilling off the Atlantic and Gulf coasts in exchange for revoking subsidies to oil companies and shifting those dollars into research and development of solar and wind power.

Zachary Coile, a reporter for the San Francisco Chronicle, calls the political posturing “a chess match over energy with high stakes for both the November elections and the nation’s energy future.”

He writes in today’s editions:

Kevin Book, a senior energy policy analyst at FBR Capital Markets, said he’s betting the only energy legislation that’s likely to pass is an extension of the tax credits for wind and solar, which expire at the end of the year and are popular with both parties.

“The Republicans could still potentially strike a deal, but it’s not clear whether the Democrats have any incentive,” Book said. “They can paint Republicans as objecting to cutting a deal – particularly as all the political analysis suggests they are going to come back next year with the upper hand” by picking up seats in the House and Senate in November.

Two members of Washington’s congressional delegation — U.S. Rep. Jay Inslee, D-Bainbridge Island, and U.S. Sen. Maria Cantwell — have thrust themselves into the middle of this debate. Inslee, who wrote a book on the clean-energy revolution, has complained about the stranglehold that oil companies have on the Bush administration. (Watch video on his site.) Cantwell has spent a lot of time looking into possible market manipulations that may have led to artificial spikes in gasoline prices earlier this year.

On Thursday, an official with the Commodity Futures Trading Commission is expected to testify before Congress, according to David Ivanovich of the Houston Chronicle.

“If the agency were to uncover real evidence of market manipulation, that could spark its own congressional stampede,” said Ivanovich, also quoting David Book.

Share on Facebook

I continue to be fascinated with the possibility that a few speculative traders could dramatically affect oil prices the way we have seen over the past month.

I’m still learning about futures markets for oil, but now Robert McCullough of McCullough Research has released a statistical analysis of recent changes in prices in the futures and spot markets. McCullough was an investigator who exposed Enron’s energy market manipulation several years ago. (See Portland Tribune article.)

Now, McCullough is working with U.S. Sen. Maria Cantwell, who is doggedly pursuing legislation designed to shed new light on the way oil markets work. Read on for down for Cantwell’s press release or read McCullough’s report (PDF 460 kb) at his Web site.

I have another question that I’ve been pondering: Most people seem to agree that it will take seven to twelve years to bring oil to market from offshore wells. But some supporters say congressional approval would have an immediate impact on oil prices, because the markets would anticipate an increased supply.

If that’s true, wouldn’t a crash program to wean the country off oil with alternative energy supplies have an even greater impact on oil prices, since the markets would anticipate a dramatic and permanent drop in demand? I’m just wondering.

(more…)

Share on Facebook

I recently asked readers of Watching Our Water Ways to refer me to books or magazine articles that would help me understand oil speculation. While I don’t want this blog to turn into “watching our oil ways,” I became interested in oil speculation while writing a story about offshore drilling and have been interested ever since.

The subject of oil speculation was brought out of the closet by Congress, and U.S. Rep. Jay Inslee told me that he became convinced during recent hearings that speculation is a major force driving up the price of oil. It appears a growing number of people agree with this assessment.

A lot of my questions about markets were answered last week in a press packet released in conjunction with a new campaign by the Air Transport Association, which wants to get oil speculation under control.

Check out:

The news release by the ATA,

A new Web site, Stop Oil Speculation, Now,

The press packet (PDF 684 kb), which includes loads of questions and answers, lists of officials and companies involved in the campaign, quotes from outside experts and congressional testimony,

And the video of the press conference announcing the campaign.

The organization, of course, is speaking from a position of self interest, but some airline officials are saying officials in the Bush administration don’t seem to understand how markets work and how speculation is driving up the price of oil.

The industry group is calling for what Inslee, Sen. Maria Cantwell of Washington and other lawmakers have said are needed restrictions on the commodities and futures markets. Unless you know a lot more about commodities than I did before getting into this issue, you may find that information in the press packet is a lot of help. Here are the basic actions being requested:

(more…)

Share on Facebook