Saudi Arabian Oil Summit Hopes to Isolate Cause of Price Rise

By Faiza Saleh Ambah
Washington Post Foreign Service
Sunday, June 22, 2008; A10



JIDDAH, Saudi Arabia, June 21 -- Leaders from oil-producing and oil-consuming nations will meet here Sunday to try to pinpoint the reasons behind the rise in oil prices, which have doubled over the past year, and to find ways to bring them down.

The summit, hastily convened by Saudi Arabia after oil prices nearly reached $140 a barrel this month, is meant to encourage key consumers and producers to join forces to combat high prices, officials said. Though officials from the more than 30 countries gathering here agree that the price must come down, they disagree sharply on the cause of the steep climb.

U.S. Energy Secretary Samuel W. Bodman, representing the world's top oil consumer, said Saturday that insufficient oil production is driving the soaring crude prices. Oil production has not kept up with increasing demand from developing countries including China and India, Bodman said.

"In the absence of any additional crude supply, for every 1 percent of crude demand, we will expect a 20 percent increase in price in order to balance the market," he said.

But Saudi officials have argued that the market is sufficiently supplied and that market speculation -- billions of dollars in financial investments in oil by investors hedging against a weakening U.S. dollar -- is the primary force driving up prices.

At the meeting Sunday, Saudi Arabia, the world's top oil exporter, is expected to ask for measures to control market speculation in futures exchanges, where oil prices are set. The Saudis have also said high government taxes on fuel and other geopolitical forces, such as instability in oil-producing countries including Iraq, Nigeria and Iran, were putting pressure on prices.

"We're striving for stable oil prices. There are many reasons for the problem and its causes, and our view is that it needs cooperation from all sides in many areas. It's not possible for just one side to provide the solution for this problem," Saudi Arabia's deputy oil minister, Prince Salman bin Abdul-Aziz, told reporters.

Analysts said Saudi Arabia was concerned about high oil prices because despite the cash windfall, they drive up inflation, hurt emerging economies and force countries to look for alternative fuel sources.

Saudi Arabia, under pressure from allies such as the United States and Britain, increased production in May by 300,000 barrels a day, to the current 9.45 million barrels a day. Oil Minister Ali al-Naimi told reporters the kingdom, which sits on the world's largest oil reserves, will increase production by an additional 200,000 next month.

Saudi Arabia has said it will produce 12.5 million barrels a day by the end of 2009. The Saudis fear that adding more crude to the market could lead to a dive in its value. In the late 1990s, Saudi Arabia's economy suffered when oil fell to $10 per barrel under similar circumstances.

http://www.washingtonpost.com/wp-dyn/conte...2101470_pf.html

World has enough oil supplies for 'many decades': Nuaimi

Jun 22 10:53 AM US/Eastern


Saudi Oil Minister Ali al-Nuaimi said on Sunday the world has enough crude to last for "many decades" and that his country will invest massively to be able to produce 15 million barrels a day.
"The world has enough petroleum reserves, both conventional and non-conventional, to meet oil demand for many, many decades to come," Nuaimi told a summit in Jeddah of top consumers and producers.

"Concerns over long-term supply shortages seem to be playing a role in strong futures prices, though I believe these concerns are badly misplaced," Nuaimi added.

In contrast, US Energy Secretary Samuel Bodman told the meeting that "production had not kept pace with growing demand for oil, resulting in increasing -- in increasingly volatile -- prices."

Nuaimi said Saudi Arabia's production capacity will rise to 12.5 million barrels per day (bpd) by the end of 2009 and another 2.5 million bpd could be added if demand warranted.

Projects underway will see "the kingdom's maximum sustained production capacity rise to 12.5 million bpd by the end of next year," he said. It currently has output capacity of 11.3 million bpd.


"In addition, we have identified a series of future crude mega increments totalling another 2.5 million bpd of capacity that could be built if and when crude oil demand warrants their development," the minister said.

The projects include a 900,000 bpd boost in Zuluf, 700,000 bpd in Safaniya, 300,000 bpd each in Berri and Khurais and 250,000 bpd in Shaybah, Nuaimi said.

The kingdom plans to add two million bpd of refining capacity over the next five years.

"These are massive investments, which over the next five years will total 129 billion dollars between the upstream and downstream segments of the industry," Nuaimi said.

Nuami emphasised that record prices were not reflecting the true state of market supplies. The price of a barrel of crude has doubled from about 70 dollars to nearly 140 dollars over the past year.

"Between the second quarter of 2007 and the second quarter of 2008, global demand rose by an estimated 800,000 (barrels) to 1.2 million barrels per day.

"At the same time, global oil supplies rose between 1.4 and 1.6 million barrels per day, substantially more than the increase in demand."

He added that forward cover -- a key market measure for how long oil inventories would last if production stopped -- had increased from 52 days to 54 days over the past 12 months.


"Clearly something other than supply and demand fundamentals is at work here, and a simplistic focus on supply expansion is therefore unlikely to tame the current price behaviour," Nuaimi said.

However, in a gesture to appease consuming nations at Jeddah and dampen high prices, Saudi Arabia, the oil powerhouse, said it would ramp up oil output to 9.7 million barrels per day.

That is the highest daily production for Saudi Arabia since 1981, when it pumped a record high of 10 million barrels per day.

http://www.breitbart.com/article.php?id=08...;show_article=1

And on the Iraq side of things ...


Iraq to award oil contracts to foreign firms

Jun 22 09:17 AM US/Eastern

Iraq will award contracts to 41 foreign oil firms in a bid to boost production that could give multinationals a potentially lucrative foothold in huge but underdeveloped oil fields, an official said on Sunday.
"We chose 35 companies of international standard, according to their finances, environment and experience, and we granted them permission to extract oil," oil ministry spokesman Asim Jihad told AFP.

Six other state-owned oil firms from Algeria, Angola, Pakistan, Thailand, Turkey and Vietnam will also be awarded extraction deals, Jihad said.

The agreements, to be signed on June 30, are expected to be short-term arrangements although the ministry has yet to provide a timeframe.

The deal paves the way for global energy giants to return to Iraq 36 years after late dictator Saddam Hussein chased them out, and is seen as a first step to access the earth's third largest proven crude reserves.

"They will have the first right to develop the fields," said Jihad, adding that competitive bidding would come later once the nation's long-delayed hydrocarbon law is passed by parliament.

Iraq wants to ramp up production by 500,000 barrels per day from the current average production of 2.5 million barrels per day (bpd), a level about equal to before the US-led invasion in March 2003.

Monthly exports of 2.11 million bpd currently form the bulk of the war-torn nation's revenues, and the oil ministry is keen to raise capacity over the next five years to 4.5 million barrels per day.

Iraq's crude reserves are estimated at about 115 billion barrels, but it is sorely lacking in infrastructure and the latest technology to which it was denied access under years of international sanctions after the 1991 Gulf War.

Before major investment is injected, the Baghdad parliament would also first have to finalise a controversial oil law considered by Washington as a key step towards national reconciliation.

The proposed law stipulates a fair distribution of oil revenues between Iraq's 18 provinces, a sensitive matter in a country wracked by inter-ethnic violence.

Oil Minister Hussein al-Shahristani said in February that he hoped an oil law would be finalised this year, but officials have said little progress has been made.

One major concern is whether the autonomous Kurdish region of northern Iraq will share revenues.

The Kurdish regional government has signed 15 exploration and export contracts with 20 international companies since passing its own oil law last August, infuriating the Baghdad government.

Stipulating how foreign investment will be governed is also critical amid concerns that Iraqi oil revenues will be squeezed by large oil firms granted special treatment with the help of the US government.

Multinationals involved in the current deals will be focused on fields in the north and the south where wells already exist, thus requiring minimal additional investment, and skirting around the national oil law.

These agreements will be announced alongside technical support agreements (TSAs) with five foreign oil majors.

They cover Kirkuk field (Shell), Rumaila (BP), Al-Zubair (ExxonMobil), West Qurna Phase I (Chevron and Total), Maysan province development (Shell and BHP Billiton) and the Subba and Luhais fields (Anadarko, Vitol and the UAE's Dome), according to a previous media report.

"The execution will be carried out by Iraqi staff while companies will provide expertise and the machinery," said Jihad, who stressed that these were not investment contracts.

http://www.breitbart.com/article.php?id=08...;show_article=1

Obama calls for oil crackdown

By: Mike Allen
June 22, 2008 01:10 PM EST

With the cost of gas a top issue in the presidential campaign, Barack Obama on Sunday will announce a plan to crack down on oil speculation by tightening regulations on energy traders.

The announcement is further evidence that an Obama administration would take an activist, populist approach to regulating business.

Obama wants to close a loophole in federal law that exempts some energy traders from regulations that govern other exchange-traded commodities. Democrats call this “the Enron loophole” because it benefited the Houston energy-speculation firm that collapsed in an accounting scandal.

In response, John McCain campaign spokesman Tucker Bounds said: “The truth is Barack Obama is following John McCain’s lead to close a Wall Street loophole that was signed into law by President Bill Clinton. John McCain has supported bipartisan efforts to close this loophole and will work to address abuses in oil speculation.

"Barack Obama has voted the party line for Democrats who claim the loophole is fixed. The fact that Barack Obama is attacking John McCain, despite McCain’s leadership on the issue, shows that Barack Obama is driven by the partisan attacks that Americans are tired of.”

The Obama campaign accuses Phil Gramm — the former U.S. senator from Texas, who’s now a McCain campaign co-chair and economic adviser — of helping insert the exemption. Gramm's wife, Wendy, was a member of the Enron board of directors.

So today’s announcement — in an early-afternoon conference call featuring New Jersey Gov. Jon Corzine — allows the Obama campaign to both side with consumers and take a whack at McCain’s brain trust.

Obama said in a statement: “My plan fully closes the Enron Loophole and restores common-sense regulation as part of my broader plan to ease the burden for struggling families today while investing in a better future.”

The campaign calls the loophole “one example of the special interest politics that put the interests of Big Oil and speculators ahead of the interests of working people.”

Obama said: “For the past years, our energy policy in this country has been simply to let the special interests have their way — opening up loopholes for the oil companies and speculators so that they could reap record profits while the rest of us pay $4 a gallon.”

Here are excerpts from the text of the four-part “Obama Plan to Crack Down on Excessive Energy Speculation,” as provided by the campaign:

1) Fully Close the “Enron Loophole”: One of the reasons our energy market is particularly vulnerable to excessive speculation is the so-called “Enron Loophole” … [which means] Commodity Futures Trading Commission (CFTC) is unable to fully oversee the oil futures market and investigate cases where excessive speculation may be driving up oil prices. This regulatory gap is dangerous because: 1) the absence of government oversight has the potential to facilitate abusive trading or price manipulation. And 2) the failure of a large derivatives dealer could trigger disruptions of supplies and prices in energy markets. As President, Barack Obama will go beyond the changes included in the recently-passed Farm Bill and fully close the Enron loophole by requiring that U.S. energy futures trade on regulated exchanges. He will call for new, disaggregated data on index fund and other passive investments to increase transparency and oversight of the growing number of institutional investors participating in commodities futures markets. And he will support legislation directing the CFTC to investigate whether additional regulation is necessary to eliminate excessive speculation in U.S. commodities markets, including higher margin requirements and position limits for institutional investors.
2) Ensure That U.S. Energy Futures Cannot be Traded on Unregulated Offshore Exchanges: CFTC oversight of oil market speculation is also limited by rules that allow energy traders to engage in unregulated transactions through foreign subsidiaries of U.S. exchanges. Currently, about 30 percent of U.S. oil futures trades fly below the regulatory radar because they are transacted on a U.S. exchange that works through a subsidiary in London. Similar arrangements are being pursued by U.S. exchanges in partnership with Dubai as well. Barack Obama would limit the price impacts of excessive speculation by preventing traders of U.S. crude oil from routing their transactions through off-shore markets in order to evade speculation limits and also impose reporting requirements.

3) Work with Other Countries to Coordinate Regulation of Oil Futures Markets.

4) Call on the Federal Trade Commission and Department of Justice to Vigorously Investigate Market Manipulation in Oil Futures.

http://dyn.politico.com/printstory.cfm?uui...088A92379FFCF9E

This is the kind of proactive assertive campaigning on substantiative issues that I like to see...You Go, Obama Man...

This is the kind of energy policies which confirms the assertion that an Obama presidency will be like a second term under Jimmy Carter.

The Saudis are correct. It is the energy speculation not demand that is keeping prices of oil high. Investment in oil futures were used to hedge against the falling dollar. So it is really the trade deficit and the government budget deficit which is keeping oil prices high.

But since they are clearly the correct policies (after all, you cannot make any objections to them, and you dislike Obama) that will be great!

Speculation does seem to be having an important role in pushing up oil prices, even conservative business commentators are saying that.

But over the long haul I expect oil prices to stay on an upward trend. The emerging market economies are growing their middle classes, and they want energy-intensive things like cars and more meat in their diets. The only thing likely to reverse that trend will be a breakthrough (or breakthroughs) in alternative energy.

Close the ENRON Loophole...

Obama calls for closing 'Enron loophole' Posted: Sunday, June 22, 2008 3:24 PM by Mark Murray
Filed Under: 2008, Economy, Obama
From NBC/NJ's Athena Jones
The debate over how to bring down energy prices has occupied the center of the political stage in recent days, as drivers across the nation face sky-high gas prices, which in turn are driving up costs of food and other goods. Obama campaign's said today that he plans to ease the impact of rising gas prices by cracking down on excessive energy speculation through closing the so-called “Enron Loophole.”



VIDEO: What are the presidential candidates' positions on energy and taxes? NBC's Andrea Mitchell reports on the latest in politics, including recent polling numbers.

On the 25-minute call were New Jersey Gov. Jon Corzine, economic policy director Jason Furman, and energy adviser Elgie Holstein, who was chief of staff at the Department of Energy during the Clinton Administration. The overall theme was a common one -- that McCain is out of touch with the concerns of working people and more in touch with those of big business. Today, they applied that argument to the issue of energy policy.

"What we’re talking about today is one very important part of Barack Obama’s overall plan, and it’s an overall plan that John McCain disagrees with. In almost every instance, he sides with oil companies and Barack Obama sides with consumers,” Furman said.

McCain and Obama have been at loggerheads over several proposals for how to deal with an issue that is putting a strain on families, local governments, and even school systems. McCain has supported a summer gas-tax holiday -- which Obama calls a “gimmick” that would rob states of much-needed infrastructure money. McCain also supports lifting a moratorium on offshore oil drilling, which Obama says would produce no short-term benefit and little long-term impact on world oil prices. And McCain opposes the windfall profits tax on oil companies that Obama has proposed. Obama would use the money to help families pay energy costs and other bills.

Aides argued the changes to the regulatory structures could have at least some medium-term impact on gas prices. The “Enron Loophole” -- so named because it was added at Enron’s behest -- has kept the Commodity Futures Trading Commission from fully overseeing the oil futures market and investigating cases where excessive speculation may be driving up oil prices, the campaign explained in a policy paper. Obama would close the loophole by requiring that US energy futures trade on regulated exchanges. His plan also calls for legislation that would direct the CFTC to investigate whether further regulation is needed to end excessive speculation in US commodities markets, including higher margin requirements and position limits for institutional investors.

Obama would aim to ensure that US energy futures cannot be traded on unregulated offshore exchanges and would seek to work with our other countries to establish regulations to avoid excessive speculation in commodities futures markets. He would also call on the Federal Trade Commission to investigate market manipulation, including in the oil futures markets and ask the Justice Department to investigate whether energy traders have been engaged in illegal activities that have helped drive up oil and food prices.

Corzine said high oil prices were partly a result of increased demand from countries like China and India, but that most experts believed speculation was also a contributing factor and that the volatility in the price of oil on a daily basis was a clear indication of speculation in the marketplace.

“I think everyone believes there’s too much speculation in the oil markets and a lot it flows directly from that particular loophole,” he said. “"It might as well be called the Phil Gramm loophole, because it was snuck in at the 11th hour, 59th minute to the 2000 energy policy bill, and it just is, it really needs to be addressed. And it would have a lot of impact I think certainly in the intermediate term, if not in the short term with greater oversight here.”

Corzine said the "Enron loophole” Gramm had added to the bill took exchanges and derivative oil contracts out of supervisory oversight and had been a problem in electricity markets in California a few years ago. He said it was unlikely Gramm would push back against his own amendment.

The call participants declined to answer directly questions about how quickly the regulatory changes Obama has proposed could be put in place or how much they would lower gas prices in the short term.

McCain campaign fires back
McCain spokesman Tucker Bounds sent an email that pointed to McCain’s support for closing the “Enron Loophole," noting that he was “one of only three Republicans” to support an amendment to do so. Corzine, then a US senator, voted with McCain for the amendment, his campaign said.

“The truth is Barack Obama is following John McCain’s lead to close a Wall Street loophole that was signed into law by President Bill Clinton,” Bounds said. “John McCain has supported bipartisan efforts to close this loophole and will work to address abuses in oil speculation. Barack Obama has voted the party line for Democrats who claim the loophole is fixed. The fact that Barack Obama is attacking John McCain, despite McCain’s leadership on the issue, shows that Barack Obama is driven by the partisan attacks that Americans are tired of.”

http://firstread.msnbc.msn.com/archive/200...22/1161113.aspx

And this is from a former Reagan/Bush advisoer...

June 19, 2008
Op-Ed Contributor
Sue OPEC
By THOMAS W. EVANS
NEW YORK TIMES

http://www.nytimes.com/2008/06/19/opinion/...agewanted=print

THE president of the United States has the power to attack, and perhaps destroy, the Organization of the Petroleum Exporting Countries, the illegal cartel that has driven the price of oil over $130 per barrel. This can be accomplished without invasion or bombing. No special legislation is needed. The president need simply allow the states to seek relief in the Supreme Court under our antitrust laws.

The oil ministers of the OPEC countries meet periodically to set production quotas for the cartel’s members and in the process establish an artificially high price for crude oil. Under our antitrust laws, this is illegal. Two years ago, Amy Myers Jaffe, an energy expert at Rice University, estimated that the real production cost was $15 a barrel, at a time when the price was approaching $60. Recently, an OPEC spokesman said the price could be $70 a barrel — a little more than half the current price — if speculation and manipulation could be eliminated.

Despite this illegal conduct, not everyone can sue OPEC and succeed. In 2002, a federal court dismissed a class-action lawsuit brought against OPEC by a gas station owner. An appeals court agreed, noting that “under the current state of our federal laws the individual member states of OPEC are afforded immunity from suit brought for damage caused by their commercial activities when they act through OPEC.”

The “current state of our federal laws” refers to the “act of state doctrine,” which was first enunciated by the Supreme Court in 1897 with the following words: “Every sovereign state is bound to respect the independence of every other sovereign state, and the courts of one country will not sit in judgment on the acts of the government of another, done within its own territory.” The doctrine was seldom used, but new life was breathed into it in 1964, when the Supreme Court denied relief to Americans who lost money when Cuba nationalized its sugar industry.

Fortunately, there is another way to sue OPEC. Even if actions by individual citizens fail, a seldom-used provision of Article III of the Constitution grants original jurisdiction to the Supreme Court over lawsuits brought by states against “foreign states” and, as expanded by the United States Code, over “aliens.”

The attorneys general of the various states should sue OPEC as an alien or, pleading alternatively, as a foreign state. (A joint action by the attorneys general is the method the states used to collectively sue tobacco companies, Microsoft and health maintenance organizations.)

The states should contend that Article III of the Constitution outweighs the act of state doctrine. Respect for the sovereignty of a foreign government for acts “done within its own territory” does not, even if very liberally construed, protect decisions reached by a cartel based in Austria that directs 13 nations to sell their product at inflated prices to customers outside their boundaries. If the states won the case, the court could recover substantial damages based on assets and commercial activities of OPEC member nations in the United States.

Still, even though the states are allowed to sue OPEC in the Supreme Court, they might not prevail. There are significant separation of powers issues. The court might determine that OPEC’s illegal actions could be remedied only by foreign policy, as carried out by the legislative and executive branches.

That’s where the president — whether it’s President Bush or his successor — comes in. If the Supreme Court decided to defer to the policies of the political branches, the states could ask the president to issue a statement permitting the lawsuit to go forward, or at least assure that he would not later intervene to end it. This pathway was established in a statute passed by Congress in the wake of Cuba’s expropriation of American sugar interests.

Even an adverse decision in this suit would draw attention to OPEC’s destructive behavior. An informed and aroused public would demand action from whichever branch the court identified as having the authority to act against the cartel. The Supreme Court’s decision would determine the constitutional path to redress.

Moreover, confronted with the likelihood of huge damages and restraint of its illegal conduct, OPEC, or some of its members, might seek a settlement establishing production goals that would provide a price closer to actual costs. The probable reduction in the price of heating fuel and gas at the pump might exceed the amount of the current federal stimulus package.

If the president allowed the states to sue OPEC, his actions would undoubtedly anger political leaders in the Middle East and create the need for diplomatic initiatives to limit the fallout. But how stable is the Middle East right now? And isn’t starting a lawsuit better than starting a war?

Thomas W. Evans, who was an adviser to Presidents Ronald Reagan and George H. W. Bush, is the author of “The Education of Ronald Reagan.”

McCain Defends 'Enron Loophole'
by Jason Leopold

http://www.baltimorechronicle.com/2008/051908Leopold.shtml

May 19, 2008—Sen. John McCain says he opposes the $307 billion farm bill because it would dole out wasteful subsidies, but his chief economic adviser Phil Gramm also wants to stop its proposed regulation of energy futures trading, a market that was famously abused when Enron Corp. manipulated California’s electricity prices in 2001.

Clearing the way for that California price gouging, Gramm, as a powerful Texas senator in 2000, slipped an Enron-backed provision into the Commodities Futures Modernization Act that exempted from regulation energy trading on electronic platforms.

Then, over the next year, Enron – with Gramm’s wife Wendy serving on its board of directors – worked to create false electricity shortages in California, bilking consumers out of an estimated $40 billion.

Gramm left the Senate in 2002 but now has emerged as what Fortune magazine calls “McCain’s econ brain,” not only filling the Arizona senator’s acknowledged void on economic expertise (“I don’t know as much about the economy as I should”) but recognized as one of McCain’s closest friends in politics. The two men talk daily.

A McCain aide told me that the Arizona senator opposes the farm bill because it “rewards lobbyists” by granting rich farmers lucrative subsidies, although he would support “a reasonable level of assistance and risk management to farmers when they need America's help.”

But the aide, who spoke on condition of anonymity, acknowledged that the presumptive Republican presidential nominee also opposes the farm bill because Gramm advised McCain that he should resist its regulatory language on the energy futures market.

Democrats have dubbed that gap in energy futures regulation the “Enron loophole,” but it played a part, too, in the more recent attempt by the Amaranth Advisers hedge fund to corner the national gas market by shifting trades to the unregulated “dark markets” of the Intercontinental Exchange.

The “Enron loophole” also has become part of the debate over the soaring price of oil. Last week, a study sponsored by Sen. Carl Levin, D-Michigan, concluded that speculative futures markets were partly to blame for the surge in oil prices that have pushed gas at the pump toward $4 a gallon.

At a May 15 news conference, Levin said the skyrocketing price of oil is “not the result of supply and demand. Speculators have taken over most of the futures market."

However, the 673-page farm bill, containing the regulatory provisions on electronic energy trading, still faces obstacles amid overall concerns about the bill’s largesse to farmers at a time of rising food prices.

President George W. Bush has vowed to veto the bill, although it cleared the House and Senate by margins wide enough for an override, assuming Republicans don’t rally behind Bush and McCain, their current and future standard bearers.

Gramm and Enron
The battle over the “Enron loophole” also could draw attention to McCain’s dependence on Gramm as his chief economic adviser and Gramm’s key role in passing legislation that let Enron trade commodities on electronic platforms without federal oversight.

In 2000, with the Republicans in charge of Congress and Gramm chairing the Senate Banking Committee, the exemption on electronic trading was approved without a Senate hearing.

Internal Enron documents, which were released in 2002, revealed that the Houston-based company helped write the legislation, which was signed into law by President Bill Clinton in December 2000.

Freed from regulatory interference, Enron then used manipulative trading practices to game the California electricity market and drive up electricity prices across the state.

While California consumers were getting fleeced, the new Bush administration shielded Enron from early accusations of market manipulation. President Bush personally joined the fight against imposing caps on the soaring price of electricity, buying additional time for Enron although the company’s house of cards collapsed anyway in fall 2001. [For details, see Consortiumnews.com’s “Bush’s Enron Lies.”]

In 2006, the “Enron loophole” allowed Amaranth Advisers hedge fund to shift its trades from the regulated New York Mercantile Exchange (NYMEX) to the unregulated Intercontinental Exchange (ICE) in Atlanta.

That let Amaranth corner the natural gas market, betting that futures prices would rise. The hedge fund lost about $6 billion and imploded as natural gas prices fell to a two-year low in September 2006.

Last July, the Federal Energy Regulatory Commission and the Commodity Futures Trading Commission charged that Amaranth manipulated prices paid in the physical natural gas markets. FERC has proposed $291 million in penalties and the forfeiture of “unjust profits.”

“Unregulated markets are known as ‘dark markets’ because there is very little oversight of the trades,” said Rep. Bart Stupak, D-Michigan, chairman of the subcommittee on Oversight and Investigations, during a hearing on energy speculation last December.

By trading on the “dark” ICE market, traders can avoid the Commodity Futures Trading Commission’s rules which are in place to prevent price distortions or supply squeezes.

Stupak said trading volumes on ICE “have skyrocketed in the past three years and are now as large or even larger in some months, than the volumes traded on the regulated futures market.”

The lack of oversight “makes it difficult for regulators to detect excessively large positions which could lead to price manipulation,” Stupak said.

Advising McCain
Gramm, who is now a vice chairman of financial services company UBS, began advising McCain in 2005 when the Arizona senator indicated he planned to run for President.

Since then, McCain has adopted much of Gramm’s anti-tax, anti-regulatory agenda. Most strikingly, McCain shifted to support Bush’s tax cuts, which McCain had voted against in 2001 and 2003. He now vows that, if elected President, he would make them permanent.

Yet Gramm’s influence over McCain’s economic agenda – and the checkered political-business history of Gramm and his wife Wendy – have largely escaped media scrutiny.

Gramm received more than $34,000 in campaign contributions from Enron and served as one of the company’s key legislative allies in Washington, including his help in 2000 removing federal oversight from energy trades on electronic platforms.

At the height of the Enron scandal in January 2002, Gramm’s press secretary Larry Neal told The New York Times that Gramm did not “recall a conversation” he apparently had with Enron’s chairman Ken Lay in 2000 to discuss that Enron legislative priority.

An internal Enron e-mail dated Aug. 10, 2000, under the subject “CFTC Reauthorization” – sent by Enron’s top lobbyist Richard Shapiro to Steve Kean, Enron’s executive vice president – said the company needed to get Lay on the phone with Gramm so the bill could be passed.

“The bill is not moving quickly in the Senate due to Senator Phil Gramm's desire to see significant changes made to the legislation (not directly related to our energy language),” Shapiro said.

“Last week at the [2000] Republican Convention, I asked the Senator about the bill and he said they were working on it, but much needs to be changed for his support. More telling perhaps, were Wendy Gramm's comments that she would rather the current bill die if a better bill can be passed next year.

“What this means is that we must, at the least, remove Senator Gramm's opposition to the bill to move the process and more importantly seek to gain his support of the legislation.”

Shapiro added: “However, with less than 20 or so legislative days left, we need Senator Gramm to engage.

“A call from Ken Lay in the next two weeks to Senator Gramm could be an impetus for Gramm to move his staff to resolve the differences. Gramm needs to fully understand how helpful the bill is to Enron.

“Let me know your thoughts on this approach. I am prepared to assist in coordinating the call and drafting the talking points for a Ken Lay/Sen. Gramm call.”

Several other internal Enron e-mails briefed company staffers on the status of Gramm’s position and Enron’s lobbying of the senator. Gramm finally removed a “hold” on the bill in December 2000, reintroduced the bill under a different number, and forced a vote on it without floor debate.

It was then attached to an appropriations bill that was signed by President Clinton on Dec. 21, 2000.

California Crisis
Less than a month later, California began to experience rolling blackouts due to artificial electricity shortages which, according to documents later released by federal energy regulators, were the result of manipulative trading practices employed by Enron.

The California crisis centered on Enron’s energy trades through a new platform called EnronOnline, which had been freed from regulatory oversight by the legislation pushed by Gramm.

In April 2002, Gramm blocked an amendment by Sen. Dianne Feinstein, D-California, that would have closed the loophole that Gramm had helped open.

Gramm’s wife, Wendy, also had played a role in the anti-regulatory policies that contributed to the Enron scandal.

On Jan. 14, 1993, in the final days of the first Bush administration, Wendy Gramm – as chairwoman of the Commodity Futures Trading Commission – pushed through a key regulatory exemption removing energy derivatives contracts and interest-rate swaps from federal oversight.

That was a major financial boon to Enron, where Wendy Gramm landed five weeks later as a member of the board of directors. She also became a member of the audit committee that signed off on another one of Enron’s fraudulent schemes, partnerships that hid the company’s growing debt.

Even after Enron had collapsed in fall 2001, Sen. Gramm continued to resist congressional efforts at tightening up the rules.

In 2002, despite the accounting scandals at Enron, WorldCom and other major companies, Sen. Gramm objected to the Sarbanes-Oxley corporate reform bill designed to hold executives accountable for inaccuracies in financial reports.

Now, the Gramm family’s anti-regulatory agenda is returning via McCain’s presidential campaign.

As Fortune’s editor-at-large Shawn Tully wrote, “economic conservatives should take heart. McCain’s chief economic adviser – and perhaps his closest political friend – is the ultimate pure play in free market faith, former Texas Sen. Phil Gramm. ... Most of [McCain’s] current positions are vintage Gramm indeed.” [Fortune, Feb. 19. 2008]

The first test of McCain’s commitment to Gramm’s anti-regulatory purity may come in the looming battle over the “Enron loophole” that the farm bill seeks to close.


--------------------------------------------------------------------------------

Investigative reporter Jason Leopold is the editor and frequent writer for The Public Record, a very new online political journal.

I think it is a lot more important for trend setters in the social system to pay attention to
the way food is produced and distributed and let the present forces continue to compete
for market share of how Energy is produced and distributed. Nations are like Persons. What
we do best and like to do, we do too much of and do too little of those things we need to do and
don't like to do.

June 19, 2008
Op-Ed Columnist
Bad Day in the Rose Garden
By GAIL COLLINS

It’s very easy, in our chaotic world, to lose track. Did you know, for instance, that “ER” is still on television? That “The Phantom of the Opera” is still on Broadway? That Hugh Hefner is still dating?

It was in this spirit that I looked up at CNN on Wednesday and noted that George W. Bush is still the president.

Yes! There he was in the Rose Garden, unveiling his plan for reducing the price of oil. A little grayer, but strangely unchanged. When he was complaining about the way the Democrats wrote last year’s omnibus spending bill, I swear I heard him call it the “ominous spending bill.”

In a major change of policy, the president announced that he wanted to end a federal ban on offshore drilling and open up drillers’ access to the outer continental shelf.

He repeatedly referred to the outer continental shelf as “the O.C.S.,” making the whole proposal sound a little like a search for energy sources in an old teen TV series.

The O.C.S. was only one part of a four-point recipe for producing tons and tons of American-bred gasoline in the future. Bush wants to search for oil offshore, out West, in the Arctic National Wildlife Refuge, in the basement, beneath the Washington Monument — you name it, he’s ready to drill.

This would require a great deal of excruciatingly controversial legislation, all of which he demanded the Democrats in Congress pass before the Fourth of July recess.

Otherwise, everything is their fault.

“They will need to explain why $4-a-gallon gasoline is not enough incentive for them to act,” the president said. It was sort of mesmerizing. Imagine some half-forgotten celebrity popping up out of nowhere and announcing that he wants an Academy Award. By Tuesday. And if he doesn’t get it, he cannot be responsible for the consequences.

The Rose Garden event was peculiar, and only partly because the chief executive of the United States suddenly announced that Congress has two weeks to reverse an offshore drilling policy that it has had in place since 1981.

There was also the matter of John McCain. Poor McCain has been trying desperately to convince the public that there’s a vast, vast gulf between him and the current administration. It’s been tougher than he expected.

In the past, McCain parted company with Bush on everything from torture to taxes. But now he’s fudged some of those differences, and completely caved on others.

There’s not much left but global warming, and the people who really, really care about that will probably be looking to see which candidate Al Gore likes best.

Earlier this week, McCain made news when, in a change of position, he called for allowing more offshore drilling. It was his moment to betray the environmentalists in the name of cheaper gasoline. You’d think the president would have the decency to wait, and refrain from holding a press conference that made the two of them sound like soul mates.

Really, it isn’t fair. Bush has already created a national antipathy toward the Republicans so intense that the party would be hard pressed to hold its ground with Abraham Lincoln and Tiger Woods on the ticket this fall. The least he could do is stay put long enough for McCain to disagree with him.

McCain is struggling to put together some kind of economic policy that gives him the aura of a candidate who feels the public’s pain.

First, there was that extremely cheesy idea of a federal gas-tax holiday. It was dead on arrival the day he proposed it. Besides, any position that leaves you lashing out at “so-called economists” is not going to instill a deep sense of confidence in the voting public.

The way he’s been working the energy issue only makes him look like a man with no inner core. For instance, the guy who was speaking in Houston this week was considerably different from the one who did a town-hall meeting in New York last week.

The New York McCain laced into oil companies for their “obscene” profits and their failure to invest in alternative sources of energy. “I think it’s an abrogation of their responsibility as citizens,” he said, assuring the audience he was “very angry with oil companies.”

The Houston McCain seemed to have gotten over his wrath, and contented himself with lacing into Obama’s plan for a windfall-profits tax on oil companies. It would, he said, discourage oil exploration.

And worst of all, it “was President Jimmy Carter’s big idea, too.”

Even if Americans had enough historical memory to recall what they didn’t like about Jimmy Carter’s energy policy, this is a bad strategy.

McCain does not want this to be an election in which the public is asked whether they’d rather have Carter II or Bush III.

http://www.nytimes.com/2008/06/19/opinion/...agewanted=print

This just about says it all --

Offshore drilling is no solution...

But I do like the "use it or lose it" bills... which would force oil companies to develop the land they already have before they could get new leases...

I would also suggest other legislation that would void the leases retroactively if the companies failed to devleop on the leases they already had withn a certain period of time...

June 19, 2008
Editorial
The Big Pander to Big Oil
NEW YORK TIMES

http://www.nytimes.com/2008/06/19/opinion/...agewanted=print

It was almost inevitable that a combination of $4-a-gallon gas, public anxiety and politicians eager to win votes or repair legacies would produce political pandering on an epic scale. So it has, the latest instance being President Bush’s decision to ask Congress to end the federal ban on offshore oil and gas drilling along much of America’s continental shelf.

This is worse than a dumb idea. It is cruelly misleading. It will make only a modest difference, at best, to prices at the pump, and even then the benefits will be years away. It greatly exaggerates America’s leverage over world oil prices. It is based on dubious statistics. It diverts the public from the tough decisions that need to be made about conservation.

There is no doubt that a lot of people have been discomfited and genuinely hurt by $4-a-gallon gas. But their suffering will not be relieved by drilling in restricted areas off the coasts of New Jersey or Virginia or California. The Energy Information Administration says that even if both coasts were opened, prices would not begin to drop until 2030. The only real beneficiaries will be the oil companies that are trying to lock up every last acre of public land before their friends in power — Mr. Bush and Vice President Dick Cheney — exit the political stage.

The whole scheme is based on a series of fictions that range from the egregious to the merely annoying. Democratic majority leader, Senator Harry Reid, noted the worst of these on Wednesday: That a country that consumes one-quarter of the world’s oil supply but owns only 3 percent of its reserves can drill its way out of any problem — whether it be high prices at the pump or dependence on oil exported by unstable countries in Persian Gulf. This fiction has been resisted by Barack Obama but foolishly embraced by John McCain, who seemed to be making some sense on energy questions until he jumped aboard the lift-the-ban bandwagon on Tuesday.

A lesser fiction, perpetrated by the oil companies and, to some extent, by misleading government figures, is that huge deposits of oil and gas on federal land have been closed off and industry has had one hand tied behind its back by environmentalists, Democrats and the offshore protections in place for 25 years.

The numbers suggest otherwise. Of the 36 billion barrels of oil believed to lie on federal land, mainly in the Rocky Mountain West and Alaska, almost two-thirds are accessible or will be after various land-use and environmental reviews. And of the 89 billion barrels of recoverable oil believed to lie offshore, the federal Mineral Management Service says fourth-fifths is open to industry, mostly in the Gulf of Mexico and Alaskan waters.

Clearly, the oil companies are not starved for resources. Further, they do not seem to be doing nearly as much as they could with the land to which they’ve already laid claim. Separate studies by the House Committee on Natural Resources and the Wilderness Society, a conservation group, show that roughly three-quarters of the 90 million-plus acres of federal land being leased by the oil companies onshore and off are not being used to produce energy. That is 68 million acres altogether, among them potentially highly productive leases in the Gulf of Mexico and Alaska.

With that in mind, four influential House Democrats — Edward Markey, Nick Rahall, Rahm Emanuel and Maurice Hinchey — have introduced “use it or lose it” bills that would force the companies to begin exploiting the leases they have before getting any more. Companion bills have been introduced in the Senate, where suspicions also run high that industry’s main objective is to stockpile millions of additional acres of public land before the Bush administration leaves town.

This cannot be allowed to happen. The Congressional moratoriums on offshore drilling were put in place in 1981 and reaffirmed by subsequent Congresses to protect coastal economies that depend on clean water and clean coastlines. This was also the essential purpose of supplemental executive orders, the first of which was issued by Mr. Bush’s father in 1990 after the disastrous Exxon Valdez oil spill the year before.

Given the huge resources available to the energy industry, there is no reason to undo these protections now.

Legislation Would Make Big Oil ‘Use It or Lose It’
By JOSELYN KING POSTED: June 19, 2008
Email: "Legislation Would Make Big Oil ‘Use It or Lose It’"
*To: <--TO Email REQUIRED!
*From: <--FROM Email REQUIRED!



Article Photos
AP Photo
Fadi Sabbagh, owner of a gas station in Paterson, N.J., pumps gas that is priced at $4.05 a gallon for regular unleaded Monday.
Total U.S. oil production would double - and domestic natural gas amounts would jump by 75 percent - if big oil companies would use the drilling permits they've already been granted, according to a report by the House Committee on Natural Resources.

The committee's chairman, U.S. Rep. Nick Rahall, D-W.Va., has proposed the Responsible Federal Oil and Gas Lease Act, requiring oil companies to use land leases they've already been granted; otherwise they would lose the leases. The Secretary of the Interior would have 180 days to establish standards defining what are "diligently developed" lands.

The legislation would pertain to drilling of 68 million acres of land, both on-shore and offshore, that already is leased to oil companies but is not being developed.

"Big Oil, as many Americans already suspect, are perfectly fine with high gasoline prices at the pump while they hold back domestic production on federal leases and enjoy world-record profits," Rahall said. "I am calling them on the carpet. I am calling their bluff. We are not going to continue to allow them to speculate and profiteer with public resources to the detriment of the American people."

The legislation is based on regulations that already exist in the coal industry, where coal companies are required to "diligently develop" their leases over the time of a typical 20-year lease. Oil and gas companies presently are not required to do so, and their leases are typically for 10 years.

Because there are no diligent development requirements, oil and gas companies can stockpile leases in a non-producing status, the committee report states.

It encourages them to hold nearly 68 million acres of federal land without producing oil or gas.

The report notes that if active drilling were occurring on these lands, an additional 4.8 million barrels of oil and 44.7 billion cubic feet of natural gas would be produced each day.

The numbers have convinced U.S. Rep. Charlie Wilson, D-Ohio, that drilling for oil at the Arctic National Wildlife Refuge in Alaska won't have the most immediate impact on lowering gas prices in the U.S.

"We're confused," Wilson said of President George W. Bush's push to drill at ANWR. "Why does it make a difference to drill in ANWR if the oil companies already own the right to drill on lands and they are not doing so? We know they have sufficient supplies on these lands. Why do they have to drill in ANWR?

"The oil companies can't keep stockpiling and not drilling," Wilson added. "This is helping no one. We have the oil. Why are we not drilling the oil we have?"

Wilson noted he does support drilling in ANWR but doesn't see its importance.

The report states ANWR drilling would not affect U.S. importing of oil until at least 2022, and that production there wouldn't start for at least 10 years.

"We can't wait for 10 years for ANWR to produce enough gas for us," Wilson said. "It is affecting our dollar and food prices. So much is going on because of it."

Gerry Griffith, a spokesman for U.S. Rep. Alan Mollohan, D-W.Va., said he had not yet spoken to Mollohan about the legislation Wednesday, but he said Mollohan does support drilling in ANWR.

U.S. Rep. Shelley Moore Capito, R-W.Va., also backs Bush's call for more domestic oil production from Alaska.

"For years Congress has blocked efforts to expand our nation's domestic production of energy off-shore and in Alaska, and now we're paying the price at the pump," said Capito. "It's well past time to see that policy reversed.

"There are currently more than 175 trillion cubic feet of natural gas resources and more than 1.1 trillion barrels of oil that are off limits for domestic production. With gas prices at more than $4 per gallon, we can no longer afford to let these resources sit idle," she added.

"Obviously we cannot simply drill our way out of this problem," Capito said. "There's no doubt that domestic exploration must be coupled with investment in renewable resources like wind, solar or biomass - but to ignore our immense domestic resources is short-sighted and irrational. Domestic crude oil production is down more than 12 percent since 2000 - not because of a shortage of new oil wells, but because the Congress has kept some of our most energy-rich regions off limits for drilling.

"Continued obstruction from House leadership on this issue will do nothing to help West Virginia families that are struggling with high gas prices, and I implore Nancy Pelosi and her leadership team to finally listen to the 67 percent of the American people who are calling for expanded domestic production, and the nearly unanimous population of West Virginians who want to pay lower prices at the pump."

http://theintelligencer.net/page/content.d...ml?showlayout=0

What's correct about them Arne? Just like Carter's policies it penalizes Americans and ignores the fact there is a world outside of our borders. I can object to those kind of policies and do; they did not work in the late 70s and they won't work now.

Can you be specific in giving clear reasons as to why your objections make sense? Making assertions you don't support in any way is not doing that.

Big oil is not drilling for oil. Look at their balance sheets. They are using their big profits to buy back shares of their common stock.

Exactly.

Their shareholders do not want them to explore --- that would cut into their profits and dividends....which is why I like the use it or lose it bill that would deny them access to new leases if they were not actively using their present leases...

Why change anything ? What we're doing now is working so well....

Now not every regulation is a good one, no matter how much a bunch of rascals may be running the industry that needs to be regulated. Marine just might have a case, however well he is concealing it (to me would seem to be concealing it exceptionally well). I think that in general we want open and free financial markets, which includes things like commodity futures. But these markets need regulation to prevent the worst kinds of abuses. I don't see anything inherently wrong in what Obama is proposing, rather it looks like a very good idea.

Why would an oil company want to invest in drilling where the only place made available to them are old and marginal fields? If you sink a well and it cost you a million bucks and the expected return may be around a million bucks why take the risk?

My cousin makes her living in old oil fields, she wildcats and anyone who thinks wildcatters get rich better think again. She's been doing this for about 30 years and if you averaged her income over that peiod she'd make less than 50k a year. The only other thing she's got out of it is a head full of grey hair and high blood pressure.

What's there to conceal Arne? If we regulate energy speculators the way Obama's plan has it they will just go to the a European or Asian markets which we can't regulate and continue business as usual. Now if he came up with a plan with a long term solution it might make some differences. How's about giving the big oil companies a tax credit 1 for 1 on any investments they make in developing alternative sources of energy for them to spend all those massive profits on? Get the profit motive going and see if someone can develop a hydrogen fuel cell or other technology so we can thumb our nose at OPEC.

Pandering to people like the Obama proposal does ought to leave you feeling insulted that he has so little respect for you intelligence.

Oh I do feel that my intelligence has been insulted, but not by Obama.

I don't know how the European and Asian markets are regulated, but I would imagine that they are regulated some. Are they less regulated or more regulated than our markets? And perhaps there are proposals to tighten regulation there if they are insufficiently regulated, although I admit I don't know. It is not as though the average Japanese and EU consumer is not bothered by super-high gas prices. Now I have heard the general argument about the availability of foreign markets if we regulate ours too much, and will admit that there is something to it. Sure, if we regulate too tightly people will wonder if London might make sense. On the other hand there are other reasons people trade in New York and Chicago, so I don't think that any reform we come up with will drive most people away. It is a question of determining what the right balance is.

I am all for providing incentives to develop alternative forms of energy, although I am not sure that your proposal here is the right approach. (Why not cap and trade or a carbon tax, etc.? If you realize the price of the disadvantages of oil then people will see more profit into going into alternative energy. But we could spend all kinds of time discussing just the right mix of incentives.) It is a very good issue, but a separate issue from speculating on oil prices. And Obama does have some proposals on providing incentives and programs to develop alternative energy sources.

This is why we should sue them like the former Reagan/BUsh advisor suggests...

Cap and Trade is just another way of saying sitting in the dark wrapped in my blanket trying to keep warm off the flame of my candle.

Carbon Tax? You mean the "Let's make Al Gore a billionaire" tax?

Either suggestion you make implies we should lower the standard of living. I happen to like to drive my truck to work and I don't want to go back to a team of mules like Grand Dad used to plow his fields.

But you can bet if we did have to go back to the use of draft animals some liberal someplace would start sounding dire warnings of the environmental impact and suggest a tax to deal with mule farts.

Do you believe that we can develop alternative energy sources or don't you? If you do, then what is all this garbage about cap and trade and a carbon tax? The whole idea is to phase that kind of thing in so it doesn't kill the economy. In the meantime everyone wants to support alternative energy development. George Bush has a program, McCain has a program, and Obama has a program.

As far as living standards go, what are we going to do about all of those new middle class Chinese who want to drive their own new cars? Tell them no they can't, that will make it too inconvenient for Marine to drive his truck?

Well, if those middle class Chinese can afford to drive their cars good for them but cap and trade puts in a clause where polluters can buy their way out. Do you really think corporations don't pass cost on to consumers? Do you really think developing countries would adere to some internationally imposed standard? We've just about drove the US manufacturing segment from the stage as it is, I'd think we could a learned from watching the Europeans that over regulating kills an industry.

I grew up in a Union household and Unions just don't count for much when government makes it too attractive for businesses to go make their stuff in China.

Point is Marine that the money that all of those middle class Chinese spend on gasoline jacks up the price. Supply and demand, a lot of us learned that in Econ 101. So the price is going up regardless, unless...

Cap and trade will drive up prices, no question about it. But if phased in sensibly and gradually it is not going to be a huge hit on people. Personally I think that a carbon tax is likely to work better, but the politics of the situation is that cap and trade is more likely to pass, so you work with what you can get, not what you would like.

We already have climate change summits and treaties, so despite the difficulties there is some hope for international action, which I agree is necessary and will be difficult. As a spur we could declare the environment is more important than trade and threaten a carbon tariff against countries who aren't serious about their own responsibility for dealing with global warming (although should probably be kept in reserve as a last resort). Anyway, the leading economic power and carbon producer (I think that we are still ahead of the Chinese in that, although they are likely to overtake us pretty soon) should be a...leader, IMHO.

What is the alternative to a carbon tax or a cap and trade system if we want to promote cleaner energy and the development of alternative energy sources?

A tax is one way of motivating someone.

A credit is another.

I believe Obama supports both.

Can we afford the status quo?

I guess you would say yes, because so far as I recall you were not a big believer in the effects of global warming being caused by man-made greenhouse gases.

Be that as it may, getting off our addiction to foreign oil is important to stop funding terrorism. Is this at least a goal we can agree on?

Its government policy that moves jobs to China. If we as a nation did not allow it it would not happen.

Do you seriously think that the U.S. could do much more than dent Chinese growth? And why would we want to? Do we really want a nation that continues to exist as sweatshop of more than a billion people?

Fact is a lot of their growth is driven by exports to all over the world, and by the growth of their middle class, which is spending their money. And if you are worried about the slippage in the power of labor and the working man and woman these days (as I am) then the growth of that middle class is a good thing. (But few good things are unalloyed in their goodness.)

Now we could hurt them by closing our markets to them, but then we export stuff to China too. But they could find other suppliers if they were of a mind to do that.

I am all for looking at outsourcing and strong labor and environmental clauses in trade agreements. But I would not just cut off trade to China. I would encourage to rely even more on their own market to spur their growth.

If the Chinese were to get feisty, if their workers could strike or threaten to and force their pay up, then one stone could kill several birds. If unions started to count there then maybe they would count more here again.

That depends on how much control of the World you want to invest in our Government. The
Human Social System can be relativly Self-regulating. This capacity expands with the spread of
the concepts of a Humanitarian Constitutional Democracy. This is not best achieved through
Invassion, Occupation and Nation Building, Micro-Managed from a temporary Control Center
in a Double Wide in Florida.

The fact is that the Human Social System is currently committing susicide with its relentless
population explotion while we observe Baby Having Clubs as an extra-curricular activity in high school and the world-wide Catholic Church fights Birth Control. If we don't ask for what want (in
an effective and efficient way), we probably won't get it...

What the heck does any of that have to do with anything?

Not even Marine is talking about applying the military to this problem. The straw man building here is especially transparent.

I guess you are not open to novel solutions...