This is one way to bring some sanity back to the price of oil, and I’m glad to see that not only is Obama backing this bi-partisan push to put some limits on out of control speculation, but also calling for tougher restrictions on market forces that aren’t doing anything to help out consumers…

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. […]

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.”

Here’s why this is important…

Michael Masters, a portfolio manager, told Congress last month that index speculators had bought the equivalent of 1.1 billion barrels of oil – eight times as much as the United States has added to the Strategic Petroleum Reserve over the last five years. Speculators also had purchased enough corn futures to fuel the entire U.S. ethanol production for a year.

Masters said the strategy is to buy futures contracts for items in limited supply and hold them – which he called “virtual hoarding.”

“Individually, these participants are not acting with malicious intent,” he said. “Collectively, however, their impact reaches into the wallets of every American consumer.”

More as it develops…

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