First of all, no POTUS or Congress can really effect the price of oil (and thus gasoline) in the short run. It's a function of supply and demand. With U.S. oil companies controlling only 2-3% of the world's oil reserves, the political effect on the supply side is obviously limited. Political steps to effect demand also take a long time to take effect. CAFE standards as an example, get phased in over many years. I'd go so far as to say that no POTUS or member of Congress can take credit for low prices or be blamed for high prices.

So what can be done in the short term? Let's take a look at the effect of futures trading on the price of gasoline. The Wall Street Journal has estimated that 63 cents of the price of every gallon of gasoline is the result of the trading of futures contracts by traders who have no intention of ever taking ownership of the oil futures they buy and sell. Businesses like airlines and utilities also trade oil and gas futures, but they do so to hedge the price of an important element of their cost of doing business. Pure traders are buying and selling futures contracts for the sole purpose of profiting on their trades.

How did the trading of futures get to the point that it has such an effect on the price of gas you ask? It all happened back in the early 1990's. Until then, the regulations of the Commodity Futures Trading Commission (CFTC) prohibited the widespread trading of futures for the sole purpose of making money on the trades. The chairwoman of the CFTC at the time was Wendy Gramm, wife of Senator Phil Gramm of Texas. Gramm generally called for deregulation of the energy industry. Previously, Gramm held several positions in the Reagan Administration, including heading the Commodity Futures Trading Commission from 1988 to 1993. After a lobbying campaign from Enron, the CFTC exempted it from regulation in trading of energy derivatives. Shortly thereafter, Wendy Gramm resigned from the CFTC and took a seat on the Enron Board of Directors and served on its Audit Committee. While on the Enron board she received not only a seven-figure salary, but also took donations from Enron to support the Mercatus Center, a free market think tank which Gramm was instrumental in founding.

Now we know of course that the subsequent wild and unregulated trading by Enron not only resulted in the the failure and quick liquidation of the company, but also the conviction and incarceration of it's president and COO. But the unregulated trading of oil and gas futures has continued unabated, with pure traders creating even a greater proportion of the futures markets, until today. As a member of the Enron board and audit committee, Wendy Gramm lost several lawsuits against the directors personally, which were settled by the payment of multi-million dollar payments by the directors personally.

So now, this week, President Obama has proposed that new regulations be enacted to require traders to place a significantly greater percentage of the value of the futures contracts they enter into at risk. The POTUS also proposed that the percentage of the futures markets taken by any one trader or group of affiliated traders be severely limited. The proposed regulations wouldn't impact the types of companies that truly need to hedge their future costs. But the new regulations, if enacted, would severely limit the acticvities of the pure for profit traders and their ability to effect the runup of oil and gas prices such as we've seen and experienced for almost two decades.

I might ask those who are critical of the POTUS attempts to re-enact the regulations trashed back in the early 1990's...how has the repeal of such regulations worked for us? How might the former employees of Enron answer? How about those of you paying an extra 63 cents a gallon as the result of the profiteering of the Wall Street traders?

By the way, at about the same time Wendy Gramm's husband was leading the charge to repeal the Glass Steagall Act that had kept the commercial banks out of the trading business for almost 50 years. We all know how that worked out, don't we?

So before we either blame or credit any one POTUS or Congress, maybe we ought to really understand what happened to get us to where we are. More importantly, we ought to take the time to fairly evaluate the proposals being made to fix the obvious problem.