Democrats take up energy

WASHINGTON -- Senate Democrats accused Republicans and the White House on Monday of standing by as oil companies and financial traders manipulate markets to drive the cost of gas beyond $3 a gallon in many parts of the country, including Seattle.

Sen. Maria Cantwell, D-Wash., who presided over part of a hearing arranged by her party, also said high electrical prices caused by Enron's illegal manipulation cost 43,000 jobs in Washington state and drained $1.3 billion in disposable income from families.

"We need to keep history from repeating itself and make sure oil and gas markets function the way they're supposed to," she said. "Consumers have no confidence that the prices they are paying at the pump are in fact valid and borne out by market fundamentals. Today we heard clear bipartisan calls for congressional action and far more vigorous market monitoring and enforcement by federal watchdogs."

Monday's hearing was designed to draw parallels between Enron's illegal manipulation of the electrical market in 2000 and the gas prices today.

"American consumers are being told there's nothing that can be done," Sen. Carl Levin, D-Mich., said.

But inventories of crude oil in the United States are at the highest they've been since 1998, when oil cost $15 a barrel, Levin said. The only difference, he said, is that increased trading activity has driven prices higher, but the culprits are concealed by weak regulation and by a system that allows transactions to occur "in the dark." Such a system, Levin and other Democrats said, creates a rich environment for manipulation.

Proof, however, was elusive.

The best Democrats could do is draw comparisons to the illegal activity by Enron, which drove electrical prices in Washington state and across the West to astonishing levels because of manipulation.

The "corporate culture of corruption at Enron operated right under the noses of federal regulators for years and had far too many apologists in the administration and the media," said Sen. Byron Dorgan, D-N.D.

As gas prices soar, "the administration and some in the media are once again quick to dismiss any suggestion of price fixing. Did we learn nothing from the Enron debacle?" Dorgan asked.

The hearing, which carried no official weight because Democrats are in the minority, was more theater than legislative process. It featured Illinois Attorney General Lisa Madigan, who described a multistate investigation into rising natural gas prices.

It also featured Eric Christensen, a lawyer for the Snohomish County Public Utility District who has been instrumental in uncovering evidence showing how Enron manipulated the electrical market in 2000 and 2001.

Still, Democratic aides said the party would be working hard to emphasize the hardship high gas prices have caused average Americans and link that pain to the White House and Republicans.

The campaign gained steamed last week after Senate Majority Leader Bill Frist, R-Tenn., was forced to withdraw a widely condemned plan to offer a $100 rebate to offset high gas prices. Since then, Republicans have been struggling to develop a response to the high price of gas while acknowledging that Congress and the White House have limited power to quickly change the market.

The danger of the issue is reflected in polls, which show a growing number of Americans concerned about the price of gas and a willingness to blame President Bush and the Republican-led Congress.

A CNN/Gallup/USA Today poll last month found that 61 percent of people agreed that the cost and availability of energy was a "major problem." That same poll found that 38 percent said the Bush administration should carry "a great deal" of the blame and 43 percent said the White House deserved at least "some" of the blame.

Republicans have promised to provide remedies. Last week, the House passed legislation making price gouging a federal crime. But lawmakers failed to pass another bill that would have made it easier to build new refineries after critics said it would circumvent environmental laws.

"Everyone here in Congress is looking for a solution or for someone to blame," Sen. Charles Grassley, R-Iowa, said Friday during a speech from the Senate floor.

The coordinated campaign by Democrats began last week when they drew attention to energy legislation that they said would help wean the United States off foreign oil. Another bill would make price gouging of gasoline a federal crime. Cantwell, who has been designated by Democratic leaders to be the "face" of their energy policy, spearheads both bills.

That effort accelerated Saturday when Cantwell delivered the party's response to Bush's radio address.

In her comments, Cantwell spoke about the Democrats' plan to increase the use of alternative fuels and conservation.

"We can ask Americans to sacrifice," she said. "We can ask Americans to conserve. We can ask American to innovate and to invest in new technologies. We just can't ask them to accept the status quo."

Cantwell also followed the Democratic strategy of linking Republicans and the White House to oil companies.

"It's time to end the huge tax breaks for big oil and replace them with new incentives for lightweight, efficient materials and for cars that can run on either ethanol or gasoline," she said.

P-I Washington correspondent Charles Pope can be reached at 202-263-6461 or charliepope@seattlepi.com.

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