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By Peter C. Fusaro peterfusaro@global-change.com, Chairman, Global Change Associates

The realization that energy problems will not be fixed by the recently passed energy bill will take time for the “inside the beltway” crowd in D.C. to admit. But the energy markets don't lie. It has taken Wall Street about a year to finally accept that we no longer have mean reversion in oil prices. Or, as a trader in London quipped to me this summer, “The lows get higher.” The reality is very different than the illusion. When the paradigm actually breaks, not shifts, people just run scared. They deny what is obviously in front of them and pretend it's not there.

My thinking is quite simple: Markets don't lie, especially the energy market. The recent run up in crude, gasoline, heating oil and natural gas are harbingers of the future. The energy industry being too shell shocked from price crashes in the 1986 and 1998 frankly doesn't even believe it. So, it coughs back the profits to investors in dividend boosts and stock buy backs. The new energy hedge fund phenomena has also been slammed recently as several very big funds lost $100 to $150 million apiece on natural gas prices. They thought natural gas would tank in the historical “shoulder period” of the fall when gas usage drops. They were dead wrong due to the “event risk” of Hurricane Katrina.

Earlier this summer, the big Wall Street houses and some other hedge f......................

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