Robert McCullough, the “analyst known for his work with a Washington utility trying to prove that Enron manipulated power markets” (in the words of Newswatch: Energy), is back in the news with a report sure to appeal to the economically naive in Congress and elsewhere.

In his report McCullough concludes, “All available evidence indicates that the price spike of July 3rd was a form of market failure—most likely due to the significant concentration in the energy sector in recent years.” But his evidence for “significant concentration in the energy sector” consists of an estimate of market concentration (using HHI as his measure) based on the CFTC‘s Commitments of Traders data for trading on NYMEX. And of course, even if a trader held a large share of contracts on the NYMEX, that is far far from being anything like controlling a large share of the international oil market.

In any case, McCullough finds his NYMEX-focused HHI estimate is increasing over time, with a significant and unexplained sharp increase during July 2008. The highest possible “worst case” estimate of the HHI that he finds appears to be around 850. For readers not conversant in the ways of the HHI, the maximum possible value for an HHI is 10,000; typically antitrust agencies don’t become the least bit interested until around 1,800 and serious antitrust consideration kicks in around 2,500. (It looks more significant in the chart McCullough presents because his chart showing the range of possible HHI values in NYMEX oil trading only goes up to 1,000—well below the level of regulatory interest.)