Congress Investigates Speculators' Role in Oil Prices

Congress wants to know whether energy traders bear some responsibility for the huge run-up in oil prices. The Senate Agriculture Committee holds a hearing Tuesday featuring testimony from the head of the Commodity Futures Trading Commission.

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MONTAGNE: Oil prices are still up about 40 percent this year. Rising prices have attracted a flood of money from those investing in oil futures. And there's debate over whether excessive speculation can be blamed for rising oil prices. And that's what will be talked about in the Senate as it holds a hearing on the issue today. Lawmakers plan to ask the head of the agency in charge of policing commodities markets like oil whether he has the tools to do the job.

NPR's Scott Horsley reports.

SCOTT HORSLEY: The average price of gasoline is now $4.08 a gallon nationwide, more than a dollar higher than at this time last year. Crude oil prices have nearly doubled in that time period and some observers wonder if market speculators are partly to blame.

Mark Cooper of the Consumer Federation of America is set to tell a joint Senate hearing today speculators have added as much as a dollar a gallon to the price at the gas pump.

Mr. MARK COOPER (Consumer Federation of America): We believe that the consumer is being burdened by a massive speculative bubble in oil prices. We think it's as much as $40 a barrel. That's a dollar a gallon. We think the speculative bubble is a result of really bad policy set by the Commodity Futures Trading Commission.

HORSLEY: The Commodity Futures Trading Commission is the agency that oversees the market for crude oil. Some lawmakers wonder if the commission is up to the task. In the last eight years the commission's workforce has shrunk more than 20 percent, while the volume of trading it's supposed to keep an eye on has multiplied sixfold.

Lawmakers will consider adding more staff and additional tools as a safeguard against possible manipulation of the oil market. Meanwhile, some economists and the Energy Department are doubtful speculators are behind the run-up in prices. Instead, they blame fundamental forces of supply and demand.

Scott Horsley, NPR News.

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