Congressional Democrats who want to lower gas prices by curbing speculation in oil futures saw their legislation survive a key vote in the Senate Tuesday.
Many Republicans question how much impact speculation has really had on prices, but they voted unanimously to let the bill move forward anyway.
GOP lawmakers are seeking a vote on lifting a longstanding moratorium on oil and gas exploration in the U.S. outer-continental shelf.
Speculation in the oil futures markets has exploded over the past few years, ever since a Republican-led Congress changed the rules so anyone could buy oil futures — not just those who actually intended to use that oil. As a result, the number of futures contracts has increased nearly 12-fold since 2001.
On Tuesday, Sen. Byron Dorgan, a Democrat from North Dakota, called that "excessive, relentless speculation."
In 2000, 37 percent of the people in the oil futures market were speculators, Dorgan said. Now, speculators make up 71 percent of the market.
"They've broken the market," Dorgan said.
Democrats cite estimates that speculation is responsible for between 20 and 50 percent of the recent spike in oil prices.
Sen. Mitch McConnell of Kentucky, the Senate's Republican leader, said he was skeptical.
"Nobody can say with a straight face that simply addressing speculation — a very narrow part of the problem — is a serious approach," he said.
McConnell said he and his fellow Republicans want an extensive debate on energy, what he called the nation's No. 1 issue. But Sen. Harry Reid of Nevada, the Senate's majority leader, rejected the changes Republicans proposed adding to the anti-speculation bill.
"They want 28 amendments," Reid said. "They're not serious about this."
Reid accused Republicans of simply trying to undermine the anti-speculation measure.
"Forty-seven different Republican senators have spoken at one time or another on the need to do something about speculation," Reid said. "That was before they heard from the oil companies, and I guess some people on Wall Street.
"Now, suddenly, they don't think speculation's a big deal."
Yes, speculation is a big deal, said Sen. John Ensign, a Republican from Nevada, but he warned that curbing speculation in the United States could mean that foreign markets will take over.
"We've been willing to do something on the speculation front as long as you're not destroying our futures markets in the United States and just sending those markets overseas," Ensign said.
At the White House, spokeswoman Dana Perino played down the significance of speculation.
"We believe that speculation does cause some volatility in the day-to-day market fluctuations of oil prices, but we believe that the root causes of high energy prices is supply and demand," Perino said.
The Commodity Futures Trading Commission issued a report Tuesday cobbled together by various Bush administration agencies. The report concluded that supply and demand is indeed the problem — not speculation.
Another Senate panel heard Tuesday from Texas oilman T. Boone Pickens. He warned lawmakers that the smart response to the oil price shock is not to drill more, but to expand solar and wind power.
"We have walked into a trap and ... we've got to get out of it," Pickens said. "We are the ones that put ourselves there, nobody else."
It's not clear whether the anti-speculation bill will keep moving forward — Republicans are balking at being limited to only two amendments. Democrats say one of those amendments can be on expanding oil drilling, because they don't expect it to pass.