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ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MICHELE NORRIS, host:

And I'm Michele Norris. Crude oil prices rose again today, this despite Saudi Arabia's promise over the weekend to increase oil production. Costly crude oil has pushed gas prices over $4 a gallon. That's got Americans doing what they can to cut back at the pump, and many in Washington eager to show their concern. As NPR's Scott Horsley reports, politicians have identified a new bogeyman to blame for soaring oil prices.

SCOTT HORSLEY: There have been a lot of explanations offered for the doubling of crude oil prices over the last year: a weak dollar, strong demand overseas, greedy oil companies, stubborn OPEC. The latest culprit singled out on Capitol Hill and the campaign trail is oil speculators. Here's John McCain last week in Houston.

Senator JOHN McCAIN (Republican, Arizona; Republican Presidential Candidate): We all know that some people on Wall Street are not above gaming the system. When you have enough speculators betting on the rising price of oil, that itself can cause oil prices to keep on rising.

HORSLEY: Barack Obama chimed in from his campaign plane.

Senator BARACK OBAMA (Democrat, Illinois; Democratic Presidential Candidate): Big investors or purchasers or buyers can artificially jack up the price of oil in order to secure short-term profits.

HORSLEY: Both presidential candidates have called for more government oversight of oil speculators, and Congress has been busy holding hearings on the subject, including one today by a House subcommittee.

The subcommittee found that speculators are responsible for about 70 percent of all the oil traded on the New York Mercantile Exchange. That's up from less than 40 percent at the beginning of the decade. Michael Masters, who runs a capital management company, testified at the hearing that speculators such as hedge funds and investment banks aren't like the traditional players in the market who actually depend on oil. They're simply placing a bet that the price of oil - and in some cases other commodities - will rise.

Mr. MICHAEL MASTERS (Masters Capital Management): If a pension fund decides to allocate $100 million to a commodity index, the $40 million that consequently flows into West Texas Intermediate Crude Oil has nothing to do with the real-world supply or demand for crude oil.

HORSLEY: In other words, consumers might not be putting any more gasoline in their tanks, but their pension funds may be loading up on oil futures, and Edward Krapels of Energy Security Analysis told lawmakers that growing demand from institutional investors is driving up the price.

Mr. EDWARD KRAPELS (Energy Security Analysis): If we lived in a small town, and we had all owned a house, and suddenly a person that has much more money than the rest of us moved in and bid up the price of our houses, the increase in the size of the funds that these people have is so enormous that there can be no doubt that this increase in the demand for paper barrels has bid up the price for paper barrels.

HORSLEY: Not everyone's convinced that speculators are to blame for rising oil prices. The Bush administration has downplayed their role, and Severin Borenstein, who heads the University of California Energy Institute, argues that speculators are chasing high prices, not causing them.

Professor SEVERIN BORENSTEIN (University of California Energy Institute): There is no evidence that the current price of oil is being driven by speculators.

HORSLEY: Still, Congress is looking for ways to rein in speculators, or at least get a clearer picture of what they're up to. And some lawmakers worry that the problem goes beyond speculation to manipulation, especially since much of the oil trading happens out of sight or on lightly regulated markets.

Washington Congressman Jay Inslee recalls what happened in the West Coast electricity market at the beginning of the decade, when traders deliberately withheld power and used other schemes to artificially drive up the price.

Representative JAY INSLEE (Democrat, Washington): Here's one economic principle that I know: Bad things happen in the dark. And that's where these markets are right now, are in the dark. And it's time to shed a little light on them.

HORSLEY: The federal agency that oversees the oil market has already taken some steps to increase transparency. Lawmakers will be considering ways to go further, including rules making it harder for speculators to buy up large quantities of oil and limiting financial speculation in the oil market altogether. Scott Horsley, NPR News.

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