WASHINGTON As U.S. gasoline prices surge and Capitol Hill rhetoric heats up about who's to blame, a familiar villain has been revived: the speculator.
A group of Democratic lawmakers in the House of Representatives urged Gary Gensler, the top cop for U.S. futures markets, to crack down on speculators who they argue are artificially inflating oil prices.
"Right now, oil speculators are cynically exploiting fears relating to U.S. and European efforts to prevent Iran from getting nuclear weapons," said Edward Markey, a Massachussetts Democrat, at a news conference on Wednesday.
Rising gasoline prices have become a hot issue ahead of the presidential election in November. Republicans want to tap into voter anger about prices as a way to criticize President Barack Obama's energy policies.
Obama has said there is no quick fix for gas prices. Republicans argue that increasing domestic production and approving the Keystone XL pipeline from Canada would, over the long term, help temper the spikes in oil prices.
"The way to deal with the speculation premium is to show we're serious about developing oil and gas and other forms of energy in this country," John Hoeven, a Republican senator from North Dakota, told reporters.
A group of 32 Republican senators led by John Coryn of Texas wrote to Obama on Wednesday, urging him to allow more oil production.
CLINTON "SKEPTICAL" ON PRICE SPIKE
Global oil prices have jumped as the United States and European Union take steps to sanction importers of Iranian oil, seeking to cut off revenues for Iran's nuclear program.
On Wednesday, the U.S. Energy Information Administration said markets have become increasingly tight and could worsen if Iran shuts in oil.
Secretary of State Hillary Clinton suggested to lawmakers on Wednesday that the recent gasoline price jump was not justified by geopolitical tensions in Iran, Syria and Libya.
"I am skeptical about the reasons for the increase in gas prices. I think that deserves careful attention by the Congress. Because there is supply," Clinton told the House appropriations subcommittee in charge of foreign aid.
"I think the increase in prices is hard to explain based on the facts as we are aware of them," she said.
JURY OUT ON SPECULATION
Over the years, academics and analysts have sparred over whether the $300 billion in institutional investment poured into commodity markets during the past decade has been responsible for price spikes.
But in the wake of the last gasoline price run-up in 2008, when oil prices hit historic highs, lawmakers pressed the Commodity Futures Trading Commission to clamp down, an effort that became part of the Dodd-Frank financial regulations.
The CFTC had planned to begin enforcing its position limits in June, but lobby groups for the financial industry have challenged the agency in court, arguing it went too far, and are seeking an injunction to block it.
On Tuesday, House Democrats asked the CFTC for detailed information on the size of the largest long speculative positions and whether margin limits could be hiked as a way to tamp down speculation.
If the CFTC enforced its new rules on the number of positions that any one trader can hold, that speculative premium would evaporate, lawmakers told reporters.
They said that speculation accounts for more than 50 cents of the average $3.73 per gallon that U.S. consumers pay for gasoline.
"These rules would make the oil speculators who are manipulating the marketplace change their ways," Markey said.
Democrats also slammed Republicans for not giving the CFTC enough funding to carry out its job.
"I do think rising energy prices is a reminder as to why this is a good investment for the American public," said Gensler, the chairman of the CFTC, at a hearing on Capitol Hill on Wednesday.
(Additional reporting by Susan Cornwell and Christopher Doering; Editing by Russell Blinch and Jim Marshall)