After more than a half dozen hearings in Congress on the issue, Democratic House lawmakers said they intend to tighten restrictions on pension funds, investment banks and other large investors that they blame for driving up fuel prices.

Many Republicans, analysts and regulators, however, say soaring oil prices are a reflection of macro-economic factors, including the falling dollar, unrest in the Middle East and increased demand from countries like China and India.

Lawmakers continue to blame large investors for their role in propping up oil prices, pointing out Monday that speculation in crude futures has nearly doubled since 2000.
Pension funds, Wall Street banks and other large investors that have no intention of taking delivery of fuel have increasingly pumped money into contracts for oil and other commodities as a hedge against inflation when the dollar falls.
After more than a half dozen hearings in Congress on the issue, Democratic House lawmakers said they intend to tighten restrictions on pension funds, investment banks and other large investors that they blame for driving up fuel prices.
Many Republicans, analysts and regulators, however, say soaring oil prices are a reflection of macro-economic factors, including the falling dollar, unrest in the Middle East and increased demand from countries like China and India.
Oil prices rose $1.38 to settle at $136.74 a barrel Monday on the New York Mercantile Exchange on disappointment over Saudi Arabia's modest production increase and concerns that output from Nigeria will decline.
Saudi Arabia said Sunday it would add 200,000 barrels per day in July to a 300,000 barrel per day production increase it first announced in May. But that pledge at the meeting held in the Saudi city of Jeddah fell far short of U.S. hopes for a larger increase.
"Make no mistake about it, the excessive speculation in commodity markets is having a devastating effect at the gas pump that is rippling through our entire economy," said Rep. Bart Stupak, D-Mich., who chaired the hearing of a House Energy and Commerce subcommittee.
But Rep. Joe Barton, R-Texas, said insufficient supply is the main driver behind rising energy prices. He called for increased domestic production of oil, natural gas and coal.
Speculators have increased their share of oil futures contracts on the Nymex to 71 percent this year, up from 37 percent in 2000, according to figures released by Stupak's office. At the same time contracts held by traditional oil users have fallen to less than 30 percent from over 60 percent.
House Democrats on Monday suggested a range of remedies, including: higher margin requirements and stricter position limits on investors.
The Commodity Futures Trading Commission Acting Chairman, Walter Lukken, cautioned lawmakers that higher margin requirements could drive traders out of the U.S. markets.
Some Democratic lawmakers made it clear they were willing to take that risk to lower fuel costs.
"I hope that you can appreciate the titanic effect that even a small reduction in oil prices would have compared to the relatively small effect of losing some speculative business," said Rep. Jay Inslee, D-Wash.
Nymex CEO James Newsome pointed out that traders who use the exchange are already subject to limits on the number of contracts they can hold.
The London-based ICE Futures Europe does not have such restrictions, and many experts have accused traders of using the foreign exchange to pile up excessive shares of the commodity markets.
ICE Chairman Sir Robert Reid tried to assure lawmakers his exchange does not tolerate excessive speculation, even if it doesn't have strict rules to prevent it.
"We know the positions of each of the people trading on our markets and if they look unusual then we call them in and as them questions," Reid told the subcommittee.
Lawmakers have cited the pain prices are causing airlines, trucking companies, farmers and consumers in calling for restrictions on speculative trading. At the pump, gas prices dipped less than a penny overnight to remain at a national average of over $4.07 a gallon, more than $1 above the year-ago average, according to AAA and the Oil Price Information Service.
A panel of analysts and oil industry experts told lawmakers that the recent influx of institutional dollars has disrupted the futures market's traditional function as a tool for the buying and selling of commodities. The panel included Steven R. Williams, chairman and CEO of Little Rock, Ark.-based trucking line Maverick USA Inc.
Panelists said pension funds, sovereign wealth funds and other large investors have taken advantage of loopholes that let them bypass speculative limits imposed by U.S. regulators.
In the last five years, investments in index funds tied to commodities grew to $260 billion from $13 billion, according to testimony from Michael Masters, managing member of the Virgin Islands-based hedge fund Masters Capital Management.
Sen. Joe Lieberman, I-Conn., has floated a proposal to ban pension funds and other institutional investors from futures exchanges altogether.
Northwest Airlines Corp. Chief Executive Douglas Steenland endorsed that idea Monday, and also urged lawmakers to close loopholes that allow traders to dodge U.S. speculation limits by trading on foreign exchanges or through over-the-counter transactions.
"Our highest priority is to tackle the overall price of fuel which is now 40 percent of our cost pie," Steenland told lawmakers. "Addressing excessive speculation is the most immediate remedy Congress could deliver."
The debate over oil speculation spilled onto the campaign trail over the weekend with presumptive presidential contenders Sens. Barack Obama, D-Ill., and John McCain, R-Ariz., sparring over who would be tougher on policing energy futures markets.