July 21, 2008 / 9:33 PM / 10 years ago

Senate Democrats push oil speculation bill

WASHINGTON (Reuters) - Senate Democratic leaders will try on Tuesday to move forward legislation to crack down on excessive oil speculation, which many blame for inflating prices of crude oil and gasoline.

Sen. Byron Dorgan, of North Dakota, a member of the Democratic leadership, said he hopes to get enough votes this week to allow consideration of the bill and pass the measure.

Soaring energy prices have become a top concern this election year, with Democrats and Republicans in Congress offering often competing solutions.

Passage of any reform will be difficult in the Senate, where Democrats have a slim 51 to 49 majority. Republicans, who want to increase U.S. oil drilling, have enough votes to raise procedural hurdles and possibly block passage of any plan.

The Senate legislation would require institutional traders to give the Commodity Futures Trading Commission more details on unregulated over-the-counter transactions to determine if price manipulation or excessive speculation is occurring.

The CFTC also would review trading practices of swaps dealers and commodity index funds.

The legislation would not require the higher margins to buy and sell oil that the futures industry had feared. But the bill requires tough position limits on speculators to restrict the number of oil contracts they could control.

Sixty “yes” votes will be needed on Tuesday’s motion merely to open the door to proceed on the bill. Dorgan also hopes to gain Senate passage this week, and backers believe they will get sufficient support.

“I don’t think there is hardly anyone in the United States Senate that believes we shouldn’t proceed to address this issue of energy,” said Dorgan, chairman of the Senate Democratic Policy Committee and a leading backer of the bill.

“We need legislation to rein in Wall Street traders who unfairly are driving up oil prices,” said Senate Majority Leader Harry Reid.

Republicans insist a bill going after speculators also must expand offshore oil drilling and allow development of oil shale fields in the Midwest.

“If we pass the speculator piece alone, Americans will continue to demand a serious solution that gets at supply and demand,” said Senate Minority Leader Mitch McConnell. “It’s time to use the (oil) resources we have.”

President George W. Bush last week lifted an executive order protecting the West and East coasts and Florida from offshore drilling. He also called on Congress to end its own drilling moratorium.

The Interior Department on Tuesday will announce regulations to establish a commercial oil shale program, which could result in 800 billion barrels of new crude on western lands.

Congress has blocked oil shale development. Democrats say oil companies already hold millions of acres under federal leases that can be explored for oil.

The presumptive Democratic presidential nominee, Sen. Barack Obama, opposes opening closed areas to energy exploration. Republican presidential candidate Sen. John McCain says states should choose if they want oil development off their coasts in return for a bigger share of oil royalties.

Meanwhile, a coalition of hunting and outdoor groups on Monday issued recommendations for responsible oil and natural gas exploration on federal lands.

(additional reporting by Joanne Morrison and Ayesha Rascoe)

Reporting by Tom Doggett; Editing by David Gregorio

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