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Legislation On Oil Speculation Advances In Senate


And lawmakers are still focused on those high prices and how much speculation may be to blame. The Senate yesterday moved forward with a bill aimed at what some lawmakers call excessive speculation. So here's some awkward timing. The Senate action came the same day as a government report saying speculation is not the main problem. NPR's Wendy Kaufman reports.

WENDY KAUFMAN: Supply and demand, not speculators, are to blame for the increases in crude oil prices. That was the conclusion of an interim report by an inner agency government task force. The panel cited high demand for oil, especially in developing countries, without a commensurate increase in supply. The group said supply issues have been compounded by production shortfalls associated with geopolitical unrest in countries with large oil reserves.

With respect to speculators, activity on the crude oil futures market has increased significantly. But the Commodity Futures Trading Commission's chief economist, Jeff Harris, who headed the panel, says the evidence does not support the idea that speculative activity has systematically driven changes in oil prices.

Mr. JEFF HARRIS (Commodity Futures Trading Commission): Each day we look at the position changes by different groups of traders, including different groups of speculators and changes in prices on those days. Then we apply some economic analysis to that and find that there's really no evidence that the purchases by speculators are actually leading to any price increases.

KAUFMAN: Crude oil prices were actually down yesterday for the fourth time in the past five sessions. At the pump prices have fallen a bit, but gas still costs about 80 cents more a gallon than it did a year ago.

Wendy Kaufman, NPR News. Transcript provided by NPR, Copyright NPR.

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Wendy Kaufman