(CNSNews.com) - The Senate on Tuesday cleared the way for a vote on the only “oil price” bill that has a chance of passing before the August recess.
 
The bill, introduced by Senate Majority Leader Harry Reid (D-Nev.), aims to curb “out-of-control” speculation in the oil futures market and increase transparency and accountability in the oil and gas markets.  
 
The Stop Excessive Energy Speculation Act would require the Commodity Futures Trading Commission to change the definition of “legitimate hedge trading,” limiting it to actual producers and actual purchasers of oil, for example.
 
In a statement on July 16, Reid (D-Nev.) said excessive speculation  had “directly contributed to soaring prices of gasoline at the pump.”
 
“That is why Democrats have introduced legislation to curb excessive speculation and increase transparency and accountability in the oil and gas markets,” he said.  “This bill will address the rising cost of gasoline in the short-term, prevent Wall Street traders from gaming the oil markets and ensure that American consumers are paying a fair price at the pump.”
 
Reid also said the bill gives Democrats and Republicans the opportunity to “work together.”
 
Democrats who oppose expanded domestic oil drilling support Reid’s bill as a way of bringing oil prices down.
 
Republicans -- who favor expanded domestic drilling -- apparently don’t mind efforts to curb speculation, but they say it won’t solve the problem of high energy prices.
 
“The American people will not accept a timid approach to such a major problem,” Senate Republican Leader Mitch McConnell (Ky.) said on his Web site.
 
McConnell said it seems that Democrats are not interested in a “full and open” debate, nor are they willing to hear “good ideas from all sides.”
 
He also suggested that Democrats are bringing the anti-speculation bill to the floor now, to give themselves “political cover” when they return home for the long August recess.
 
“And let's be clear, speculation-only legislation is a very little piece to a massive problem Americans are facing every day at the pump,” McConnell said. “Americans will continue to demand a serious solution that gets at supply and demand; nothing less than that can be seen as a solution.
 
“Nobody can say with a straight face that simply addressing speculation—a very narrow part of the problem—is a serious approach.” McConnell and other Republicans say the solution to America’s energy crisis is to “find more and use less.”
 
House Republicans are pushing an “all of the above” approach that includes expanded domestic oil drilling, conservation, development of alternative sources, and more nuclear power.
 
Sen. Roger Wicker (R-Miss.) said he thinks speculation is a “small part” of the reason gas prices have risen above $4.
 
“I don’t think you’d find very may knowledgeable people who would say that speculation is the reason we’re in the situation we’re in,” he told CNSNews.com. “We’re in the situation we’re in because we don’t produce enough American-made energy.”
 
The speculation bill “may” bring down gas prices, said Sen. Jeff Sessions (R-Ala.), but the solution to ending America’s energy crisis is “more involved than that.”
 
“The fundamental problem … is because there’s a shortage,” Sessions told CNSNews.com. “[Speculators] can’t be successful when there’s a generous supply.”
 
Congress needs to do something about increasing the domestic supply, Sessions said.
 
Sen. Ben Nelson (D-Neb.) said there are many other factors that Congress and the United States must consider when discussing ways to bring energy costs down, such as alternative fuels and more reliance on domestic energy sources. But he said controlling speculation is one way to bring down prices.
 
“There are the short-term things that are being talked about, and controlling speculation could very well be a short-term but also a long-term solution,” he told CNSNews.com.
 
The issue of what role speculation plays in boosting gas prices has been debated beyond the Capitol. In an interview with CNBC last month, billionaire businessman Warren Buffett said record-high oil prices are the result of supply and demand problems, not speculation.
 
“If somebody buys a thousand forward oil contracts and somebody sells a thousand forward oil contracts, somebody’s speculating on the downside and somebody’s speculating on the upside,” Buffett said. “The only way you could have speculators having a big impact is if you had a huge amount of storage, where they started actually withdrawing actual, physical oil from the system.”
 
For most of his life, except for the past two years, there has been a “huge amount of excess supply available,” Buffett said.
 
But on the other side of the argument, Michael Greenberger, a professor at the University of Maryland and former head of Commodity Futures Trading Commission’s trade division, believes speculation is to blame for a significant part of petroleum price increases.
 
Greenberger has testified before Congress that speculators are driving gas prices higher, and last month he predicted that the cost of crude oil could drop 25 percent if speculation was controlled and trading rules were tightened.
 
Reid’s bill authorizes the Commodity Futures Trading Commission to hire an additional 100 full-time employees to detect, prevent, and punish price manipulation and excessive speculation.
 
Now that it’s cleared the way to proceed on the bill, the Senate is expected to pass it before week’s end.