House Panel to Probe Energy Trading

A House committee has begun an investigation into speculation in energy markets, including the role of investment banks, and is planning to hold hearings in May and June, according to a Democratic aide and several people invited as witnesses.

In particular, lawmakers are taking aim at hedge funds and investment banks, blaming them for playing a pivotal role in pushing crude-oil prices to record levels. Crude futures set a new record Friday, closing at a record high of $125.96 a barrel on the New York Mercantile Exchange.

The House Energy and Commerce Subcommittee on Oversight and Investigations has scheduled a hearing for May 21 on gasoline prices, which will touch on the issue of possible market manipulation, according to the aide and witnesses. That would be the day after a planned Senate Energy and Natural Resources Committee hearing examining speculation.

A larger, more in-depth House hearing on the investigation is being planned for June, the aide said. A spokesperson from the Energy and Commerce Committee couldn't be reached for comment.

In June 2006, the Senate Homeland Security and Governmental Affairs Subcommittee on Investigations released a report on the role of market speculation in oil and gas prices. The report said that as an increasing number of U.S. energy trades occur on unregulated, electronic exchanges or through foreign exchanges, the Commodity Futures Trading Commission's oversight program becomes less comprehensive and needs strengthening.

The Senate Democratic leadership has unveiled as part of its energy package to lower oil and gas prices two provisions that would raise the cash collateral needed to trade energy futures and would establish oversight of foreign markets operating with U.S. terminals.

Both the New York Mercantile Exchange and the Intercontinental Exchange -- the two major exchanges that operate energy trading -- have criticized the proposals.