• With: Rep. Chris Van Hollen, D-Md.

    This is a rush transcript from "Your World," April 26, 2012. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST OF "YOUR WORLD": All this as House Democrats are demanding a vigorous inquiry into whether speculators are manipulating these markets -- 42 Democrats led by Maryland Congressman Chris Van Hollen firing off a letter to Attorney General Eric Holder.

    In it, they say -- and I quote here -- "We urge you to use every investigatory law enforcement tool at your disposal to ensure the proper functioning of our oil and gas markets."

    Congressman Van Hollen joining me right now.

    REP. CHRIS VAN HOLLEN, D-MD.: Good to be with you, Neil.

    CAVUTO: Congressman, do you really think that it is speculators running amok here? Or is this just a convenient excuse to take the attention off the drilling critics of the president and all this other stuff?

    VAN HOLLEN: Neil, I think a lot of factors go into the prices of oil and gas.

    The biggest driver, of course, are the forces of supply and demand. But there's no doubt that a component of the cost of gas today, and one of the things that helped drive up prices to where they are, has to do with excessive speculation in the marketplace. That’s been found by...

    CAVUTO: When you say it’s a component, how big of one?

    VAN HOLLEN: Yes.

    Well, the figures I've seen range from 50 cents to a dollar per gallon of the cost. And we just had a case, recently, as you probably know, where a company settled for having manipulated the price back during the last oil spikes we saw back in 2008.

    CAVUTO: But they've done -- as you know, Congressman, they've done an investigation. Believe me; I am not apologizing for the oil companies. Everyone says, oh, Neil, you must own oil stock.

    I don't own any oil stock. I don’t care one way or the other. But I will say this, Congressman. The president’s interior secretary, Ken Salazar, confirmed that the administration has gotten a lot more strict denying oil drilling permits since Deepwater Horizon. And he contended that the president is pursuing an effective all of the above energy strategy.

    But he did go on to say -- and I quote here, sir -- "We have new sets of regulations that have been put into place. I have been focusing on these reviews. And they are rigorous. We make sure that any company that is going to be operating in the waters of the United States complies with these rules that we set out."

    In other words, he's saying we have been cutting back. So, there’s your supply and demand thing going kablooey.

    VAN HOLLEN: Well, a couple of things, Neil.

    First of all, as you know, we are dealing with prices on the world market. Right?

    CAVUTO: Right.

    VAN HOLLEN: So, there are a lot bigger sources of supply in other parts of the world. And we should try and maximize the U.S. supply to the market consistent with environmental protection.

    After the huge oil spill in the Gulf, I think it's very reasonable and I think the American people agree it's reasonable that we should ensure that oil companies that are drilling in deep water comply with environmental regulations, so that we don't have a big spill.

    (CROSSTALK)

    CAVUTO: You are absolutely right. I don’t think anyone will doubt that -- how important that is.

    But if we look at it in the aggregate stepping back, three years, these latest three years vs. the prior three years, it is down markedly, 37 percent. Now this speculator might be very germane, but then again it could be something far simpler. Right?

    VAN HOLLEN: Well, I think it's a combination of events.

    It is the world demand as well. So, for example, as the Chinese economy continues to chug along at about 8 percent growth, as you continue to have some growth in India and other markets, more and more people are using oil and gas. And you’ve got more people driving and that, obviously, creates a pull on demand.

    (CROSSTALK)

    CAVUTO: But do you think you and your colleagues though are to blame? Not you specifically, congressman.

    But by not coming up with a budget better than three years, both sides playing this game, Republicans and Democrats, on never getting this financial house in order, that it’s walloped our dollar, oil is priced in dollars, and it costs more dollars to buy oil, that it might be as simple as you, in Washington, not getting your job done.

    We look like a joke to the world. It cheapens our dollar. It cheapens our image. And it sends gas and oil prices soaring.

    VAN HOLLEN: Neil, now, you’re mixing a couple of things.

    I totally agree that we should get our fiscal house in order. That’s why I support the approach that bipartisan groups have recommended. We’ve got to get our budget deficit down through a combination of cuts, but also through revenue, including a lot of big tax loopholes.

    But I do not think that the current budget situation in Washington is what’s setting the world oil prices. I think that is a big, big reach.

    CAVUTO: Not at all, not at all. Oil is priced in dollars.

    If we had a normal, stable currency, oil would be 30 percent less than what it is now. Now, I'm not saying that's the sole reason, as I told you at the outset, but I am saying that we overlook something that is right beneath our nose, that priced in dollars, as it is, and the dollar gets cheaper, and it costs more dollars to get -- I readily agree with you that's not the sole reason, but it is contributing to this.

    And it is setting in stages here an inflationary spiral that goes way beyond whatever speculators are doing.

    VAN HOLLEN: Well, no, I disagree with you there.

    I think if you look at the number of folks who are speculating in the oil markets, it goes way beyond the people who are simply hedging for their own business reasons. So it goes way beyond, say, the airline industry.

    (CROSSTALK)

    CAVUTO: I don't want to belabor this point, Congressman.