Democratic U.S. lawmakers have called on the country's futures regulator to crack down on excessive speculation in oil markets as rising gasoline prices move to the forefront of the U.S. election campaign.
In a letter to the U.S. Commodity Futures Trading Commission, 23 senators and 45 members of the House of Representatives called on the agency to stop "dragging its feet" on implementing new regulations to stop Wall Street from dominating the oil market.
Meanwhile, gasoline prices are soaring, despite plenty of supply and low demand, the lawmakers charge.
"As the cost for American people to fill their gas tanks continues to skyrocket, the CFTC continues to drag its feet on imposing strict speculation limits to eliminate, prevent, or diminish excessive oil speculation," the members of Congress told the commissioners in a letter.
"We urge you to take immediate action to impose strong and meaningful position limits, and to utilize all authorities available to you to make sure that the price of oil and gasoline reflects the fundamentals of supply and demand."
The letter was signed by Senators Barbara Boxer, Bernie Sanders and John Rockefeller and Representatives Rosa DeLauro, among others. All the signers were Democrats except for Sanders, who is an independent.
U.S. gasoline prices have jumped nearly 30 cents over the past month and now average $3.77 a gallon, according to data from the American Automobile Association.
Some analysts argue that there is little evidence of excessive speculation in oil markets and that prices are moving over concerns in the Middle East and strong demand from developing countries such as China and India.
"Congress is rightfully concerned about the economic difficulty that today's high oil prices present to American consumers, but targeting financial speculators simply won't fix the problem that policymakers are trying to solve," said Blake Clayton, an energy and national security fellow at the Council on Foreign Relations in New York.
Concern over Iran sanctions could drive oil prices higher yet and push American gasoline prices above the psychological barrier of $4 a gallon in the coming months.
Such lofty prices could spell trouble for President Barack Obama as he gears up for the November elections. Obama has been talking up the issue in campaign-style stops in recent days, saying there was no quick fix to the problem. Last week in New Hampshire, he called for an end to tax breaks for the country's prosperous oil and gas companies.
Kevin Book, an analyst at ClearView Energy Partners in Washington, said Obama's promises to protect consumers in the weeks ahead could refer to the formation of a new CFTC rule among other things. But there's little a new rule could do to hurt speculators as high gasoline prices eventually correct themselves.
Republicans, eager to blame the Obama Administration for the rising fuel costs, say the country is paying for the decisions by the White House to limit offshore oil drilling and delaying approval of the Keystone Canada-to-Texas oil pipeline.
Democrats are also urging the administration to tap the country's strategic oil reserves, something the White House has said it was considering.
The CFTC's groundbreaking position limits rule, contested in courts by the financial industry, aims to restrict the number of contracts a trader can hold in 28 commodities including oil. It was narrowly approved by the agency's five commissioners last October.
The measure was part of the 2010 Dodd-Frank law that was designed to bring tough new oversight to Wall Street, including limiting excessive speculation.
The futures regulator, straining with a huge workload drafting the new rules, has said it could implement limits for the spot month by June, but it must first finish its swaps definition.
The final limits for all contract months can only be set a few months after the agency has collected a year's worth of swaps data, a process that is expected to end in August.
The financial industry sued the CFTC in December, arguing the agency overstepped its bounds by imposing a rule that was riddled with flaws and had the potential to irreparably harm its members and the public.
Jill Sommers, a Republican commissioner at the CFTC who voted against the position limits, told reporters at a bankers conference that an imposition of limits may have little effect on the market because only about six participants would be affected.
"Is that really going to change the price?" she said after speaking at the conference. "I think we've all cautioned against making the leap that just because we haven't imposed the limits yet that means that when we impose them there will be some significant effect on price."