Pension Fund Opposes Speculation Bill

The California Public Employees’ Retirement System, the nation’s largest public pension fund, has finally weighed in on the debate over oil and food speculation.

The fund, which has $1.3 billion of its total $239 billion investment portfolio in commodities, released a statement on Thursday opposing legislation that would  limit their ability to invest in the lucrative commodities market.

“There‘s no empirical evidence of anything other than a circumstantial correlation between commodities index investments and rising commodities prices,” wrote the fund.

CALPERS argues that they have a fiduciary duty to diversify their investments. Curtailing their ability to do so, they argue, would hurt workers and retirees invested in the pension plan.

The statement is another sign of the financial industry opposition faced by Democrats anxious to pass anti-speculation legislation before the August recess when they’ll face constituents frustrated with high gas prices.

Although the speculation bill passed a key procedural vote on Tuesday, Senate Republicans have since slowed progress by pushing Majority Leader Harry Reid (D., Nev.) to include amendments aimed at increasing domestic-oil production.

Airlines, trucking companies, gas station owners, and other gas-dependant industries have lobbied hard in favor of legislation. Financial services companies, traders, hedge funds, and other investors oppose any major crack down.

On Thursday, the U.S. Commodity Futures Trading Commission charged a Netherlands-based trading fund with manipulating energy futures contracts to reap profits of about $1 million.

But the CFTC, which oversees the commodities markets, Bush administration, and many economists maintain that speculation has little to do with the run-up in gas prices.

"This is not a politically motivated case," Acting Enforcement Director Stephen Jay Obie said at a news conference. "What we're going after are manipulators of our markets. We pursue all manipulators."