As gas prices skyrocket, the question is now, "Why?" Fingers are pointing more away from the fundamentals of supply and demand and more towards the role of energy speculators and the lack of government oversight.
Today on Capitol Hill, key players in the energy field will be questioned by lawmakers in an effort to find the culprit to the fuel crisis. It's all part of an increasing clamor in Congress to pin the blame for pain at the pump on someone, something or some institution.
New data released by the Chairman John Dingell, D-Mich., of the House Energy and Commerce Committee details for the first time how speculators now dominate the energy futures market.
In 2000, the New York Mercantile Exchange was dominated by those who wanted to purchase oil for use in the future like airlines and trucking companies. These so called "physical hedgers" controlled 63 percent of the market. But by April, 2008 the trend completely reversed. "Physical hedgers" ran 29 percent of the oil futures on NYMEX and the rest - 71 percent - were in the hands of speculators.
Dingell likens the commodities markets to a "casino for unscrupulous speculators who profit at the expense of the American people."
"This raises troubling concerns about whether the oil future prices have become delinked from underlying supply and demand fundamentals," he said.
While NYMEX is regulated by the Commodities Futures Trading Commission, its competitor, the InterContinental Exchange is not. ICE executives argue they are sufficiently regulated by the British and don't need additional oversight. ICE contends they are a foreign exchange and the CFTC agrees.
Rep. Bart Stupak the chairman of the House Energy and Commerce Oversight and Investigations Subcommittee disagrees and says the lack of regulatory oversight is contributing to the energy crisis.
"The Commodity Futures Trading Commission and the Department of Energy may be the only people in the world who currently believe that speculation in energy markets is not a driving force in the recent run up in oil prices," he said.
Dingell also released data today that shows 64 percent of ICE West Texas crude oil futures are traded from US terminals.
The data also shows that ICE's share of business on US terminals is increasing. In the last quarter of 2007, 69 percent of ICE's West Texas futures were run from US terminals.
Yet despite their growing market share in the United States, ICE says it is only subject to British regulations.
When Dingell's committee requested an ICE representative to appear at today's hearing, they were told the exchange would send someone from England. Sir Robert Reid is expected to testify today that his exchange is British and therefore exempt from American oversight.
By Laura Strickler