WASHINGTON — Ignoring a presidential veto threat, the House on Thursday approved measures aimed at curbing speculation in oil and other commodity markets. It said federal regulators now don’t have the tools or manpower to track trading abuses.
The bill, passed by a vote of 283-133 and sent to the Senate, is aimed at certain hedge-fund and large institutional investors as well as electronic trading through overseas entities that avoid U.S. government scrutiny.
It would give the Commodity Futures Trading Commission authority for more staff and for limiting the stake traders hold in certain markets. It also would require new reporting and other limits on traders including the foreign trading boards.
The bill now goes to the Senate, which is grappling with broader energy legislation focused on offshore oil drilling and it’s not certain whether the speculation issue will be wrapped into that effort, or even if an energy package will be passed before Congress leaves town, perhaps as early as the end of next week.
And the likelihood of the anti-speculation measure becoming law is anything but certain.
The White House said in advance of the House vote that President Bush is likely to veto the bill if it reaches his desk.
There “is no verifiable evidence to conclude that oil speculators were behind the rise in oil prices … (or) were behind its recent decline,” the White House said.
But the speculation bill got bipartisan support even as Republicans continued to hammer Democratic leaders on broader energy issues.
Rep. John Larson, D-Conn., said the new authorities for the trading commission and additional staff are needed “to make sure we have referees on the field” when it comes to the oil and other commodity markets.
Democrats in both the House and Senate have argued for months that abusive speculation in the oil markets was a major reason for the driving up of oil prices from $95 a barrel at the start of the year to a high more than $147 a barrel this summer — and to the recent rapid decline.
A report presented by Masters Capital Management said the role of speculators was clear as investors poured $60 billion into oil futures markets during the first five months of the year as oil prices soared and pulled out $39 billion since July as prices dropped.