(Adds details on outlook for bill and White House reaction.)
WASHINGTON -(Dow Jones)- The U.S. House of Representatives - on a day when crude oil prices hit a record high - voted Thursday to order the nation's energy market regulator to use its emergency powers to immediately curb excessive energy market speculation.
The 402-19 vote was in favor of a bill that calls on the Commodity Futures Trading Commission to more aggressively police the energy markets it oversees.
The overwhelming vote indicates that both parties want the CFTC to step up its review of whether speculation is contributing to rising prices and be prepared to take dramatic steps. Those steps could range from increasing the amount of money that traders must put down to bet on the direction of energy prices to temporarily shutting down the markets.
"Speculation is part of the problem," said Rep. Chris Van Hollen, D-Md. Forcing the CFTC to use its emergency powers "opens up a whole set of new tools that they are not using."
It isn't clear that the bill will make it into law. The U.S. Senate won't take up the bill until next month at the earliest, and many people are betting it won't get past the Senate. Even then there is the risk that both chambers would need a two-thirds majority to override a presidential veto.
While the White House hasn't said whether it would veto the bill, the Bush administration has downplayed the role of speculation and maintained that oil prices are rising because of growing worldwide demand.
"The CFTC has the appropriate authority and oversight to review energy markets," said White House spokesman Tony Fratto. "The most important factor in rising oil prices is increasing global demand."
The vote came on a day when crude oil futures hit a record above $140 a barrel after OPEC's president said prices could rise above $150 a barrel.
Some lawmakers say that prices that have more than doubled over the past year are due in part to a flood of money entering the commodity futures markets.
Wall Street firms are concerned about the talk of further congressional action. They have been making a case that speculation is not the same thing as manipulation, and arguing that speculators are necessary for markets to function. Their lobbying appears to have helped shape many of the bills floating around Capitol Hill, but has been unable to fully thwart Congress amid ever- rising prices.
Speculators account for an estimated 70% of trading in U.S. markets, up from about 57% two years ago, according to the CFTC.
But the CFTC has said that it isn't clear whether speculators are driving up prices, since some people may be betting that prices will fall, while others may be betting that prices will rise.