Oil-speculation bill passes, but its future is dim

WASHINGTON — The Senate voted 94-0 Tuesday to move ahead on legislation to curb speculation in oil markets. But any hope of bipartisanship to pass the bill is likely a mirage.

The Senate bill would require the Commodity Futures Trading Commission to set limits on trading in oil markets by investors and speculators and close a loophole that allows speculators trading on the London oil market to escape scrutiny by U.S. regulators.

Democrats say the rapid increases in oil prices have coincided with big rises in trading on oil future markets and investment in oil by pension and hedge funds. "The demand for 'paper barrels' ... has begun to swamp the price signals that are generated by the more traditional hedgers and the large producers and the consumers of petroleum products in tune to the real time dynamics of supply and demand," said Energy Committee Chairman Jeff Bingaman, D-N.M.

But the overwhelming majority to consider the bill only set up a debate in which both parties blame the other for not doing enough to combat this summer's $4-a-gallon gasoline prices.

Majority Leader Harry Reid, D-Nev., is offering Republicans only one amendment, and a GOP filibuster seems likely. That's fine with Reid — a political draw even if the underlying oil speculation bill dies.

"The procedure is fine," Reid told reporters Tuesday. "The Republicans don't want to legislate."

Republicans want to offer an amendment to open the Outer Continental Shelf to oil drilling. GOP nominee-to-be John McCain is a new convert to such drilling, and opinion polls suggest voters are rallying around the idea.

"Nobody can say with a straight face that simply addressing speculation — a very narrow part of the problem — is a serious approach," said Minority Leader Mitch McConnell, R-Ky. He said Republicans will insist on a full and fair debate on a wide range of energy issues, including offshore drilling.

Most Democrats — and their allies in the environmental movement — are opposed to lifting offshore restrictions. But enough of them have indicated they would defect for the GOP side to prevail on a simple up-or-down vote requiring only a margin of one to win. Democrats are, in effect, filibustering that — requiring 60 votes instead of 51 to prevail.

Speaker Nancy Pelosi, D-Calif., won't let the House or any of its committees or subcommittees allow a vote on offshore drilling. She and other Democrats say the oil companies should first look to areas offshore and in Alaska where drilling is already allowed.