House Defeats Anti-Speculation Bill

DTN AgDayta

Wed Jul 30, 2008 03:23 PM CDT

WASHINGTON (Reuters) -- The U.S. House on Wednesday defeated a bill to prevent excessive speculation in oil and other futures trading in a row over offshore drilling and developing oil shale reserves.

"This is no substitute for a real bill on drilling," said House Republican Leader John Boehner of Ohio. The White House threatened to veto the bill.

Representatives voted 276-151 for the bill to tighten position limits on energy and agricultural futures contracts, but a two-thirds majority was needed for passage.

The bill was debated under rules that prevented any amendments.

An anti-speculation bill is mired in the Senate in a similar dispute. Republicans say Congress ought to encourage domestic energy production, not just revise U.S. regulation of the futures markets.

"That is what this legislation should be addressing," said Virginia Republican Bob Goodlatte, who said the bill offered modest improvements in oversight of futures trading.

House Majority Leader Steny Hoyer said the defeated bill would have prevented oil prices from being artificially inflated. He said Republicans pursued more offshore drilling although billions of barrels of oil were available in tracts already open to oil and natural gas development.

"We (Democrats) agree we ought to get more oil in America," said Hoyer, listing previous, unsuccessful bills to expand U.S. production. Earlier, he told reporters the argument over offshore drilling was a Republican ruse.

Interest in revising U.S. futures market regulation soared this year as oil and grain prices hit record highs. Some lawmakers blame large investment funds, relative newcomers to the U.S. futures markets, for unduly boosting prices. Preliminary studies say the charge is not proven.

President George W. Bush has urged Congress repeatedly to develop U.S. oil resources. He said there is enough oil in offshore fields to meet U.S. demand for 10 years.

Democrats said the bill would have given U.S. regulators more power to assure fair trading at domestic and foreign exchanges. Foreign exchanges would have been required to adopt position limits similar to U.S. markets. The bill allowed position limits on look-alike contracts traded over the counter.

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