As oil stays up, the target on speculators’ backs gets bigger

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Congress’ current favorite definition of an Enemy of the State: anyone who’s using his or her money to speculate in oil -- as opposed to those who invest to get it out of the ground for sale, or those whose money goes to pay for it at the Quickie Mart.

Both the House and the Senate have previously waded into the causes and effects of record energy prices, but this week on Capitol Hill it’s looking like open season on the speculator ranks in oil and other commodities. Four different congressional committees are taking up the question of why oil is so high -- and two of the committees are specifically looking for ways to limit the influence of speculators (some of whom insist they’re really long-term investors, but no matter).

And conveniently for Congress, crude is refusing to come down on its own, closing at $136.74 a barrel Monday, not far from its recent peak of $138.54 on June 6.

Earlier Monday, speculators were skewered at a hearing of the House Energy and Commerce Committee, where Chairman John Dingell (D-Mich.) declared, ‘Energy speculation has become a growth industry and it is time for the government to intervene.’

If you have the time, I recommend perusing the witnesses’ testimony -- both the anti-speculator testimony and the comments of those who defended the speculators. You can find it all here.

The best overall roundup from the Dingell hearing may be this one, from MarketWatch.com. It begins: ‘The price of retail gasoline could fall by half, to around $2 a gallon, within 30 days of passage of a law to limit speculation in energy-futures markets, four energy analysts told Congress.’

Do you believe it?

In the last few weeks I’ve read nearly everything I could find on the issue of the possible investor/speculator influence on commodity prices, and here’s my unsatisfying conclusion: You can’t prove unequivocally that they are responsible for a big chunk of the price run-up in oil and other raw materials -- nor can you prove that they’re having no real influence.

Of course fundamental supply and demand issues are largely behind record oil prices; the market fears a shortage, if not now, then later. But every asset bubble has a fundamental grounding. And in every bubble, it’s inevitable that buyers feed on one anothers’ bullishness. Why shouldn’t that be true of the current wave of investor/speculator interest in commodities?

Whether Congress would just make things worse by intervening in markets is the question now. Speculators’ presence makes markets more liquid. Kick too many of them out at once and you risk more volatility -- and perhaps even higher prices. You just don’t know.

Here’s what’s on the Capitol Hill calendar the rest of this week:

--On Tuesday, the Senate Homeland Security and Governmental Affairs Committee, chaired by Sen. Joe Lieberman (I-Conn.), holds a hearing to discuss legislative options for ‘ending excessive speculation in commodity markets.’ I previewed the hearing here last week.

--On Wednesday the Senate Small Business and Entrepreneurship Committee will hold a hearing on home heating oil prices.

--On Thursday, the topic of a hearing of Congress’ Joint Economic Committee will be: ‘Oil Bubble or New Reality: How Will Skyrocketing Oil Prices Affect the U.S. Economy?’

Isn’t it a little late to be wondering about that?