On March 5th, 68 Congressional Democrats sent a letter to regulators at the Commodities Futures Trading Commission (CFTC) urging that the agency “immediately enact strong position limits to eliminate excessive oil speculation as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.” The Dodd-Frank Act requires that the CFTC promulgate and enforce limits on oil speculation by January 17, 2011, but the CFTC has not yet done so.

According to a Goldman Sachs report cited by the letter, “excessive oil speculation ‘translates out into a premium for gasoline at the pump of $.56 a gallon’”. Despite U.S. oil demand being at its lowest mark since 1997, on March 5th the national average for a gallon of gasoline was $3.79, making the premium identified by Goldman Sachs approximately 15%.

According to the letter, “oil speculators now control over 80 percent of the energy futures market, a figure that has more than doubled over the past decade.”

What impact on gas prices would curbs on oil speculation have? On other aspects of the economy? Why has the role of speculators in the energy futures market grown so rapidly? Is there a public benefit to wide-spread oil futures and commodities speculation?