Increasing Fuel Costs Raise New Energy Concerns

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• RAY SUAREZ:

  Oil sells for over $135 a barrel, more than double what it was a year ago. Some on Capitol Hill are asking whether market speculators after a fast buck are partly to blame for record high prices.

  Members in both houses and from both parties have introduced legislation. This morning, Democratic Senators Bill Nelson and Byron Dorgan brought forth a measure to curb speculation.

  SEN. BYRON DORGAN (D), North Dakota: This is a run-up in prices on a commodity exchange that has been ballooned by excess speculation.

• RAY SUAREZ:

  A House hearing took up the issue yesterday. This morning, it was the Senate Homeland Security Committee's turn. Michael Masters runs a hedge fund which he says does not trade in commodities like oil.

• MICHAEL MASTERS, Masters Capital Management:

  We're not arguing that index speculators are the only reason that prices have gone up, but we are suggesting that they have greatly amplified a positive price trend.

  I think, over the short term, if you did this, I think that it's very likely that prices for food, energy commodities would come down hard.

• RAY SUAREZ:

  But James Angel of Georgetown University Business School said speculation is nothing new and legislative remedies are of limited use.

• JAMES ANGEL, Georgetown University:

  What will bring prices down is a credible action by the United States that signals to the rest of the world that we are serious about transitioning away from imported petroleum.

• RAY SUAREZ:

  The United States imports 58 percent of the oil it consumes. Much of it comes from the world's most volatile regions.

  Beyond the Middle East, with its episodic instability, several other oil-producing nations face supply disruptions or production shortfalls, among them the West African country of Nigeria. It's the world's eighth-largest exporter, but its industry is under constant attack from a rebel group in the Niger River Delta, as it was again in the past few days.

  This past weekend, Saudi Arabia, the world's largest oil exporter, convened an emergency meeting on the issue of supply. Saudi King Abdullah addressed the assembled delegates.

• KING ABDULLAH, Saudi Arabia (through translator):

  There are several factors behind the unjustified swift rise in oil prices. And they are: speculators who play the market out of selfish interests; increased consumption by several developing economies; and additional taxes on oil in several consuming countries.

• RAY SUAREZ:

  The meeting ended with promises of modest production increases.

  While American demand has been curbed slightly by high prices, China and India are fueling record economic growth with high demand for petroleum.