Expert says investors not to blame for oil prices

Daniel Yergin, chairman of Cambridge Energy Research Associates, said increased demand, smaller supplies and a dearth of resources needed to discover oil have created a "shortage psychology" that has driven prices to historic highs.

"When you consider the pressure in the markets, the impact on consumers and the economy, and the shifts at hand, we really are at a break point in terms of world oil," Yergin told members of the Joint Economic Committee.

Politicians are scrambling to find remedies for $4-plus gas prices, with the Bush administration advocating increased offshore drilling and Democrats suggesting higher taxes on oil companies. With little consensus on those proposals, lawmakers are focusing on curbing speculative investments in oil commodities, which some experts blame for inflating prices.

Oil futures fell Wednesday after the Energy Department said the nation's fuel and oil supplies were larger than expected last week, but prices remain above $130 a barrel.

Nearly a dozen bills have been introduced in the last month that would increase oversight of commodity markets, and some would restrict how investment banks, pension funds and other institutional investors trade in commodities. Investments by these groups, who use oil contracts to protect their assets from the falling dollar, have nearly doubled since 2000, according to government data.

But Yergin warned against assigning blame to investors, saying "changes of this scale and significance result not from a single cause, but rather from a confluence of factors."

Despite such calls for restraint, many politicians on Capitol Hill and on the campaign trail have made it clear they want to increase oversight of energy trading.