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NEW YORK (CNNMoney.com) -- Near-record oil prices could quickly fall by half if Congress were to rein in speculators, according to testimony Monday from a hedge fund manager and oil company adviser on Capitol Hill.

Michael Masters, of Masters Capital Management, told a subcommittee of the House Energy and Commerce Committee that - with greater regulation - oil prices could drop to $65 or $70 a barrel within about 30 days.

"That's half of where prices are today, and gas prices would reflect that," he said.

Roger Diwan, an adviser to oil companies at Washington, D.C.-based PFC Energy, agreed that regulation could lead to a drop in prices. He said it would take no more than 30 days for speculation in the oil market to decrease and gas prices to fall.

With more regulation, "prices will reflect closer the marginal cost of producing oil," Diwan said.

The testimony came as Congress, reflecting some sentiment among the public, blamed Wall Street traders for record oil and gasoline prices.

Regulator: Beware unintended consequences

But the head of the agency that regulates U.S. commodity futures said increasing the amount of money speculators need to put up to buy an oil contract - something the agency can do now in emergencies - could have unintended consequences.

"Changing margin requirements may drive businesses elsewhere to London and over-the-counter markets," said Commodity Futures Trading Commission Acting Chairman Walter Lukken. "I'm not sure it would get [index traders] out of the market," he said.

Lukken warned that raising margins could drive traders elsewhere, with Tokyo or Hong Kong market as beneficiaries.

While Lukken did not say whether or not he believes there is undue speculation in the oil market, he has noted "a lot of growth in swap dealers."

He said the CFTC will report to Congress by Sept. 15 regarding "the scope of commodity index trading in the futures markets and recommendations for improved practices and controls, should they be required."

The chair of the oversight and investigations subpanel hearing, Rep. Bart Stupak, D-Mich., had a different take on speculation. "We risk having our economy brought to its knees" by "excessive" speculation in commodity markets, he said.

Leaders from the trucking, airlines and heating industries testified before the panel that speculation in the oil market has harmed their bottom lines.

In Congress, nine bills attempt to limit the role of speculators. Several have bipartisan support, but only one was co-sponsored by a Republican.

Proposed regulation includes requiring foreign exchanges to provide more information about crude oil trades, limiting the number of contracts speculators are allowed to hold, increasing the amount of money speculators need to put up to buy an oil contract, and removing speculators from the market entirely and limiting trade to just producers and consumers.

Energy speculation at issue

The topic of energy speculation is front and center on Capitol Hill this week. A Senate hearing is scheduled for Tuesday and another House panel examination is set for Thursday.

Last Friday, three Democratic House members including Stupak introduced a bill attempting to better regulate the oil markets.

To underline his case, Stupak said speculators now control 71% of oil on the market. That means only 29% control the physical oil being traded, down from 61% eight years ago. He blamed loosely regulated trading markets with numerous loopholes for the ease that traders have to buy and sell crude.

"We can eliminate a major avenue that traders use to avoid oversight," Stupak said Friday. "It's time for Congress to close the Enron loophole and lower our gas and diesel prices by 50%."

Opposition to regulation mounts

Traders have lashed out against some of the lawmakers' proposals, such as banning speculation in some markets, saying that would only result in oil trading shifting to even less-regulated areas.

But some analysts believe that speculation plays a crucial role in the market by adjusting the price of oil according to supply and demand. Some argue that such regulation - no matter how pervasive - will hinder that process and actually result in higher prices.

Though many Democratic and some Republican politicians have furiously blamed speculation for driving up the price of oil, many analysts argue that the market fundamentals of supply and demand are the cause of record prices.

"If it is a bubble, then where is the evidence in the actual physical market?" asked Kevin Norrish, a commodities analyst with Barclays Capital in London. "There is an endless list of reasons why this argument is a very, very poor one - it will only make things worse."

CNNMoney.com staff writers David Goldman and Aaron Smith contributed to this report.