Oil bills: Congress gets little done

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NEW YORK (CNNMoney.com) -- As Americans clamor for action on record oil and fuel prices, Democratic leaders in the House had promised to address energy issues this week, but they ended up without much to show for it.

The House passed two pieces of legislation on Thursday. The Saving Energy Through Public Transportation Act would provide nearly $2 billion in grants to lower mass transit fares over the next two years. And the Energy Markets Emergency Act directs the Commodity Futures Trading Commission (CFTC) to use its existing authority to investigate and curb "excessive" energy speculation.

Policy analysts were not impressed. The CFTC bill is just political rhetoric, they said.

"The bill doesn't do anything," said Christine Tezak, policy analyst for Stanford Group. "The CFTC is well on their way to doing what [House Speaker Nancy Pelosi] is screaming for."

Earlier in the month, the commission announced it is investigating the oil markets and will produce a report on "recommendations for improved practices and controls, should they be required" on Sept. 15.

More action could come soon

The Energy Markets Emergency Act was the latest of nearly a dozen introduced on the subject of oil speculators - and the first one to be passed. The rest still await a vote, and analysts think compromise bills could come out of both chambers next month when Congress returns after next week's July 4 recess.

That's because it may be the only oil-related issue that Democrats and Republicans can agree on. Democrats have faced stiff opposition from the other side of the aisle when it comes to penalizing oil companies with windfall profits taxes. On the other hand, Republicans do not have the Democratic-led Congress' support for opening up domestic resources for oil drilling.

As a result, it is likely that Congress will pass legislation that will increase CFTC's power to regulate oil markets.

"Leadership is going to pull something together in July and possibly move for enactment in September," said Tezak. "They'll agree on CFTC reform if it doesn't include Big Oil prosecution or drilling."

What that bill will look like is still a little hazy. The slew of speculation-tackling propositions that have not yet faced a vote address a variety of issues. Some have bipartisan support, like increasing the CFTC budget, and some are more contentious like limiting over-the-counter trades to producers.

CFTC may get budget boost

The bills address four major themes: closing loopholes on foreign oil trading, raising trade margins, limiting hedge funds position in the market and even putting an end to most oil speculation altogether.

Judging by Congress members' reactions during this week's four hearings on the subject, Tezak believes a bill will likely include a boost to the CFTC budget. The legislation also could possibly tighten the regulation on domestically made transactions in foreign boards of trade and require higher margin minimums.

The bill may include setting hedge fund limits, but Tezak believes Congress would have to leave it open to the CFTC to determine whether that is appropriate based on their Sept. 15 study.

Lastly, a speculation bill may direct the commission to track trader data to a limited extent, though the CFTC is unlikely to make individuals' positions public.