Are hedge funds and investment banks unfairly driving up fuel costs for families in the U.S. -- or are soaring energy prices merely the result of a strong global economy and a free financial system?
On Tuesday, executives from ExxonMobil, Chevron, ConocoPhillips, BPand Royal Dutch Shelltestified before the House Select Committee on Energy Independence and Global Warming.
The congressional panel wanted the petro execs to justify why they should retain $18 billion in tax breaks after posting profit of $123 billion in 2007 -- and why the companies are not investing more in renewable energy which could theoretically help wean the U.S. off foreign oil.
Industry officials are debating the question -- and will present their arguments to CNBC on Thursday's edition of "Closing Bell."
Home oil prices have risen 58 percent in the last year, and drivers are paying a record national average $3.29 for a gallon of gasoline -- months before the summertime driving season. This comes as U.S. home prices are declining and jobless claims jumped to their highest level since 2005.
“Excessive speculation on energy trading facilities is the fuel that is driving this runaway train in crude oil prices,” said heating-oil executive Sean Cota, who will testify before the Senate on Thursday.
Cota, president of the New England Fuel Institute and co-owner of a family-owned home-oil company in Vermont, said, “American consumers are forced to ride this same speculative rollercoaster as the energy trader.”
He supports a bill from Rep. John Larson (D-Conn.) that would widen the regulatory framework and make it harder for speculators to participate in the energy market.
After his Senate testimony, Cota will appear on Thursday's edition of "Closing Bell" with Maria Bartiromo, where he'll butt heads with Red Cavaney, president of the American Petroleum Institute, who offers the free-market counter-point argument.
“Under the current system, the Nymex gets products to consumers reliably,” said Cavaney.
Referring to the central element in Larson’s plan, Cavaney added, “If you eliminate non-commercial accounts, you get rid of liquidity, and in a tight market, you might not have capacity” to meet demand.