A coalition made up of 80 groups that are seeking an end to “excessive speculation” wrote a letter to Congress on June 3 urging them to pass legislation that adds transparency and oversight to the commodities market.

President Barack Obama recently called on Congress to make commodity traders’ actions more transparent, which would add to regulation put in place last year with the Commodity Futures Trading Commission Reauthorization Act, which gave the CFTC greater authority over commercial markets.

But the Commodity Markets Oversight Coalition says these are only “positive steps in the right direction” of a much longer journey to increased market oversight and stabilization.

The 80 groups that make up the coalition are mostly oil and refined fuels retailers who use the market to hedge costs, but the coalition also includes agriculture, consumer interest and even faith-based groups.

In addition to asking that the market become fully transparent, the letter urged congress to take specific actions such as closing multiple loopholes that could limit the reach of trade regulation, limit exchange traded fund investments in physical commodities and their derivatives and require across-the-board aggregate speculation limits to prevent traders from controlling commodity prices.

Members of the coalition point to skyrocketing commodity prices during July 2008, when oil reached $147 bbl despite rising supply and waning demand, saying fundamental factors did not justify price increases.

“When we have a glut of oil and prices continue to rise, something smells funny,” said Matt Cota, executive director of the Vermont Fuel Dealers Association, a member of the coalition. “People are saying now, for example, that oil prices are rising because the jobless reports are not as bad as expected. It’s absurd; we’re running out of storage capacity—prices should be dropping. We need to limit the ability of noncommercial speculators so they can’t continue to highjack the market.”

Cota said during the price boom last summer, New England states were bracing for a heating oil crisis once the colder weather hit, holding emergency discussions about how to form shelters for people who couldn’t afford to heat their homes. When commodity prices dropped with the stock market before the colder weather hit, the issue was averted.

But Cota said regulating the commodities market in the ways the letter to congress expressed would provide much-needed price stabilization for retailers and consumers alike.

“This isn’t just some esoteric argument about the market; it affects regular people,” he said.

But some consider speculation, over-the-counter trading and credit default swaps to be vital to market health, and say that overregulation could lessen trading activity, weakening an already slumping U.S. economy.

In a House Agriculture Committee hearing in February, Michael A. Gooch, chairman and CEO of GFI Group Inc., said that killing the credit default swaps market will “continue to extend the current period of tight lending.” At the same hearing, Terrance A. Duffy, executive chairman of CME Group Inc. said that the swaps are a “very valuable tool” to limit risk.

In a presentation for the Energy Information Administration’s Energy Conference in April, Adam E. Sieminski, chief energy economist for Deutsche Bank AG, said the high prices last summer were due to a combination of factors: Gross Domestic Product growth, higher demand, low spare production capacity and the weakening of the U.S. dollar.

“[We blame speculators] because it’s a more satisfying ‘sound-byte’ than the complicated answer that involves a review of a large number of social and economic forces with inherent data limitations,” his presentation states.

By its very nature trading leads to price volatility, according to Robert J. Weiner’s presentation for the same conference. There is not enough proof to show that speculators are the cause of volatile prices, his presentation stated. Weiner is a professor of international business and public policy at George Washington University.

“Speculators' influence on oil prices and price volatility is at best limited,” he said. “[The view that speculators are behind market volatility] is not supported by any research, as none has been undertaken, and proponents have offered neither evidence nor a coherent rationale for speculators' effects on markets.”

James M. Collura, vice president of coalition member The New England Fuel Institute, said the coalition is not seeking to remove speculators from the market entirely, just to regulate their activities so that retailers and oil companies can rely on the market to hedge their costs.

“We’re not anti-speculator, we’re pro-transparency and pro-regulation,” he said. “Greater transparency and regulation cannot hinder the market; they can only improve the situation. These people rely on commodities trading to hedge for their businesses and if it is less volatile the economy will benefit from that.”