Blame supply and demand for oil price hikes? Not so fast.

The AP just released a story that’s likely to make American consumers cringe: Oil prices have set a new record today, rising to above $147 per barrel.

Starting to feel a bit price-gouged?

According to Tyson Slocum, director of our Energy Program at Public Citizen, this isn’t surprising. He told the U.S. House Committee on Agriculture this morning that these stories of record-setting prices aren’t simply resulting from supply and demand; they’re also the result of weak or non-existent regulatory oversight of energy trading markets.

Sure, supply and demand has played a role in rising oil prices. But speculators and unregulated traders have pushed these fundamentals of supply and demand into a new era. Consider this: A May 2006 Citigroup report on the monthly average value of speculative positions in American commodity markets found that the value of speculative positions in oil and natural gas stood at $60 billion, forcing Citigroup to conclude that the hike in speculative positions was a “key driver” for the latest surge in commodity prices.

If that’s not enough, a recent congressional investigation found that at least $30 of the then-current cost of $145 per barrel of oil was pure speculation, unrelated to supply and demand.

“People are reeling from the economic crunch from high prices, and uncompetitive actions continue to pick their pockets,” Slocum told the committee. “The oil companies and energy traders enjoying record profits are not investing those earnings into sustainable energy or alternatives to help us break our addiction to oil.”

To solve this glaring issue, Slocum recommended four broad reforms to the Commodity Exchange Act to rein in speculators and help ensure that energy traders do not engage in anti-competitive behavior. In addition, he urged lawmakers to repeal subsidies now going into the fossil fuel industries and use that money to give households better access to alternative energy sources.

Read the full text of Slocum’s testimony for more details, and visit Public Citizen’s Energy Program page to learn more about oil, natural gas and deregulation.