WASHINGTON – Curbing speculation in oil prices is now a priority with the U.S. Commodity Futures Trading Commission.

Chairman Gary Gensler has announced hearings over the next month to determine what the agency should do to check wild price swings like the ones we've seen in the last 12 months.

Unless you are a speculator, this should be welcome news. Markets should be open to any buyers and sellers who want to participate. Their trades should reveal a true price. But when prices take off in a speculative frenzy that drives much of the world economy to its knees, consumers should not have to pay through the nose while waiting for the bubble to burst.

It's been a year since oil prices hit $145 a barrel. That price was clearly divorced from global supply and demand. This week, prices began trading below $60 a barrel. They've been up and down by more than 30 percent in recent weeks – based not on changes in supply and demand, but on investor bets.

The price of oil has been volatile for more than a century. When wildcat drillers hit supergiant gushers in Texas, hundreds of other drillers would crowd in and prices would collapse.

The Texas Rangers and the Texas Railroad Commission brought riot control and oilfield conservation to these frontier days. Volatility returned as new global discoveries flooded world markets, but these were tamed by giant oil companies acting together to hold the market steady.

OPEC seized control in 1973 and jacked up prices by limiting its members' production. Higher prices brought more oil into the market, and consumers used less. But there was more than the market at work. By flooding world markets in the mid-1980s, Saudi Arabia claims it helped speed the collapse of the Soviet Union.

In the last five years, rising demand from China and other developing countries and renewed OPEC discipline combined to raise prices – and price expectations.

Those expectations of higher prices brought a new wave of oil traders into the marketplace. Pension funds, investment banks and retail investors came in to inflate a bubble.

Bubbles correct themselves. Just go to a yard sale and check the prices of Beanie Babies. But we're seeing a lot more consequential bubbles burst in this young century – Internet stocks, residential and commercial real estate, commodities.

We've seen especially pernicious bubbles in energy prices in this decade. Enron drove down California with its manipulation of electricity prices. Amaranth and others drove over all of us with speculation in natural gas prices.

With oil, there were plenty of speculators in the market last year. They were fed by warnings that the world's oil supply had peaked, and that demand could not be checked quickly enough to prevent an inexorable rise in prices to $200 or more a barrel.

But demand did fall. Recession, of course, was the leading cause. But consumers were fed up with prices even before the economy tanked.

Now some are talking of peak oil demand rather than peak supply. Exxon Mobil Corp. and BP are both forecasting that U.S. demand for gasoline has reached its apex. Ethanol is only the first of several alternative transportation fuels that will come into use in the next few years to steal market share from oil.

Discovering the true price of oil is crucial to investments both in these alternate fuels and for future supplies of oil itself. But that can't happen when speculation makes it impossible to discover the true price.