June 25 (Bloomberg) -- Oil's upward price trend may ease in the years ahead as U.S. gasoline demand may have peaked in 2007, and the economy is suffering from skyrocketing prices, said witnesses at a congressional hearing.

Daniel Yergin, chairman of Cambridge Energy Research Associates, told the Joint Economic Committee that oil prices are being driven by ``new fundamentals'' involving the merging of oil and financial markets. He added that the price of oil has hit a ``break point'' where the U.S. will begin to seek alternatives.

``In our view, 2007 may well have been the top, the peak in terms of U.S. gasoline demand,'' Yergin said in testimony. ``There is much talk about peak oil supply these days, however, we think something else is at hand, peak demand.''

The U.S. consumes more than 9 million barrels of gasoline a day, and that number might drop to just over 7 million barrels a day by 2022, with increased use of ethanol and better energy efficiency, Yergin said.

Crude-oil prices have doubled from last year, reaching a record $139.89 a barrel in trading on the New York Mercantile Exchange June 16. Congress has held numerous hearings on the cause of the increase, and President George W. Bush last week called for expanded drilling to respond to surging prices.

Frederick Joutz, an economics professor at George Washington University, said in an interview after testifying that escalating oil prices could be responsible for a 6 percent to 7 percent loss in gross domestic product growth over a two and a half year period starting at the beginning of this year.

''This shock is going to have a negative impact on economic growth,'' Joutz said.

Higher Prices

Yergin, a Pulitzer Prize winning author, said basic supply and demand factors are a key cause of rising prices. As oil has become an asset for investors, though, supply and demand fundamentals have been altered. He also said the rising cost of drilling equipment and personnel shortages have added to prices.

Much of the attention surrounding prices had been focused on speculators driving up prices by pouring money into investment bets that prices will go up.

New York Democratic Senator Charles Schumer, the chairman of the House-Senate panel, blamed oil producers and companies.

``I think it is interesting that the big oil companies and OPEC are blaming speculators for out of control prices, when they may be much more the cause,'' Schumer said.

Yergin said the focus on speculators is too limited, and that the key is to allow investors to add liquidity to commodities markets, without letting them artificially drive up the price.

``These markets have changed rapidly and developed rapidly, and I think the first step is to more fully understand them,'' Yergin said.

Yergin won the Pulitzer Prize for non-fiction in 1992 for his book The Prize: The Epic Quest for Oil, Money and Power.

To contact the reporter on this story: Daniel Whitten in Washington at dwhitten2@bloomberg.net

Last Updated: June 25, 2008 14:36 EDT