WASHINGTON -- President Bush on Tuesday ordered a temporary suspension of environmental rules for gasoline, making it easier for refiners to meet demand and possibly dampen prices at the pump. He also halted for the summer the purchase of crude oil for the government's emergency reserve.
Easing the environment rules will allow refiners greater flexibility in providing oil supplies since they will not have to use certain additives such as ethanol to meet clean air standards, said the Associated Press. The suspension of oil purchases for the federal emergency [image-nocss] oil reserve is likely to have only modest impact since relative little extra oil will be involved, it added.
The moves came as political pressure intensified on Bush to do something about gasoline prices that are expected to stay high throughout the summer. Bush said the nation's Strategic Petroleum Reserve (SPR)which holds 685 million barrelshad enough fuel in it to guard against any major supply disruption over the next few months.
"By deferring deposits until the fall, we'll leave a little more oil on the market. Every little bit helps," he said.
Wholesale gasoline futures prices for June delivery dropped 8 cents a gallon to $2.10 on the New York Mercantile Exchange (NYMEX) immediately upon Bush's remarks.
The high cost at the pump has turned into a major political issue, with Democrats and Republicans blaming each other for a problem that is largely out of Congress' control. Republicans are worried that voters paying more than $3 per gallon would punish the party in power. Democrats would like to see that happen.
Bush said that high gasoline prices are like a hidden tax on consumers and businesses, although he said the nation's economy was strong. He urged Congress to take back some of the billions of dollars in tax incentives it gave energy companies, saying that with record profits, they do not need the breaks. He urged lawmakers to expand tax breaks for the purchase of fuel-efficient hybrid automobiles.
The president said Democrats in the past have urged higher taxes on fuel and price caps to control fuel expenses, but he said neither approach works. Instead, he called for increased conservation, an expansion of domestic production and increased use of alternative fuels like ethanol.
Bush said high energy prices are disturbing.
"Our addiction to oil is a matter of national security concerns," the president said in a speech to the Renewable Fuels Association, which advocates alternate energy sources. "After all, today we get about 60 percent of our oil from foreign countries. That's up from 20 years ago, where about 25 percent of our oil came from foreign countries."
Bush said gasoline prices are expected to remain high throughout the summer and "that's going to be a continued strain on the American people."
Click here to read a transcript of President Bush's speech.
Bush said the Federal Trade Commission (FTC), the Department of Justice and the Department of Energy were investigating whether the price of gasoline has been unfairly manipulated. The administration also contacted all 50 state attorneys general to offer technical assistance to urge them to investigate possible illegal price manipulation within their jurisdictions.
During the last few days, Bush asked his Energy and Justice departments to open inquiries into whether the price of gasoline has been illegally manipulated.
It's unclear what impact, if any, Bush's investigation would have on prices that are near or at $3 a gallon or more. Asked if Bush had any reason to suspect market manipulation, White House press secretary Scott McClellan responded, "Well, gas prices are high right now, and that's why you want to make sure there's not."
The administration sent letters Tuesday to state AGs urging them to vigorously enforce state law "against any anticompetitive, anticonsumer conduct in the petroleum industry."
"Consumers around the nation have expressed concerns about what they have perceived as anticompetitive or otherwise unfair conduct by the world's major oil companies," said U.S. AG Alberto Gonzales and FTC Chairman Deborah Platt Majoras. Their letter said federal agencies had substantially increased efforts to monitor, detect and prevent any violations of the law.
House Speaker Dennis Hastert (R-Ill.), and Senate Majority Leader Bill Frist (R-Tenn.) urged Bush in a letter Monday to order a federal investigation into any gasoline price gouging or market speculation. Click here to read the full letter from Hastert and Frist.
Senate Democratic leader Harry Reid (D-Nevada) dispatched his own letter, calling for real help for Americans, not just Big Oil. HE also called for a multi-pronged approach to restrain gas prices. Click here to view Reid's letter.
Meanwhile, Pennsylvania Governor Edward G. Rendell called on President Bush to act immediately to put an end to profiteering in fuel markets and tap oil companies' record-breaking profits to provide relief to consumers.
He urged the White House to work with Congress to establish a windfall oil profits tax and collect billions in oil royalty payments due the federal government by oil companies.Funds generated from a windfall profits tax and the royalties should be returned to the consumers who are bearing the brunt of profiteering from the oil companies, Rendell said.
Click here to read the full text of Rendell's letter.
Some other developments (see related story in this issue of CSP Daily News for state developments):
Representative Mark Kirk (R-Ill.) outlined several actions Congress should take to reduce prices. Kirk called for ending local boutique fuel monopolies, raising fuel economy standards, extending hybrid tax credits, expanding refineries and boosting E85 fuel deployment. Federal action is needed to lower gas prices, said Kirk. Rising oil prices hurts our pocketbooks and threatens our economy. The federal action I have called for enjoys widespread bipartisan support in the House and Senate. The American people are looking for relief at the pump and effective action by the federal government.Senator Debbie Stabenow (D-Mich.) said she will introduce comprehensive legislation to hold oil companies accountable for rising gasoline prices. Stabenow joined Sam Hamade, owner of the Southfield Service Center in Southfield, Mich., at his gas station Monday to call for an end to policies that allow oil companies to charge record prices while reaping record profits. This week, Stabenow will introduce the Oil Company Accountability Act. The bill would repeal $5 billion in tax breaks for oil companies and give an immediate $500 tax rebate to families to offset high energy costs. Families earning up to $119,950 would be eligible for the one-time tax rebate. Rep. Jim Nussle (R-Iowa) said he is preparing legislation to help lower gasoline prices. He will introduce his Independence from Oil With Agriculture (IOWA) Act when Congress reconvenes this week. It increases the Renewable Fuels Standard from 7.5 billion gallons to 12 billion gallons by 2012, nearly a 60% increase; expands the availability of E85 by providing a permanent tax credit for the installation of E85 tanks; and permanently extends the Small Producer Ethanol Tax Credit, the Biodiesel Production Tax Credit and the Renewable Energy Income Tax Credit for utility providers.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.