Bush eases gasoline rules, halts reserve deposits

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[4:20 p.m.]

President Bush today suspended new purchases of crude oil for the U.S. strategic petroleum reserve, a small move to boost market supplies, and announced a federal investigation into possible manipulation of gas prices that have topped $3 per gallon.

Mr. Bush, responding to concern over skyrocketing fuel costs, also took direct aim at oil companies, saying they have a responsibility to American motorists and called on Congress to strip away tax breaks that the corporations now enjoy, despite record profits.

"To reduce gas prices, our energy companies have got a role to play. Listen, at record prices, these energy companies have got large cash flows, and they need to reinvest those cash flows into expanding refining capacity, or researching alternative energy sources, or developing new technologies, or expanding production in environmentally friendly ways," Mr. Bush said.

"That's what the American people expect," Mr. Bush said in a speech to the Renewable Fuels Association, which advocates alternate energy sources.

He also ordered a temporary suspension of environmental rules for gasoline, giving refineries more leeway to produce more gas, but analysts predicted the actions will do little to dampen high prices this summer.

Mr. Bush's announcement came a day after House Speaker Dennis Hastert, Illinois Republican, and Senate Majority Leader Bill Frist, Tennessee Republican, sent a letter to Mr. Bush calling for a federal investigation into any gasoline price gouging or market speculation.

Both Democrats and Republicans have turned rising gas prices into a political fight, each blaming the other, even though they can do little to control the world market and other factors that drive prices up and down.

Mr. Bush said the Federal Trade Commission, the Justice Department and the Energy Department will investigate possible price manipulations.

In calling on Congress to cancel about $2 billion in tax breaks over 10 years, Mr. Bush said that record profits for oil companies mean "that these energy companies don't need unnecessary tax breaks like the write-offs of certain geological and geophysical expenditures, or the use of taxpayers' money to subsidize energy companies' research into deep water drilling."

"Cash flows are up. Taxpayers don't need to be paying for certain of these expenses on behalf of the energy companies," he said to applause.