Bush orders suspension of gas rules

• Article
• Comments ()
• Click-2-Listen
• Videos

By

President Bush yesterday ordered a temporary suspension of environmental rules for gasoline, which are creating bottlenecks in U.S. gasoline markets, and announced a federal investigation into potential manipulation of gas prices that have topped $3 per gallon.

Mr. Bush, responding to high fuel costs that are expected all summer, said oil companies have a responsibility to American motorists and called on Congress to strip away tax breaks the corporations are enjoying amid record profits.

"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," the president said in a speech to the Renewable Fuels Association, which advocates alternate energy sources, yesterday in Washington.

The $16 billion in combined first-quarter earnings expected from ConocoPhillips, Exxon Mobil Corp. and Chevron Corp., the country's three largest oil and gas companies, will be 14 times greater than the combined first-quarter profits of Google Inc., Apple Computer Inc. and Oracle Corp, and 19 percent more than last year.

Mr. Bush also suspended new purchases of crude oil for the U.S. Strategic Petroleum Reserve, a small move to boost market supplies.

Analysts and Democrats predicted that the actions will do little to dampen high prices this summer, even though crude oil and gasoline futures fell yesterday after Mr. Bush's announcement.

"If you have $75 a barrel crude oil, you're sort of at a starting point of $2.90 a gallon for gasoline," said Mary Novak, managing director at the economic consulting firm Global Insight.

Democrats called Mr. Bush a hypocrite for making the speech because he signed last year's energy bill that gave oil companies billions in tax breaks and subsidies. They also called for a 60-day federal gas tax holiday.

"We have two oilmen in the White House, the logical follow-up from that is $3-a-gallon gasoline," said House Minority Leader Nancy Pelosi of California. "It is no accident. It is a cause and effect."

Sen. Robert Menendez, New Jersey Democrat, introduced an amendment to the supplemental spending bill that would put a 60-day suspension on the 18-cents-per-gallon federal tax on gasoline to give drivers immediate tax relief -- saving $2.70 to fill a 15-gallon tank.