US President George W. Bush momentarily shifted his focus from longer-term alternatives and ordered more federal investigations of high gasoline prices.
“Americans understand by and large that the price of crude oil is going up and that the prices are going up, but what they don’t want and will not accept is manipulation of the market. And neither will I,” he said in an address to the Renewable Fuels Association on Apr. 25.
He said the Federal Trade Commission already is investigating whether prices have been unfairly manipulated since last summer’s two major Gulf Coast hurricanes.
Bush said that he has directed the Justice Department to work with the FTC and Department of Energy and that he also will order the Justice and Energy departments “to conduct inquiries into illegal manipulation or cheating related to the current gasoline prices.”
The president’s actions come after Republican congressional leaders joined Democrats earlier that day in expressing concern over gasoline price increases. The average US retail price for regular gasoline climbed 13¢ from a week earlier to $2.914/gal on Apr. 24, the US Energy Information Administration reported.
Senate Majority Leader Bill Frist (R-Tenn.) and House Speaker J. Dennis Hastert (R-Ill.) sent Bush a letter requesting a Justice Department and FTC investigation of any potential price-gouging or market speculation that could be contributing to higher prices.
They also asked Bush to order Commodity Futures Trading Commission Chairman Reuben Jeffrey III “to bring heightened scrutiny to the trading of energy futures and derivatives to determine whether spikes in the prices of oil, gasoline and other petroleum distillates are a result of improper market manipulation by traders or by energy firms.”
House Energy and Commerce Committee Chairman Joe Barton (R-Tex.) said he has asked the Oversight and Investigations Committee “to immediately look into issues such as refinery outages and how oil companies determine where to invest profits.”
In an apparent reference to Lee R. Raymond, who recently retired as ExxonMobil Corp.’s chief executive, Barton added, “It troubles me that a CEO receives a $400 million retirement package while refinery capacity continues to lag behind in this country.”
Bush’s other steps
Bush also asked major oil companies to reinvest profits in refining capacity, new technologies, and alternative energy sources. He said Atty. Gen. Alberto R. Gonzales and the FTC are contacting attorneys-general in all 50 states offering technical assistance as they investigate gasoline price-fixing allegations.
“Record oil prices and large cash flows also mean that Congress has got to understand 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’ monies to subsidize energy companies’ research into deepwater drilling,” Bush continued.
He said he would ask Congress to remove about $2 billion of such incentives from the federal budget over 10 years. “Cash flows are up. Taxpayers don’t need to be paying for certain of these expenses on behalf of the energy companies,” Bush declared.
He also said he has directed Environmental Protection Agency Administrator Stephen Johnson to grant reformulated gasoline waivers during the transition to ethanol from methyl tertiary butyl ether (MTBE).
“We also need to confront the problem of too many localized fuel blends,” said Bush, adding that he has directed Johnson to form a task force with the nation’s governors to reduce the number of boutique fuels and increase cooperation between states on gasoline supply decisions.
He also urged Congress to improve the permitting process for refinery construction and expansion. “It’s important for Congress to cut through the red tape and guarantee refinery construction permits will be processed within a single year,” he said.
Bush also said more domestic crude oil supplies need to be developed, notably from potential deposits in the Arctic National Wildlife Refuge.
“We’ve got to be wise about energy policy here in America. We’ve got to make sure that we protect the environment, but we’ve also got to make sure that we find additional supplies of crude oil in order to take the pressure off the price of crude, which takes the pressure off the price of gasoline at the pump,” he declared.
Party pot-shots
Congressional Democrats and Republicans immediately traded pot-shots in response to Bush’s remarks.
“With skyrocketing gas prices, it is clear that the American people can no longer afford the Republican rubber-stamp Congress and its failure to stand up to Republican big oil and gas company cronies,” House Minority Leader Nancy Pelosi (D-Calif.) said.
She charged that House Republicans rejected bills that would have imposed tougher price-gouging penalties. Hastert and other Republicans also have blocked HR 3936, which Rep. Bart Stupak (D-Mich.) introduced in September, that would give the FTC and Justice Department authority to investigate price allegations along the entire energy production line, Pelosi said.
“Democrats have a common-sense plan to help bring down skyrocketing gas prices by cracking down on price-gouging, rolling back the billions of dollars in taxpayer subsidies, tax breaks, and royalty relief given to big oil and gas companies, and increasing production of alternative fuels,” she said.
In a floor address, Senate Minority Leader Harry Reid (D-Nev.) said high gasoline prices are one of several issues that need to be addressed immediately instead of debating constitutional amendments on flag-burning or the definition of marriage.
He called on Republicans to let the Senate debate bills to punish price-gougers and to establish a windfall profits tax. Revenues from such a levy could be returned to consumers as rebates or used to build alternative or renewable fuel plants, he said.
“If the greedy oil companies won’t invest their billions in profit in delivering affordable domestic fuels for America, then maybe America needs to take some of those windfall profits and put them to better use,” Reid maintained.
Other Senate Democrats offered more-moderate suggestions. Jeff Bingaman (D-NM), the Energy and Natural Resources Committee’s chief minority member, said prior to Bush’s speech that US Transportation Sec. Norman Y. Mineta should consider temporarily exempting gasoline delivery truck drivers from maximum driving and “on-duty” rules to improve deliveries.
Some Republican leaders blamed Democrats and other opponents of increased access to domestic resources. “Time and again, Republicans have warned that America would wind up at the mercy of [the Organization of Petroleum Exporting Countries] if we didn’t put Americans to work producing more of our own energy. We were right, as the price at the pump illustrates again,” said House Resources Committee Chairman Richard W. Pombo (R-Calif.).
“Democrats must join Republicans to increase supply. There is no silver bullet in solving this side of the equation, but a billion barrels here, and a billion barrels there, and pretty soon we are talking about real energy,” he maintained.
Barton said he plans to hold Energy and Commerce Committee hearings on gasoline demand and supply. “Current law leaves nearly 100 billion bbl of oil out of reach in Alaska and off our East and West Coasts. Until that changes, American families will continue to pay more than they should for gasoline,” he said. ✦