Little relief from high gas prices
By H. Josef Hebert, Associated Press Writer
Wednesday, April 26, 2006 |
WASHINGTON - High gasoline costs and the political fallout they may create are producing a flurry of proposals from both Republicans and Democrats aimed at soothing motorists' anger.
But nobody is predicting prices will ease anytime soon.
Democrats are blaming Republicans, especially President Bush, while Republicans argue that congressional Democrats have stood in the way of more domestic oil production.
Bush directed his environmental agency Tuesday to stand ready to ease clean air rules if they interfere in gasoline supplies this summer. Industry analysts said that likely would have only a marginal influence on prices.
The president also announced that the government would not take 10 million barrels of oil out of the market for the U.S. emergency reserve as had been planned.
Bush maintained that “every little bit helps,” even though industry analysts said that was so little oil it would have no impact on prices.
The president expressed frustration at his inability to force down prices.
“What people are seeing at their gasoline pumps reflects the global economy in which we live,” he acknowledged in a speech aimed at countering critics who have accused him of being soft on oil companies and ignoring high prices at the pump.
Bush vowed to pursue any collusion or price gouging and directed the Justice Department to help states pursue allegations that “gas prices have been unfairly manipulated.”
But the White House opposes additional federal laws to address price gouging or strengthen antitrust laws as they pertain to oil companies, as some members of Congress have proposed.
“There are very good laws on the books,” said Al Hubbard, the president's chief economics adviser. “What's important is that those laws are enforced aggressively.”
Bush also urged Congress to repeal $2 billion in oil industry tax breaks over 10 years, declaring, “Taxpayers don't need to be paying for certain of these expenses on behalf of the energy companies.”
But he said he was opposed to price controls or a windfall profits tax on oil companies. “These plans have not worked in the past,” he said.
Democrats quickly renewed a call for taxes on oil industry profits and for a 60-day “holiday” from the 18.4 cent a gallon federal gasoline tax.
Sen. Robert Menendez, D-N.J., said the tax suspension would provide “immediate relief” of $100 million a day to motorists, although critics argued it also would increase the federal deficit unless Congress found new revenue. Menendez's proposals would make up the shortfall by new taxes on oil companies.
Sen. Byron Dorgan, D-N.D., noted that his windfalls profits tax proposal garnered only 35 votes in October, but with oil companies making record profits from crude at more than $70 a barrel he said he's now optimistic about passage.
The country's three largest oil companies - Exxon Mobil Corp., Chevron and ConocoPhillips - were expected this week to report more than $16 billion in profits during the first quarter of the year. Exxon Mobil earned $36 billion last year, the most ever by a U.S. company.
Refiners have said that a requirement to use more ethanol as a gasoline additive and an end to a federal requirement that gasoline contain 2 percent oxygenate has increased the cost of producing gasoline.
Ethanol prices have soared from $2 a gallon in December to $2.77.
Last week, prices for regular grade gasoline averaged $2.94 a gallon nationwide, a 23-cent increase in two weeks and 68 cents higher than a year ago. And prices in many areas such as the West Coast and mid-Atlantic states are exceeding $3 a gallon.
“Families are gripped by the fear of the rising gas prices,” Sen. Barbara Mikulski, D-Md., said at a news conference with other Democrats, responding to Bush's proposals, which she called “too little too late.”
The Democrats sought to link Bush's inability to lower gasoline prices to the president's problems in Iraq and the administration's response to Hurricane Katrina.
“What happened to Iraq oil, Mr. President? You said Iraqi oil would pay for the war. Ain't seen no money. Ain't seen no oil,” said Mikulski.
In a statement, House Speaker Dennis Hastert, R-Ill., accused Democrats of repeatedly opposing legislation that he said would have eased the current energy problems.
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