From the Washington Post:
WASHINGTON (Reuters) – President George W. Bush, alarmed by a spike in gas prices at the pump, has asked the Departments of Energy and Justice to look into possible cheating or manipulation of gasoline markets, White House spokesman Scott McClellan said on Monday.
Bush plans to announce his directive publicly in an energy speech on Tuesday in which he will talk about “how gas demand is only projected to increase this summer and experts are projecting that gas prices will remain high,” McClellan told reporters aboard Air Force One as the president flew back from Nevada.
The pain at the pump keeps getting worse for U.S. consumers as the national price for gasoline skyrocketed 13.1 cents over the last week to $2.91 a gallon, the fourth highest average retail price on record, the government said on Monday.
Republican congressional leaders, worried that high fuel costs will turn voters against them in this November’s midterm elections, urged the Bush administration to investigate whether oil companies are gouging consumers at the pump.
“Anyone who is trying to take advantage of this situation while American families are forced into making tough choices over whether to fill up their cars or severely cut back their budgets should be investigated and prosecuted,” Senate Majority Leader Bill Frist and House Speaker Dennis Hastert wrote on Monday in a joint letter to President George W. Bush.
ABOARD AIR FORCE ONE (AP) — President Bush is trying to calm Americans’ outrage over soaring gas prices by ordering an investigation into whether the price of gasoline has been illegally manipulated, his spokesman said Monday.
During the last few days, Bush asked his Energy and Justice departments to open inquiries into possible cheating in the gasoline markets, said White House press secretary Scott McClellan. Bush planned to announce the action Tuesday during a speech in Washington.
Bush is under pressure to do something about gas prices that have reached nearly $3 a gallon. In a new CNN poll, 69 percent of respondents said gasoline price increases had caused them personal hardship. Other polls suggest that voters favor Democrats over Republicans on the issue, and President Bush gets low marks for handling gas prices.
I don’t like high gas prices either, but placing all the blame on the oil companies is a gross oversimplication. There’s Iran’s president who causes the price of oil to jump everytime he opens his mouth. There’s the fact that oil refineries are at full capacity without any plans to build new ones because of ridiculous EPA regulations.
And there’s Congress. The energy bill Congress passed is a big contributor to the sharp increase gas prices. For an explanation, take a look at the transcript from the most recent Journal Editorial Report on Fox News:
Gigot: A barrel of crude hit record highs this week, and then jitters over the continuing nuclear standoff with oil-rich Iran. With prices at the pump pushing $3 a gallon in many markets, what can the U.S. do to bring costs under control? We’re back with Dan Henninger and Rob Pollock. And also joining the panel is Wall Street Journal editorial board member Kim Strassel.
Kim, the politicians want to blame foreigners, or they want to blame oil companies, but the Congress itself holds some responsibility for this recent run-up in gasoline prices. Why don’t you tell us about the ethanol?
Strassel: A lot of the blame is theirs. You know, to understand this story, you have to go back to 1990, when the Congress said the people had to oxygenates in their gas. And the two main ones were MTBE and ethanol, and they became a big part of our fuel supply. Now, two things have happened over the past year. Last year, in the energy bill, Congress did not give liability protection to MTBE makers that are being hit with lawsuits, and they are now pulling out of the market right and left. And ethanol makers, they handed them a huge prize in the form of a new mandate, saying everyone had to use more of their stuff. Not only is the industry not capable of filling that mandate; they’re certainly not capable of making up the slack from those MTBE makers that are getting out. So we’re having gasoline shortages now.
Gigot: So 10 cents, 20 cents a gallon, might be Congress’s own fault from its energy bill that was suppose to solve this problem last year?
Strassel: Absolutely. And it could be worse. I mean, there’s been some shortages in Texas, which is to be expected. Places like–
Pollock: And on the East Coast, you know, just yesterday and today shortages are being reported because of the ethanol mandates.
Strassel: And that’s because it’s hard to transport ethanol.
Henninger: Well, one answer to the shortages is to allow the importation of ethanol from Brazil. But there’s a 54-cents-a-gallon tariff on Brazilian ethanol–
Gigot: It’s amazing.
Henninger: —which they will not lift because they are trying to protect our own internal ethanol industry.
Gigot: Well, with elections coming up and gas prices being an issue, the Democrats think they can exploit it. Why is the Bush administration not lifting those tariffs or import quotas?
Strassel: Presidential politics. You know, look, I mean, you know the ethanol industry is centered in Iowa.
Gigot: I’m sorry, but 2008 is two years after 2006.
Strassel: You can never be too close to the ethanol industry.
So the American people can blame their very own Congress for the sudden spike in gas prices.
I see Chuck Schumer wants to investigate the oil companies for price gouging. Why doesn’t he ask his fellow politicians to do the same about tax gouging?
After all, oil companies’ profit works out to nine cents a gallon. Taxes total more like 40 cents a gallon.
But you don’t hear Schumer whining about the taxes. After all, that’s an easy source of revenue for a monotonous list of social programs whose failures are legendary. Better to keep funding them through taxes that are killing us, than demanding accountability due all of us.
Senator, if you want to bring gas prices down, start offering solutions and stop playing games.
Start opening areas for more oil exploration here, so we don’t rely on oil from over there.
How about it, Chuck? Let’s eliminate some of those gas taxes you so conveniently ignore.
Update II: In his speech today, President Bush has ordered a temporary suspension of environmental regulations on gasoline production to help with the cost of gasoline.
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.
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 had enough fuel to guard against any major supply disruption over the next few months.
“So, 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 immediately upon Bush’s remarks.
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. The suspension of oil purchases for the federal emergency oil reserve is likely to have only modest impact since relative little extra oil will be involved.
Environmental regulations should be reduced permanently.