Bush tries to stem rise in fuel prices

WASHINGTON - As his approval ratings hit new all time lows, US President George Bush yesterday moved to try and stem the rise in petrol prices.

In a bid to boost supplies on the market ahead of the northern summer "driving season", Mr Bush is temporarily halting shipments to the national strategic petroleum reserve.

Hs is also taking steps to relax environmental standards on certain types of fuel, and launching a probe into possible price gouging by the big oil companies - whose record earnings and massive pay increases to top executives have only added to public anger.

Fuel prices have been rising worldwide following the hike in the price of oil on global markets and New Zealand motorists have seen significant rises this year.

"Our addiction to oil is a matter of national security concern," the president said in a speech to the Renewable Fuels Association, which advocates alternate energy sources like ethanol.

The country now imported 60 per cent of its oil, he noted, compared with only 25 per cent in the mid-1980s.

Bush was acting to combat prices that have soared above US$3 ($4.73) a gallon - equivalent to $1.25 a litre - in many parts of the country. Fuel prices are contributing to a new low of 32 per cent in his job approval rating, according to a CNN poll.

Bush, trying to stave off a potential election-year problem for Republicans trying to hang on to control of the US Congress, acknowledged that Americans are in for tough times during the summer.

"Energy experts predict gas prices are going to remain high throughout the summer. And that's going to be a continued strain on the American people," he said.


Bush said the Justice Department and the Federal Trade Commission had urged state attorneys general to vigorously enforce laws against price gouging that may have contributed to rising gasoline prices.


He also gave US oil companies more time to pay back emergency loans from the Strategic Petroleum Reserve to put more oil on the market, saying the reserve was sufficiently large and delaying further deposits until fall.


A former Texas oil man who in recent months has advocated curing America of its addiction to oil, Bush was unusually blunt with oil companies enjoying record profits. Exxon had US$36 billion in profits last year and gave a US$400 million retirement package to ex-chief Lee Raymond.


He said they should use some of their largesse to invest in new refineries and researching alternative fuel sources. The fact that no new refineries have been built in 30 years is frequently cited as a reason contributing to soaring gas prices.


Bush called on Congress to take away from the oil companies about $2 billion in tax breaks over 10 years, such as subsidizing research into deepwater drilling.


Bush had signed the tax breaks into law as part of a comprehensive energy bill last year. He said the tax breaks are now unnecessary at a time of "record oil prices and large cash flows."


"Taxpayers don't need to be paying for certain of these expenses on behalf of the energy companies," Bush said.


The president did not, however, endorse a call from some members of Congress for consideration of a windfall profits tax on oil companies, and White House spokesman Scott McClellan said he opposed such a levy.


The "gas crisis" has helped propel Mr Bush's approval rating to the new low, plumbing depths reached among recent presidents only by Richard Nixon at the height of the Watergate scandal, by Jimmy Carter, and briefly by his own father in the months before his 1992 defeat.

Few presidents have tumbled as far as Mr Bush, whose popularity hit almost 90 per cent after the September 11 attacks, and stood at 70 per cent when the US invaded Iraq in March 2003.

Since then, it has been downhill all the way.

Almost a year and a half into his second term, this President Bush has fought his last election, and is thus beyond the direct reach of voters.

The fear in the White House and the Republican high command is that the public will vent their dislike on the next best target: the Republican party at November's mid-term elections.

Loss of control by the Republicans of either the Senate or the House of Representatives - let alone both - would not only kill off what legislative clout remains to this enfeebled White House, but also expose it finally to serious, hostile scrutiny by Congressional committees, on Iraq and other controversial issues.

In another poll this week, 69 per cent of Americans said rising petrol prices have "caused hardship" for their families - compared to just 28 per cent saying they have made no difference.

But as Mr Bush himself acknowledged, yesterday's measures will make little lasting difference - even though wholesale petrol prices dropped in New York by 8 cents a gallon immediately after the announcement.

As with Iraq, he is at the mercy of events beyond his control.

In the case of oil, these are soaring global demand, the row with Iran, and political instability in Nigeria, another major Opec producer.

But the general public, not to mention the Democratic opposition, have little time for such arguments.

Yesterday Harry Reid, Democratic minority leader in the Senate, lashed out at the White House for its failure to promote energy conservation.

Others berated the White House for handing out billions of dollars in exploration and other subsidies to oil companies already brimming with money.

Senator Charles Schumer of New York went even further, promising legislation to break up the biggest companies which, he said, operated an effective price cartel.


"To listen to the president, you'd think that it's the local gas station that's the problem. We all know it's the big oil companies who are causing these massive price increases,"

- INDEPENDENT, REUTERS