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Bush Orders Probe Into Gas Price Cheating By NEDRA PICKLER, Associated Press Writer
59 minutes ago
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.
House Speaker Dennis Hastert, R-Ill., and Senate Majority Leader Bill Frist, R-Tenn., urged Bush in a letter Monday to order a federal investigation into any gasoline price gouging or market speculation.
Senate Democratic leader Harry Reid of Nevada dispatched his own letter, calling for a multi-pronged approach to restrain gas prices. Among the steps were swift enactment of anti-price gouging legislation, an appeal to oil companies to refrain from further price increases; use of more alternative fuels and increased attention to existing fuel-saving laws and regulations.
Bush was working on the speech aboard Air Force One as he flew home Monday evening from a four-day trip to California that ended with a swing through Las Vegas. McClellan outlined part of the speech to reporters traveling on the plane.
McClellan said Bush also will announce that his attorney general and Federal Trade Commission will send a letter to all 50 state attorneys general, who have primary authority over price gouging, to remind them to stay on top of the issue and offer federal help to do so. And he will call on energy companies to reinvest their profits into expanding refining capacity, developing new technologies and researching alternative energy sources.
"I think you'll hear the president say very clearly that he will not tolerate price gouging," McClellan said.
Bush has consistently said that gas prices are high because global demand is rising faster than global supply and that the problem cannot be solved overnight. McClellan said Bush will talk about how experts predict that the price is expected to increase this summer and how the switch to a summer fuel mix is contributing to the problem.
Bush's actions are part of a four-part plan to address gas prices in the short- and long-term, McClellan said. The steps McClellan outlined are:
1. making sure consumers and taxpayers are treated fairly;
2. promoting greater fuel efficiency;
3. boosting gasoline supply at home;
4. aggressive long-term investment in alternative fuels.
___
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good job ducks
Political forum?
The biggest percentage increase has been at the refinery gates, not at retail.
Aren't the Repugs supposed to be free-marketers, letting the market set prices?
Since when do the Repugs start interfering with businesses and business profits?
What about price gouging by the drug companies? Abusive monopoly by MS?
You can buy generic equivalents for most drugs.
You can't with gasoline.
If they can provide a better explanation than the standard
"well, it's the summer driving season" then maybe I'll buy into it a little more,
but at a time when gas in my area has gone up over 70 cents in the past month,
and oil companies are still raking in record profits? I'm going to need something more substantial.
You don't have an unalienable right to gasoline. Quit buying it...that'll show 'em.
The More I Read About Gas Prices, the Angrier I Get at Politicians
The Wall Street Journal exposes how a good part of the increase in gas prices was caused by Congress itself. Lord help us if they decide to do anything else!
If the Congressmen are so concerned about our pocketbooks, they could suspend federal taxes on gas. And, when's the last time you tried to figure out how much of the per/gallon price is State Taxes?
So, high gas prices do get me burned up, but at the politicians, not the oil companies.
Am I and the WSJ right, scott?
Then there's this:
Bill Murchison tries to blow some cold air on all the hot air there are on gas prices. Nothing so unleashes political demagoguery as high prices that upset consumers. Politicians rush to blame the evil gas companies instead of the laws of supply and demand.
Like telling the environmentalist whackoes to go frig themselves and start building refineries, drilling in ANWR, rolling out shale oil recovery technologies, competing with Fidel in the Gulf, and building a few Nuclear Power Plants.
It's so depressing that these politicians, and there are GOP politicians ready to jump on the demagoguery bandwagon, rather than to look realistically at what is causing the price jump. There is increased demand, concern about the supply from Iran, delays as they switch over the the summer formulations, limits on refineries, and limits on drilling for new sources. Put these together and you get higher prices. But these are a lot harder to do anything about. And so the hot air.
This is just posturing.
There is actually a reason for global oil prices to be so high.
Increased demand is not going away.
Iran is the unstable oil producer du jour. We can expect instability in the governments of most major oil producing countries.
The summer formulation thing will be seasonal.
Limits on refineries, refineries are not something you can throw up over night.
Limits on drilling for new sources, nonetheless, it is a finite resource.
Gas prices likely will not be going down and likely will continue to go up because of the demand as the rest of the world becomes more industrialized.
Alternative fuels have to be developed and not just paid lip service to.
Drive smarter, not harder is my motto.
I don't have a choice but to pay the higher fuel costs during vacation. I just hope the price has settled by June.
If there were scooter lanes I'd buy one.
Which industry leads the country in lobbyist & campaign contributions to BOTH sides of the aisle?
Which former senate minority (and majority before that) leader's wife was the highest paid lobbyist?
You get a gold star.
Funny that he orders probe on his friends.
Mr. President, I trust you.
Develop alternatives.
Regime Change is the answer.
As it always is except for the fact that the switch from MTBE and Ethanol has many refineries pants in a wad. Not to mention Ethanol providers who were unprepared for the demand.
Which is why they should have shut the Environmentalists up years ago and started building. There's no time like the present to start though.
There's an estimated 1.5 Trillion barrels of shale oil under the Rocky Mountains, more than the Middle East countries combined. Shale extraction technology is almost there...
Not to even mention ANWR and the Gulf. We shouldn't have to be dependent on foreign oil. Period.
So, I will buy a diesel and make my own fuel, buy a hybrid, drive less, or whatever it takes to transport myself from point A to point B.
Once it become market driven and not regulation driven, alternative fuels will be developed.
Definition:
Price Gouging. Price Gouging is defined to be any profit made by a company in an industry that is defined to be a Suspect Industry.
Suspect Industry. Any company that is engaged in any energy activity, or any company or industry that is designated by any elected official of the Democratic Party to be a Suspect Industry by any public statement. Under no cir stances will trial lawyers, the health care industry, unions or the abortion industry be included within this category.
You are such a dumb . (pardon the phrase, but sometimes thingsFunny that he orders probe on his friends.
Mr. President, I trust you.
have to be said). And hypocrite to boot.
Directionally, I think the WSJ got it right - but I don't agree with the details of their premise.
First and foremost, the ethanol legislation in the Energy Bill was big time pandering to corn lobbyists. As I've postes several times in this forum, corn is one of the least efficient feedstocks for ethanol production. High import tariffs and subsidies are what is making corn compe ive as an ethanol feedstock, and even then only marginally. If our politicians were serious about alternative fuels and ethanol in particular, it would stop protecting the corn industry and allow imported feedstocks and to a lesser degree imported finished ethanol into the market. That just isn't happening. The end user price for ethanol would likely be unchanged (I'll touch on that later), but it would result in higher margins for ethanol producers, which would in turn attract more production facilities (despite what people like to believe, businesses are out to make a profit, not to fill the world with gumdrops).
As for pricing, it is expected that ethanol prices would rise to their current level - it's a gasoline blendstock in demand, so naturally it will price with gasoline. Simple alternative economics - ethanol is pricing at its intrinsic value: gasoline less freight (more on freight later). Ethanol is too small of a part of the big picture to be a price driver at this point.
Ethanol pricing, however, is not the reason for high gasoline prices. If gasoline were $2.40, ethanol would probably be $2.40 less freight as well. If gasoline goes to $5.00, so will ethanol. The real issue is another thing I've posted several times in this thread, in that replacing MTBE with ethanol requires we use more gasoline in the blend. Most ethanol blends are 10% ethanol, 90% gasoline where MTBE blends had a lower percentage of gasoline in them. Just by virtue of not being able to use as much blendstock, the gasoline pool shrinks. This reduction in gasoline supply is the most significant price effect from the increased use of ethanol.
The other pricing effect is the inefficiency in transporting ethanol. It has an affinity to water so it can't travel in the same existing pipelines as finished product. It needs to be trucked or railed to its end destination (at a higher cost - although that gets accounted for in the "gas less freight" price of ethanol so its not an issue). The problem is the use of inefficient transportation. Pipelines are ratable, predictable, and timely. Trucks and rails cars... well are not. What happens when the ethanol shipment is 2 days late?
But, in the end, the effect of ethanol on gasoline prices is a drop in the bucket. In the end, its demand outpacing supply. And a common mistake is trying to make the connection between crude oil supply with finished product demand. The bottleneck continues to be refining capacity, just as myself and even NBAdan were pointing out two or three years ago on this very message board. The National Geographic even had a cover story in the summer of 2004 on this very issue. Record profits for oil companies all along the supply chain from the production field to the retail pump should not come as a surprise to anyone - its the natural market reaction. Without record profits, no new capacity will ever be built. A windfall profit tax will only ensure that we are stuck in a continually worsening situation forever.
Here's an idea George: shut the up about bombing or invading Iran. That might calm the oil market a bit. I know your friends are making out like bandits because of this, but so are Khatami and Iran.
Only if you and your children drink the groundwater nearby, eat the fish downstream, and breathe the air downwind. You sign up for that, and I'll say that refineries are great.
This is another pipe dream. You seem to be in favor of everything that makes money at the expense of people's health. This would be short-sighted energy policy that kills people long term and causes more harm to the economy than the lack of energy ever did.There's an estimated 1.5 Trillion barrels of shale oil under the Rocky Mountains, more than the Middle East countries combined. Shale extraction technology is almost there...
Let's get to the first bit: Shale extraction is energetically expensive, as all mining operations are.
You have have all the tech you want to pull it out of the shale, but the energy you spend mining, transporting, and attempting to clean up after the mining will eat up most of the energy you get out of this idea.
That is to say nothing of the mining methods and carcinogens that would be created in the process of mining.
How much oil does the US use per day?Not to even mention ANWR and the Gulf. We shouldn't have to be dependent on foreign oil. Period.
How much oil is in ANWAR?
As for the Gulf, if it can be done reasonably cleanly, go for it.
Biodiesel is 70 times dirtier in terms of sooty output than the equivalent gasoline engine. Biodieses IS cleaner than regular deisel and if done well, could replace a portion of diesel in the US, but I wouldn't want to live in a city full of nothing but biodeisel vehicles.So, I will buy a diesel and make my own fuel, buy a hybrid, drive less, or whatever it takes to transport myself from point A to point B.
Your solution of driving less is spot on. I say move next to where you work, and walk. This is the closest to a panacea on energy that there is, with the added benefit of cleaner air. The next best thing is to invest in mass transit.
Sadly I agree. This administration pushes unrestrained amoral market forces over ethical policy almost every time. The sad thing is that it takes $4 gasoline to get them to push for the right thing instead of going at it from the beginning.Once it become market driven and not regulation driven, alternative fuels will be developed.
The administration's newly found commitment to alternative fuels is one of the few things I think they are doing right.
Don't get me wrong here.
Free market capitalism is a very creative force, and allows individuals to achieve their potential.
It is also horribly amoral. It is up to people to have the ethical sense to know this.
A dollar bill doesn't have a conscience, but we do and should.
Even "free" markets need rules and oversight to ensure ethical outcomes.
Does anybody really believe dubya is going after oil companies profits?
After starting a a phony war to push up the price of oil?
After giving the oilco's $15B for "research"?
==========================
GOP Blocks Measures Boosting Taxes on Oil Companies' Profits
Provisions Passed by Senate Would Raise About $5 Billion
By Jonathan Weisman
Washington Post Staff Writer
Wednesday, April 26, 2006; A06
While Republican leaders sharply criticize soaring gasoline prices and energy industry profits, GOP negotiators have decided to knock out provisions in a major tax bill that would force the oil companies to pay billions of dollars more in taxes on their profits.
House and Senate tax writers have been struggling to reach an accord on separate tax bills approved last year to extend some expiring tax cuts enacted during President Bush's first term. But House Republicans have raised strong objections to Senate-passed provisions that would raise nearly $5 billion in taxes over five years -- primarily by changing arcane accounting rules that have allowed oil companies to substantially lower their tax bills, according to House and Senate tax aides familiar with the talks.
The actions of Republicans hashing out a tax bill behind closed doors indicate that, despite tough talk from the White House and Capitol Hill, the party is not ready to hit the oil companies hard -- even on measures that have broad support in the Senate.
House Majority Leader John A. Boehner (R-Ohio) made it clear yesterday that the leadership would only go so far in punishing an industry enjoying record-breaking profits if that punishment could have broader negative consequences. In January, Exxon Mobil Corp. alone reported the highest corporate profit in U.S. history: $10.71 billion for the fourth quarter of 2005 and $36.13 billion for the entire year.
"The windfall profits [tax], when it was tried in the '80s, failed miserably because it led to less discovery. It led to less production and was a failure," Boehner said. "There is no reason for us . . . to go there again."
Since Congress returned to Washington this week, lawmakers under pressure from angry cons uents have threatened to take action against the oil companies. With crude oil prices well over $70 a barrel, Sens. Byron L. Dorgan (D-N.D.) and Christopher J. Dodd (D-Conn.) vowed yesterday to push for a vote in the coming days on a 50 percent excise tax on profits on oil selling for more than $50 a barrel. Sen. Arlen Specter (R-Pa.) has suggested a similar tack.
Even Bush called on Congress yesterday to temper one small provision in last year's energy bill that offered oil companies a quick tax write-off of the costs of oil exploration.
"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," he said .
But in the closed-door talks on tax legislation, there has been no such sentiment in dealing with two of the three Senate provisions that would boost federal taxes on the oil industry.
The biggest of the provisions would change accounting rules that apply to oil in storage. Currently, oil companies are allowed to calculate the taxable value of their inventories based on the value of the oldest stocks, when oil may have been worth $30 a barrel. But much of the inventory may have been pumped from the ground when oil was selling for more than double that. Critics say that understates the value of the companies' oil supplies purely to lower their tax payments.
Another would prevent oil companies from deducting from their U.S. taxes the royalties paid to foreign governments.
The third, which would repeal the provision in last year's energy law allowing companies to write off in two years the cost of geological exploration, received new life after Bush's speech, Senate tax aides said.
Those measures were first proposed by Sen. Olympia J. Snowe (R-Maine) to pay for a $500 tax credit to defray home energy costs. In letters to Senate Majority Leader Bill Frist (R-Tenn.) and House Speaker J. Dennis Hastert (R-Ill.), Snowe suggested yesterday that the Senate oil tax measures be taken out of the broader tax bills and passed separately to pay for alternative-energy development.
But the Bush administration has strongly opposed Snowe's measures from the start, especially the accounting change, which would hit the five major oil companies to the tune of $4.3 billion in two years. In letters to Congress on Feb. 23, Treasury Secretary John W. Snow used underscored text to stress that "the President's senior advisors would recommend that the President veto the legislation if this provision remains."
The tax change Bush spoke of yesterday is less dramatic than it may seem, oil industry tax analysts said. The Senate had hoped to repeal the quick write-off of exploration costs, but Bush merely wants to stretch it out from two years to five years, as proposed in his February budget plan, according to Mark Kibbe, senior tax policy analyst with the American Petroleum Ins ute.
"We would not necessarily be opposed to that at all," Kibbe said.
© 2006 The Washington Post Company
=========================
Of course, the raging insanity is going after oilco's profits, when the real culprit is ineffecincy and waste of oil due to not pushing oil conservation to the technological limits.
Funny that he orders probe on his friends.
Mr. President, I trust you.
RG, if we live on such a dirty planet and it kills people,
how come we are living longer now than ever?
You got any common sense at all?
First it was went to war FOR Iraq's oil....now its went to war to PUSH UP the PRICE of oil. What will the reason be next week?
I think the real culprits are the illegal immigrants. They're the reason my gas costs so much.
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