Post by KC on Apr 29, 2006 19:13:33 GMT -5
Bush against tax on oil profit
WASHINGTON -- President Bush rejected calls Friday for a windfall tax on oil companies' profits and said he saw no evidence of price-gouging at the gas pumps.
Responding to rising gasoline prices in a question-and-answer session with reporters, Bush urged oil companies to invest their record profits in expanding domestic energy supplies.
"Look, the temptation in Washington is to tax everything," Bush said. "The answer is for there to be strong reinvestment to make this country more secure from an energy perspective."
Bush's remarks suggested that the former Texas oilman is unlikely to take harsh action against oil companies despite public anger about the rising cost of fuel.
Gasoline is averaging $2.92 a gallon across the country, up 69 cents from a year ago, according to AAA's daily fuel-gauge report.
The hastily arranged news conference came a day after Exxon Mobil, the nation's largest oil company, reported that its earnings climbed by 7.4 percent to $8.4 billion between January and March.
Robust oil profits and escalating gas prices have become a major political issue heading into November's midterm elections.
Some lawmakers, including Republicans, have suggested slapping a windfall tax on big oil companies.
In addition, some have called for vigorous federal oversight to ensure that there's no price-gouging at service stations.
Tuesday, Bush directed the Justice Department to work with the Energy Department and the Federal Trade Commission to hunt for "illegal manipulation" of gas prices.
However, Bush said in the Rose Garden on Friday that he doesn't believe "there's any rip-off taking place." He added, "It's the role of the Federal Trade Commission to assure me that my inclination and instincts is right."
Some Democrats have viewed this week's announcement by major oil companies of huge first-quarter profits as a chance to renew their push for a windfall-profits tax.
But although a few Republicans, including Sen. Arlen Specter of Pennsylvania, have said the idea ought to be examined, Bush and most GOP lawmakers strongly oppose it.
Instead, Bush called on Congress to ease regulations that make it difficult to expand the nation's refining capacity.
He also urged oil companies to plow profits into finding and producing more energy, such as by building natural gas pipelines or pursuing renewable energy sources, all ventures that could further boost the companies' bottom lines.
The president has supported rolling back some oil industry tax breaks that were enacted with his support just eight months ago. Rescinding that tax break is part of a broader gas-price-relief plan offered by the Senate GOP leadership, but House Republicans signaled this week they won't go along.
Bush called reporters to the Rose Garden to trumpet recent positive economic reports.
But, aware that high gas prices are one of the reasons that good news hasn't sunk in with much of the public, he acknowledged that fuel costs threaten to derail economic progress -- and used a driving metaphor to make the point that tax cuts are the key to continued strength.
"With gas prices on the minds of Americans, we need to keep our foot on the pedal of this strong economy," the president said.
Although much of Bush's news conference dwelled on the nuclear-refining crisis with Iran, it's that crisis that has kept oil and gasoline prices high.
Crude futures rose nearly a dollar a barrel Friday on oil-supply worries after the International Atomic Energy Agency said Iran defied the U.N. Security Council by enriching uranium.
Iran has said it seeks the technology only to generate power, but some other countries, including the United States, believe that it aims to create weapons.
Iran is the second-largest producer in the Organization of Petroleum Exporting Countries.
Crude for June delivery rose 91 cents to settle at $71.88 a barrel Friday on the New York Mercantile Exchange. Gasoline futures rose 2.02 cents to settle at $2.0921 a gallon.
The U.N. Security Council is expected to meet next week to start a process that could result in punitive measures against Iran.
The possibility of that inciting the Islamic republic to cut its oil exports is what traders are bracing for.
"As an oil market participant, it's hard to know," said Fimat USA analyst John Kilduff, adding that the Iran situation has added about $10 a barrel to crude futures. "Given all the rhetoric ... everyone's positioning themselves accordingly."
Crude oil prices are about 40 percent higher than a year ago. But accounting for inflation, prices are still about 20 percent below the records reached in 1981, when supplies became tight after a revolution in Iran and a war between Iraq and Iran.