Bush Announcements Target Gas Prices
RENEE MONTAGNE, host:
Oil prices have dropped slightly. Yesterday, President Bush took steps to head off summertime shortages. The president also renewed his call for long-term research on alternatives to gas and oil. And he promised a crackdown on suppliers if they are found to be manipulating the energy market. NPR's Scott Horsely reports.
SCOTT HORSELY reporting:
President Bush says he wants to make sure that Americans are being treated fairly at the gas pump. With gasoline prices topping three dollars a gallon in some areas, Mr. Bush has asked the Justice Department and the Federal Trade Commission to investigation.
President GEORGE W. BUSH: Americans understand, by and large, that the price of crude oil is going up and that the prices are going up. But, what they don't want and will not accept, is manipulation of the market, and neither will I.
HORSELY: This is hardly the first time the Federal Trade Commission has investigated a spike in gasoline prices. In fact, associate general counsel John Seesel says, the FTC never really stops looking at gas prices.
Mr. JOHN SEESEL (Associate General Counsel, Federal Trade Commission): This sector of the economy is probably in the spotlight more intensely than any other part of the economy.
HORSELY: The Commission is still finishing a report on what it found last fall, when gasoline prices spiked after Hurricane Katrina. Seesel says it's premature to draw any conclusions from that study, but the FTC's many previous gasoline investigations have typically not uncovered illegal price manipulation.
Mr. SEESEL: Our staff looks very carefully to see if there is some kind of added, competitive conduct going on that might explain the price anomaly, and we have found, in virtually every situation--really, every situation--upon really close scrutiny, that market forces are generally causing those situations.
HORSELY: President Bush made some effort yesterday to influence those market forces of supply and demand. He wants additional incentives for consumers who buy fuel-efficient hybrid or diesel cars. And, he's ordered the 12 million barrels of oil, destined for the strategic petroleum reserve this summer, be left, instead, on the open market. Economist Severin Borenstein of the U.C. Energy Institute notes, that's less oil than the U.S. consumes in a single day.
Mr. SEVERIN BORENSTEIN (Director, University of California Energy Institute, Berkeley, California): The amounts we're talking about are so small, relative to the world oil market, that it's just not going to move the price very much.
HORSELY: Crude oil prices fell just 45 cents yesterday, closing a little under $73 a barrel.
Borenstein is also skeptical of another part of the president's plan, which allows the administrator of the Environmental Protection Agency to temporarily waive clean-fuel requirements in some parts of the country. That could prevent local bottlenecks that some fear could arise this summer with the phase-out of the gasoline additive, MTBE. But, Borenstein says such waivers are not likely to have a national impact on gasoline prices. He expects those prices will fall a bit, as more refineries come back on-line. And, he suspects, we'll never know if the large number of refinery outages this spring were necessary, or a form of market manipulation.
Mr. BORENSTEIN: It's really hard to tell whether the refineries that are out, are out for perfectly good reasons and just need to be maintained and need to be repaired, or whether some of the bigger refiners who have other refineries that are still on-line, are figuring out that they can make more money by producing a bit less gasoline.
HORSELY: President Bush is calling on energy companies to invest more of their profits in new refining capacity, as well as new oil production, and alternative energy sources. Three of the biggest oil companies, Exxon-Mobil, Chevron, and Conoco-Phillips, all report quarterly profits this week. Their combined earnings for the first three months of the year are expected to top $16 billion.
Scott Horsely, NPR News.