Bush urges price probe


WASHINGTON -- President Bush, under pressure to deal with rising gasoline costs, called on regulators yesterday to investigate possible price-gouging, as Republicans and Democrats jockeyed to wring election-year advantage from the issue.

Even Bush's economic advisers suggested that there was no quick fix to a problem that the president acknowledges has left him with "no magic wand to wave."

At the Federal Trade Commission, Bush's call was the most recent in a decades-long series of requests from elected officials to be on the lookout for industry manipulation that might jack up prices at the pump.

For Americans lining up to pay more than $3 per gallon, however, there might be little relief. The agency's conclusion in the vast majority of cases has been that price increases have less to do with industry gouging or windfall profits than with supply and demand in the complex oil market.

Still, a stampede of politicians, in Washington and in Maryland, are calling for investigations of dealings by oil and gas companies, whose high profits and lavish retirement packages make them an appealing target for lawmakers casting about for someone to blame.

Maryland Attorney General J. Joseph Curran Jr. said he wished that the General Assembly had adopted his anti-gouging measure, which died at the end of the 90-day session. Baltimore Mayor Martin O'Malley, a Democratic candidate for governor and Curran's son-in-law, also called for such a law. Montgomery County Executive Douglas M. Duncan, a rival for the Democratic gubernatorial nomination, said he had called for an investigation into gouging more than a year ago.

As prices rise, polls suggest that the cost of a fill-up is lowering voters' opinions of elected leaders. That has left politicians searching for ways to alleviate the problem or at least insulate themselves from blame.

Bush, laying out a four-point plan, said that his administration won't "tolerate manipulation. ... We expect our consumers to be treated fairly."

He repeated his call for Congress to allow oil drilling in the Arctic National Wildlife Refuge and asked his environmental chief to waive some clean-air rules that require the use of fuel blends in places, including the Baltimore-Washington area. Congress also ought to revoke an oil industry tax break, expand incentives for buying fuel-efficient cars, and fund more research into developing alternatives to oil, the president said.

"Every little bit helps," Bush added, announcing that he would defer filling the nation's Strategic Petroleum Reserve until after the summer.

On Capitol Hill, each party is blaming the other as members pitch competing proposals for dealing with prices that have risen faster and higher than predicted only a few weeks ago.

Democrats lined up in front of television cameras to announce support for revoking oil industry tax breaks and for investigations into possible price-gouging. They faulted Bush for an energy policy that they said had left Americans vulnerable to high gas prices and called for stiffer oil industry regulation, including new anti-gouging laws, and higher fuel-economy standards for automakers.

Republicans "don't have answers," said Sen. Barbara A. Mikulski of Maryland. "Democrats should be in the driver's seat."

None of the measures proposed by Bush or leaders in either party would do anything to lower the price of gasoline in the coming months, experts say. But Congress is eager to act, fearful that to do otherwise would give constituents a reason to throw them out of office in November elections.

"The current level of gas prices is one of the contributors to the sour mood of the country," said Republican pollster Whit Ayres.

That poses a dilemma for Bush and lawmakers, who are seeking to respond to voters' worries about fuel costs while being careful not to promise relief from a trend that analysts expect to get worse before it gets better.

"Most people know that the president and Congress don't set the price of gas, but as Americans, we always want to 'do something' to fix the problem," Ayres said.

That often means adopting a get-tough posture on price-gouging, which industry analysts say is designed to placate voters, not to bring down gasoline prices.

"The sad truth is that every time prices jump, there is typically a call for the FTC to investigate," said Vito A. Stagliano, an energy official under the first President Bush. He said he could not recall "a single case" in which such a probe had found wrongdoing.

The Federal Trade Commission, the government's market competition watchdog, will not say how many gas price investigations it has undertaken or what the results were, according to Mitch Katz, a spokesman. The FTC plans to report next month on the results of an investigation ordered by Congress last year on gas price spikes in the aftermath of Hurricane Katrina.

Deborah Platt Majoras, the FTC chairman, told Congress last year that "the vast majority of the commission's investigations and studies have revealed market factors as the primary drivers of both price increases and price spikes."

Majoras said she would oppose efforts to enact a federal ban on price-gouging - the definition of which varies by state - for fear that it would amount to price controls that would harm consumers. Maryland is one of up to 20 states that do not have anti-gouging laws.

The real culprits in the recent increases, oil industry analysts say, are a combination of mounting global demand, refiners' seasonal transition from making home heating oil to producing gasoline, and a transition from the use of the fuel additive MTBE to ethanol, which is more expensive and more difficult to transport than gasoline.

"There are lots of reasons that gas prices are up," said David Howard Davis, a University of Toledo political scientist. But he added that "oil is a fairly competitive industry." Bush's calls for investigations into possible price-gouging are an indication that "the Bush administration, for some reason, has decided that the free market isn't quite what they want," Davis said.

Al Hubbard, Bush's top economic adviser, said the president is simply "doing everything he can" to bring down gasoline prices.

"It's the combination of all of his actions" - not any single one - that will affect fuel costs, Hubbard told reporters.

Democrats, looking for ways to reap electoral advantage, said Bush's plan is inadequate, and suggested that his proposals to hold the oil industry accountable are signs of a president under strain.

"I guess when your poll numbers have hit rock bottom and your congressional allies are avoiding you like the plague, there's no better time to see the light," said Sen. Robert E. Menendez of New Jersey who proposed a 60-day holiday on the 18-cents-per-gallon federal gas tax.

Menendez said the $6 billion cost of the break would be defrayed by rolling back three tax breaks for the energy industry and by eliminating the royalty relief for companies that was approved in last year's sweeping energy bill.

"The last thing the oil companies need is more handouts," Menendez said. "The first thing the American people need is more help."

Republicans, dusting off proposals to expand oil and gas exploration and ease regulations on refiners, said that Democrats' past opposition to initiatives such as opening ANWR to drilling are to blame for the gasoline price spikes.

"Democrats are happy to criticize Republican policies, but when the time comes for them to propose a solution, they are suddenly quiet," Rep. Deborah Pryce, an Ohio Republican, said in a statement. "'No' is not an energy policy."

No matter how heated the rhetoric becomes, some analysts say that lawmakers need not worry about their election-year fortunes being tied to fuel prices, which could easily fall and quickly fade from voters' memories by election time.

"An election is not decided according to how much gasoline costs at the pump," Stagliano said. Voters "have tended historically to set it aside and go on to bigger issues."


Sun reporters Gwyneth K. Shaw and John Fritze contributed to this article.

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