Bush diverting oil from reserve to gas pumps

WASHINGTON - President Bush on Tuesday halted until fall the purchase of crude oil for the government’s emergency reserve. The move came as political pressure intensified on him to do something about gasoline prices, which are expected to remain high throughout the summer.

Bush said the nation’s strategic petroleum reserve had enough fuel to guard against any major supply disruption over the next few months.

“So, by deferring deposits until the fall, we’ll leave a little more oil on the market. Every little bit helps,” he said.

Wholesale gasoline futures prices for June delivery dropped 8 cents a gallon to $2.10 on the New York Mercantile Exchange immediately upon Bush’s remarks.

In a separate development, Bush ordered a temporary suspension of environmental rules for gasoline.

Easing the environment rules will allow refiners greater flexibility in providing oil supplies since they will not have to use certain additives such as ethanol to meet clean air standards. The suspension of oil purchases for the federal emergency oil reserve is likely to have only modest impact since relative little extra oil will be involved.

Bush asks EPA to grant waivers
In his speech on Tuesday, Bush called on the Environmental Protection Agency to grant waivers to clean air requirements if necessary to ease bottlenecks. The EPA said it will consider fuel waivers on a case-by-case basis if gasoline supply problems arise, which could result in price spikes or shortages of cleaner summer-blend gasoline.

EPA spokesman John Millett said the waivers would not adversely impact air quality because they are only for 20 days, although states can request extensions.

So far, Pennsylvania is the only state to request such a waiver, according to an EPA spokeswoman. That request is still being reviewed.

Refiners, meanwhile, said that most of the change to summer-blend gasoline already has been completed and waivers may not be needed — and might even be counterproductive in some cases.

“You’re going to have to be careful that you’re not upsetting a plan that already is in the last stage of implementation,” said Bob Slaughter, president of the National Petrochemical Refiners Association.

Political cost of gas
The high cost at the pump has turned into a major political issue, with Democrats and Republicans blaming each other for a problem that is largely out of Congress’s control. Republicans are worried that voters paying more than $3 per gallon would punish the party in power. Democrats want to make that happen.

Democrats sought to turn gas prices — like Hurricane Katrina and the Iraq war — into an issue that hurts Bush’s standing with voters. “What happened to Iraq oil, Mr. President? You said Iraqi oil would pay for the war. Ain’t seen no money. Ain’t seen no oil,” Sen. Barbara Mikulski of Maryland said.

“Families are gripped by the fear of rising gas prices,” she added.

At the same news conference, New Jersey Sen. Bob Menendez proposed a 60-day suspension of the gasoline tax, saying the money could be recovered by repealing tax breaks for energy companies. He scoffed at Bush’s call to curb tax breaks for the oil companies.

“What we’re left wondering today is why it took five years” for Bush to support tax increases on the energy industry, Menendez said.

House Minority Leader Nancy Pelosi, D-Calif., condemned Republicans for their oil plans.

“These people can’t help themselves. They are so tied to big oil that they can’t grasp what energy independence is,” she said, according to NBC News.

Pelosi and other Democrats called for more development of biofuels and other alternative energy sources.

“Let’s look to the Midwest, not the Mideast,” she said.

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