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Bush Rejects Tax On Big Oil Profits

In the wake of the latest oil company profit report showing much higher earnings, President Bush on Friday rejected calls in Congress for a tax on oil company profits, saying the industry should reinvest its recent windfalls in finding and producing more energy.

"The temptation in Washington is to tax everything," Mr. Bush said in an exchange with reporters in the White House Rose Garden. Rather than for the government to reap the benefit from oil company profits driven by the recent surge in global oil prices, he said, "The answer is for there to be strong re-investment."

"These oil prices are a wakeup call," Mr. Bush said. "We're dependent on oil. We need to get off oil."

With gasoline topping $3 a gallon in some areas, Mr. Bush said energy companies should use their increased cash flows to build more natural gas pipeline, expand refineries, explore "in environmentally friendly ways," and invest in renewable sources of energy.

"That's what the American people expect. They also expect to be treated fairly at the pump," he said.

Mr. Bush's exchange comes in the wake of some congressional Republicans and Democrats in both the House and Senate promising to roll back billions of dollars in tax breaks for major oil companies.

House Republicans refused to go along with a proposal that called on House members to accept a Senate-passed repeal of $5 billion worth of oil industry tax breaks. They are the subject of intense negotiations between the House and Senate on a broad tax bill.

A resolution urging House negotiators to accept the Senate tax proposals failed 232-190, with only two Republicans voting for it.

Meanwhile, a major American oil company has reported soaring first-quarter profits for the third time in three days, buttressed by near-record gasoline and oil prices.

Chevron Corp.'s first-quarter profit soared 49 percent to $4 billion, joining the procession of U.S. oil companies to report colossal earnings as lawmakers consider ways to pacify motorists agitated about rising gas prices.

The San Ramon, Calif.-based company's net income, reported Friday, translated into $1.80 per share, two cents above the average estimate among analysts polled by Thomson Financial. That compared to a profit of $2.7 billion, or $1.28 per share, in the same January-March period last year.

Revenue totaled $54.6 billion, a 31 percent increase from $41.6 billion last year.

"Higher earnings in the first quarter were primarily driven by the performance of our upstream business," chairman and CEO Dave O'Reilly said in a statement. "Prices for crude oil and natural gas were strong during the period."

If not for continuing production problems caused by Hurricanes Katrina and Rita last summer, Chevron said it would have made an additional $300 million — an amount that would have generated the highest quarterly profit in the company's 127-year history.

As it was, Chevron's performance marked the fourth consecutive quarter that Chevron has earned at least $3.6 billion, as the company continued to capitalize on oil prices that have climbed above $70 per barrel since the first quarter ended.

The recent run-up has pushed gasoline prices above $3 per gallon, much to the frustration of consumers and politicians looking to win votes in an election year.

The Bush administration has asked Congress to give it the authority to raise fuel economy standards on all passenger cars amid rising gas prices and growing concerns about the nation's energy security.

Federal Reserve Chairman Ben Bernanke told Congress on Thursday that rising energy prices jeopardize a currently strong economy and left the door open to the possibility of another interest rate increase to keep inflation in check.

Senate Republicans advocate sending $100 rebate checks to millions of taxpayers, and a Democrat is leading the campaign for a 60-day gasoline tax holiday.

Travelers are feeling the impact of rising oil prices at the airport as well as at the pump as

of rising fuel prices.

Chevron released its results after two of its biggest rivals, ConocoPhillips and Exxon Mobil Corp., had already provoked public outrage with similarly large first-quarter profits. Combined, the three oil companies earned $15.7 billion during the three months of the year.