Bush Takes Aim At Gas Prices

President Bush on Tuesday ordered a temporary halt to deposits to the nation's strategic petroleum reserve to make more oil available for consumer needs and relieve pressure on pump prices.

Mr. Bush also announced steps to ease environmental standards governing fuel grades.

The moves came as political pressure intensified on Mr. Bush to do something about gasoline prices that are expected to stay high throughout the summer.

Mr. Bush said the nation's strategic petroleum reserve had enough fuel to guard against any major supply disruption over the next few months. The reserve holds 685 million barrels, available in an emergency.

"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 Mr. Bush's remarks.

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.

Today's speech comes in response to angry voters who are beginning to blame both the war in Iraq and the rising price of gas on the administration, CBS News correspondent Bill Plante reports.

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' control, CBS News correspondent Sharyl Attkisson reports. Republicans are hoping that they can do enough in the short term that the voters won't remember the high gas prices in November, Plante says, but Democrats want to make sure voters don't forget.

Mr. Bush said that high gasoline prices are like a hidden tax on consumers and businesses, although he said the nation's economy was strong. He urged Congress to take back some of the billions of dollars in tax incentives it gave energy companies, saying that with record profits, they don't need the breaks. He urged lawmakers to expand tax breaks for the purchase of fuel-efficient hybrid automobiles.

The president said Democrats in the past have urged higher taxes on fuel and price caps to control fuel expenses, but he said neither approach works. Instead, he called for increased conservation, an expansion of domestic production and increased use of alternative fuels like ethanol.

Mr. Bush said high energy prices are disturbing.

"Our addiction to oil is a matter of national security concerns," the president said in a speech to the Renewable Fuels Association, which advocates alternate energy sources. "After all, today we get about 60 percent of our oil from foreign countries. That's up from 20 years ago, where about 25 percent of our oil came from foreign countries."

Mr. Bush said gasoline prices are expected to remain high throughout the summer and "that's going to be a continued strain on the American people."

Mr. Bush said the Federal Trade Commission, the Justice Department and the Energy Department were investigating whether the price of gasoline has been unfairly manipulated. The administration also contacted all 50 state attorneys general to offer technical assistance to urge them to investigate possible illegal price manipulation within their jurisdictions.

It's unclear what impact, if any, Mr. Bush's investigation would actually have on prices that are near $3 a gallon. Asked if Mr. Bush had any reason to suspect market manipulation, McClellan responded, "Well, gas prices are high right now, and that's why you want to make sure there's not."

"I don't think you'll find that there's gouging," Tom Kloza, an expert on oil prices, told CBS News' The Early Show. "I think you'll find the markets, which is to say the New York and London markets that value oil every day, are sort of carrying the water for the people that produce and refine it."

"It's one thing to sort of send the prices up for gold or silver. It's another thing to send the prices up for oil, which people have to buy every week," Kloza added.

In a conference call with reporters today, National Economic Council Director Al Hubbard said there wasn't an urgent need to pursue a federal price-gouging law.

"The important thing is that we have very good anti-trust laws, and it's very important that those laws are adhered to. Those laws prevent collusion ... companies getting together to regulate supply, to regulate pricing," Hubbard explained.

He noted that states also have the authority to enforce those federal laws.