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Editor, The Konformist
From the Los Angeles Times
High Gas Prices Will Last Years, Bush Aides Say
Even as top officials talk up the president's plan for relief, the
White House chief of staff concedes the effect of the steps will be
By Paul Richter
Times Staff Writer
May 1, 2006
WASHINGTON Gasoline prices will remain high for years to come and
will be largely unaffected by a new White House plan to bring them
down, Bush administration officials said Sunday.
Energy Secretary Samuel W. Bodman said the United States faced an
oil price "crisis" because surging demand from such countries as
China and India had outstripped supply, and he predicted that it
would be "two to three years before suppliers are in a position to
meet the demands."
"The suppliers have lost control of the market," he told NBC's "Meet
Gas prices approached record highs last week, further angering
motorists and putting a scare into lawmakers seeking reelection in
six months. The rise in fuel prices is the No. 1 concern of a
plurality of Americans, recent polls show.
In response, the administration sent top officials to the Sunday
talk shows to promote the White House energy plan, which would,
among other steps, reduce the flow of oil into the national
strategic reserve, ease regulations on fuel ingredients, and
encourage the production and purchase of hybrid vehicles.
But White House Chief of Staff Joshua B. Bolten acknowledged that
President Bush's program to deal with the price increases would have
only a "relatively modest" effect on prices in the short term.
"This is a very large problem," he said on "Fox News Sunday." "It's
built up over many years decades, in fact. It's not going to be
solved in the short run by some silver bullet. There are a lot of
policies that need to be put in place over the long run to wean
ourselves from our dependence on foreign oil."
The officials said the only lasting solution would be a long-term
effort to reduce dependence on foreign oil, which represents about
two-thirds of U.S. consumption.
"We need to deal with the long-term problems of technologies that
may get us out of this trap," Secretary of State Condoleezza Rice
said on ABC's "This Week."
She said that countries' efforts to ensure oil and gas supplies
were "distorting international politics." "The quicker we get about
the business of reducing our reliance on oil, the better we're going
Administration officials insisted that Bush was not hypocritical in
halting deposits to the Strategic Petroleum Reserve, even though he
attacked Democratic opponent Al Gore in the 2000 presidential
election for urging a similar reduction to help cut prices.
Asked if Bush's move was aimed at the midterm elections, Bodman
said: "I wouldn't call it a political move. I would say it's an
make a contribution to the reduction in price."
He added that, in any case, the price of oil "is not something that
is, I think, going to be meaningfully affected by whatever happens
to the strategic reserve."
Some elected officials have called for a "windfall" tax on oil
company profits, pointing out that the major companies posted record
profits last year and that former Exxon Mobil chief Lee Raymond was
awarded a $400-million pay package when he retired.
But Bodman said the administration was firmly opposed to such a tax.
"There are certain things that we know don't work, and [a tax on]
windfall profits is one of them," he said. "That was tried 30 years
ago; it did not work. It resulted in reduced production."
He said that though Bush had instructed the Justice Department to
look into reports of price gouging, the administration doubted that
profiteering had occurred.
"We see no evidence of it," Bodman said. "But this is one of those
situations where I guess I would call it 'Trust, but verify.' "
Despite the administration's opposition, an influential Republican
senator, Trent Lott of Mississippi, told CNN's "Late Edition" that
he was not dismissing the idea of a windfall profits tax.
"This may come as a shock to you, but I'm going keep my options
open," he said. "If the oil companies don't stop escalating the
gasoline prices, it is going to force the people to demand that the
Congress do something more and the Congress is going to have to do
A top lobbyist for the American Petroleum Institute suggested that
the oil industry, which has close ties to the administration, was
urging the White House not to go to war with Iran over its nuclear
J. Bennett Johnston, who opened a lobbying firm in 1997 after
retiring as a Democratic senator from Louisiana, said that "saber-
rattling" on Iran was among the factors driving up prices.
"We'd see gasoline prices above $5 or $6, crude oil above $100 [per
barrel] if we bomb Iran," he said on "This Week."
According to January figures from Oil & Gas Journal, Iran has the
third-largest proven oil reserves in the world, after Saudi Arabia
and Canada, and the second-largest proven natural gas reserves,
U.S. sanctions forbid American companies and their foreign
subsidiaries to conduct business with Iran, and the United States
does not import any Iranian oil or gas. But any U.S. military action
against Iran's nuclear program would be expected to have an
immediate effect on world energy prices.
New oil shock ahead as $100 spike looms
Oliver Morgan and Heather Stewart
Sunday April 30, 2006
The growing international crisis over Iran's nuclear programme could
trigger a catastrophic oil price spike, sending crude prices over
$100 a barrel, senior Wall Street analysts are warning.
With prices already at around $72 a barrel, such an increase could
mean drivers facing prices of 110p a litre on forecourts, according
the the Petrol Retailers Association. Last week Lord Browne, chief
executive of BP, warned that prices could rise to £1 as he unveiled
bumper $5.27bn profits for the first quarter.
Shell is also expected to announce close to record numbers next
week, with analysts expecting profits around $5.57bn, driven largely
by the oil price.
A single political shock could be enough to send oil markets into
panic, said Adam Sieminski, senior energy economist at Deutsche Bank
in New York. 'If we have one more big problem we are going to have
triple-digit oil prices.' Sieminski points to confrontation with
Iran, a worsening of the situation in Iraq or a recurrence of
devastating hurricanes in the Gulf of Mexico as potential catalysts
for a major rise.
Prices rose by as much as $1.20 in late trading on Friday after the
United Nations inspector Mohamed El Baradei said Iran had not
complied with demands to disclose the extent of its uranium
enrichment programme. Iranian President Mahmoud Ahmadinejad later
said he 'did not give a damn' about the UN's opinion.
In a report, Sieminski argues that with the world consuming some 85
million barrels of oil a day, a supply disruption of 2 million
barrels a day (60 per cent of Iran's exports) 'can only be
rebalanced through an extraordinary rise in prices.'
But he believes any breaching of the $100 level would be short-
lived, and that prices would fall to between $30 and $60 as
increased investment brings new production and refining capacity on
stream in oil-producing nations.
Mary Novak, managing director of energy services at consultants
Global Insight, said Iran would not need to turn off the taps
completely - even if it shut off just a 10th of its 3 million
barrels a day of exports, the impact would be dramatic. 'With the
situation we have, 300,000 barrels a day would drive prices up
significantly,' she said, adding that with the global economy
growing more quickly than expected this year 'demand is still
expanding and supply is having trouble catching up'.
High crude prices have pushed gasoline prices up to $3 a gallon in
the US, where President George Bush has described the rise as a tax
on motorists, and Republican senators have promised measures to
abate prices, including an investigation of oil company tax
payments. The approach of the US driving season has combined with
the hangover effect of last year's hurricanes on US refining
capacity to underpin current price levels. Refineries in the US have
increased their spring maintenance shut-downs for several weeks, to
deal with damage from the autumn.
At the same time, more stringent environmental controls on gasolene
content led to some US petrol stations running dry on Friday. New
rules, which come into force this year, have mandated higher ethanol
content in vehicle fuel; but since ethanol cannot be pumped through
pipelines, a shortage of infrastructure meant that in some states,
including Texas, fuel was not getting to the pumps.
Manouchehr Takin, oil analyst at the Centre for Global Energy
Studies in London said 'Every year, approaching the summer driving
season in the US, the market gets hyped, and the prices go higher,
because of the fear of a shortage.'
Ray Holloway, of the Petrol Retailers' Association, said that 'such
a hike would be critical in the second quarter of this year, if we
went to $100 a barrel in that period, you could see unleaded petrol
at 110p a litre.' Average prices this weekend were 95p a litre.
The stand-off with Iran is one of several factors that could cause a
significant supply disruption. Ethnic and tribal disputes in Nigeria
have resulted in the loss of 500,000 barrels a day. Output in Iraq,
potentially the world's second-largest exporter, is still well below
pre-war levels. There are also concerns among traders about supplies
from Venezuela and Russia because of internal politics.
High prices have advanced rapidly up the political agenda in the US,
where Republicans are trailing in the polls ahead of mid-term
elections. Republican senators led by majority leader Bill Frist,
have proposed a series of measures including the repeal of tax
incentives to oil companies intended to make them invest in the Gulf
of Mexico and measures to increase refinery capacity.
The issue has also prompted a return to the debate over opening up
the unspoilt Arctic National Wildlife Refuge in Alaska to drilling
by oil companies.
President Bush also called for an investigation into possible price
manipulation, and for new deposits into the US strategic petroleum
reserve to cease.
Bigmouth Bush told Clinton how to handle OPEC
By Evelyn Pringle
Online Journal Contributing Writer
Apr 28, 2006
While on the campaign trail in 2000, George W. Bush told President
Bill Clinton how to handle OPEC, in public no less. "What I think
the president ought to do," he said, "is he ought to get on the
phone with the OPEC cartel and say we expect you to open your
And in a brilliant, highly educational follow-up comment, Bush
informed the audience: "One reason why the price is so high is
because the price of crude oil has been driven up."
"OPEC has gotten its supply act together," Bush advised
listeners, "and it's driving the price, like it did in the past."
"And," he said in direct advice to Clinton, "the president of the
United States must jawbone OPEC members to lower the prices."
Apparently, Bush has lost the phone numbers for OPEC members, or
they are refusing to take his calls, because I think its safe to
assume that he did not "jawbone" members of the OPEC cartel.
That said, if Bush is not in the mood for "jawboning," he could at
least use a little pillow talk with his buddies in Saudi Arabia and
get them to open the spigots.
During campaign 2000, Bush told Americans that he had an energy plan
that would reduce gas prices at the pumps and here we sit five years
later, with the highest prices in history.
The high energy costs are affecting everyone, from commuters and
consumers, to public and private programs. The damage is devastating
Since Bush took office, gas prices have increased 62.5 percent from
$1.44 per gallon in January 2001 to $2.34 in March 2006. The average
household with children will spend about $3,343 on transportation
fuel costs this year, an increase of 75 percent since 2001,
according to the Energy Information Administration, Retail Gasoline
Prices, and Household Vehicle Energy Use: Latest Data and Trends,
And gas prices are still rising. As of April 24, the AAA Daily Fuel
Gauge report said, nationally, the average price for a gallon of
regular gas was $2.90, or a 15.5 percent hike over the $2.51 price
per gallon a month ago.
So where is all the money going? One need not look far. In 2005, the
world's largest oil company, ExxonMoblile, reported the most
profitable year in US corporate history, earning more than $36
Economists say oil producers and refiners, not gas stations, are
making a killing. The five largest refineries, ExxonMobil,
ConocoPhillips, Shell, Valero, and British Petroleum (BP) have
recorded $228 billion in profits since 2001, according to testimony
at a congressional hearing last November.
In 1999, refiners made 23 cents for each gallon processed and in
2004, they made 41 cents a gallon, according to Department of Energy
While watching oil company profits skyrocket, the average American
household spent about $107 more for heating this past winter
compared to the year before. In 2005-06, households heating with
natural gas paid $402 or 86 percent more than they paid in 2001-
2002. Consumers of heating oil paid $759 or 121 percent more this
winter than they paid in 2001-2002, according to the Energy
Information Administration, Short Term Energy Outlook, April 2006.
Family budgets, already strained by the rising cost of health care
and health insurance, including higher co-payments and deductibles,
as well as prescription drugs, college tuition, and other everyday
expenses, are being stretched to the limit.
Energy costs are largely responsible for the declining real wages of
working people. With the ever-rising cost of gasoline, employees are
seeing their paychecks dwindle by the simple fact that they have to
drive back and forth to work.
For many low-income families, gas now burns through 10 percent of
household income. In Wisconsin, according to Consumer News,
pawnshops are reporting brisk business as people hock their
belongings to raise money for gas.
But it is not only the poor who are affected, a majority of the
population is taking a hit. Students cannot afford to drive to
school. Owners of recreational vehicles, faced with paying more than
$200 to fill up the gas tank, are rethinking vacation trips.
"It's taking food off my table," James of Alexandria, VA told
Consumer News. "I am having trouble and I'm late paying my
daughter's tuition. No vacation this year. I'm charging gas on my
credit card because I don't have $50 to put 20 gallons of gas in my
car," he said.
Local governments, already struggling to pay for essential services
due to continuous cuts in federal funding, are overwhelmed in trying
to keep school buses, police cars, fire trucks, ambulances and other
public vehicles on the road.
Senior citizens are already strapped by the extra costs of trying to
keep their homes heated, and now the Meals on Wheels program is
having trouble delivering food to their homes due to high gas prices.
Rising fuel costs are forcing city and county officials all across
the country to boost budgets, cut back on social programs that rely
on transportation and scrutinize vehicle use.
For 2005, the Appleton, Wisconsin, city budget estimated fuel costs
for gasoline and diesel would be $595,000. In October 2005, Appleton
Mayor, Tim Hanna, projected actual costs to be $936,000.
The rise in the cost of fuel in the past year forced the city of
Charleston, SC, to spend $150,000 more than planned just to keep its
public vehicles running.
In Winnebago County, Wisconsin, County Executive Mark Harris
recently noted the need for more than 100 layoffs, threatening
positions once thought indispensable. The county's combined cost for
all types of fuel, budgeted at an estimated $1.6 million in 2005, is
predicted to rise to nearly $2.2 million in 2006, according to
Back on August 26, 2005, the Deseret Morning News reported that
Arizona was bracing for the financial impact from gas
prices. "Already," Deseret reported, "state officials are looking at
boosting the state budget next year by nearly $685,000 to make up
for the increase in gas costs."
According to the Arizona Republic on October 6, 2005, the Arizona
Department of Public Safety will cut the number of miles police will
patrol on the highway due to skyrocketing gas prices that could cost
the agency an extra $2 million in 2006.
"Officers have been ordered to cut their driving by 10 percent a
month and conduct stationary enforcements using radar guns on
freeway ramps, medians or overpasses instead of patrolling," the
In Calumet County, Wisconsin, finance director, Dan De Bonis,
informed county supervisors that motor fuel will cost the county
about $91,000 more in 2006, a 62 percent hike, and that heating
costs will increase as much as 44 percent.
The Bush administration has failed to take any action to deal with
the crisis. Every day, American workers, consumers, and small
businesses suffer with no solutions in sight. The response from the
White House has been to claim that Americans are addicted to oil.
The tax breaks, if any, that average families received under Bush's
tax cut program, have long ago been siphoned away at the pump. Yet,
while traveling in California last weekend, Bush warned of even
higher prices with vacation time approaching.
In a feeble attempt to appease the public this week, Bush said he
will temporarily divert oil used to fill the Strategic Petroleum
Reserve into the market to drive prices down.
Apparently acknowledging the act as a do-nothing remedy, Bush made
the comment, "Every little bit counts."
I doubt that many people appreciated a snide remark like this coming
from a guy who has never had to balance a checkbook, never had to
worry about paying a heating bill or filling up the gas tank, but
who now, through some perverse twist of fate, maintains a
stranglehold on the nation's purse strings.
Evelyn Pringle is a columnist for Independent Media TV and an
investigative journalist focusing on exposing corruption in