George W. Bush relaxes gasoline supply rules

Crude oil and gasoline futures fell Tuesday after President George W. Bush gave the Environmental Protection Agency the authority to relax regional clean-fuel standards to attract more imports of gasoline to the United States and to make it easier for supplies to be moved from one state to another.

Bush also said he would halt deposits of oil to the nation's strategic petroleum reserve until the fall, but analysts said that measure would have next to no impact on crude prices and certainly would not help make gasoline any cheaper. Even the fuel-specification waivers will have a marginal impact, analysts said, given that the main force behind today's soaring pump prices is the near-record price of crude oil.

"If you have $75 a barrel crude oil, you're sort of at a starting point of $2.90 a gallon for gasoline," said Mary Novak, managing director at the economic consulting firm Global Insight.

Light sweet crude for June delivery settled 45 cents lower at $72.88 a barrel on the New York Mercantile Exchange, dropping on the heels of a 4.48-cents-per-gallon decline in May gasoline futures, which finished at $2.1291 a gallon.

Crude for June delivery on London's ICE Futures rose 21 cents to settle at $73.21 a barrel, reports AP.

According to Bloomberg, Bush and Republicans in Congress face growing pressure from voters as crude oil soars to a record and gasoline pump prices near the all-time high reached after Hurricane Katrina last year. A CNN poll released yesterday showed 69 percent of U.S. adults say higher fuel costs are causing financial hardship.

The Energy Department will suspend deposits to the Strategic Petroleum Reserve through the end of summer, which is the period of peak demand in the U.S., Bush said.

Because the stockpile is nearly full, the effect of the halt may be minimal. The government has been adding an average of about 25,000 barrels of oil per day to the reserve so far this year. The U.S. imports about 10 million barrels a day.

Bush said he had ordered antitrust authorities to probe for price fixing or other anticompetitive behavior in the nation's energy markets.

"Americans understand by and large that the price of crude oil is going up and that the prices are going up, but what they don't want and will not accept is manipulation of the market. And neither will I," Bush said.

The Federal Trade Commission is looking for any signs of unfair manipulation of gas prices, Bush said. Also, the Justice Department's working with the FTC and the Energy Department to look for signs of illegal manipulation or cheating.

Bush also reiterated his longstanding call for Congress to open part of Alaska's Arctic National Wildlife Refuge, or ANWR, to oil and gas exploration - a proposal that has been repeatedly blocked by Democrats and some Republicans.

The measures Bush announced Tuesday come ahead of the release of what are expected to be gangbuster financial results to be released this week by major oil producers, including Exxon Mobil Corp. (XOM) , Chevron Corp. (CVX) and ConcocoPhillips (COP) .

Meanwhile, calls to reinstate a windfall profits tax received a cool reception from the White House and key Republican lawmakers, informs SmartMoney.


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