Oil and Gas

Bush says no magic wand to lower fuel prices

WASHINGTON (Reuters) - U.S. President George W. Bush said on Tuesday there was no “magic wand” to bring down record-high fuel prices but would consider a proposal to suspend federal gasoline taxes this summer -- an idea that has divided the 2008 presidential candidates.

Trying to calm anxious Americans facing $3.60 a gallon gasoline and soaring grocery bills, Bush again prodded Congress to open an Alaska wildlife refuge to oil drilling and allow construction of more nuclear and coal plants.

“I firmly believe that, you know, if there was a magic wand to wave, I’d be waving it, of course,” he said during a news conference. “I’ve repeatedly submitted proposals to help address these problems, yet time after time Congress chose to block them.”

Crude oil prices have surged more than five-fold since 2002, heaping more pressure on a waning U.S. economy besieged by dropping home values and rising food prices.

Oil prices are up nearly 25 percent since the start of 2008, logging a record near $119.93 a barrel on Monday, and gasoline prices are above the key $4 a gallon mark in some U.S. cities like San Francisco.

Giant U.S. oil company Exxon Mobil Corp will report its quarterly profits this week, after ConocoPhillips, Royal Dutch Shell and BP all reported quarterly profit increases from a year ago.

Presumed Republican presidential nominee Sen. John McCain and Democratic rival Hillary Clinton have both endorsed suspending an 18.4 cent per gallon federal gasoline tax this summer, but fellow Democratic hopeful Barack Obama has argued that it would make little difference.

Related Coverage

Clinton, a New York senator and former first lady, has used the gas tax issue to differentiate herself from Obama, an Illinois senator, as they fight ahead of the nominating contests in Indiana and North Carolina next week.

In Indiana, Clinton argued McCain’s plan for the gasoline tax holiday did not cover the costs to the federal government and said she would do that by taxing oil company profits.

“That money would then go in to replenish the highway trust fund,” she said.

The McCain campaign disputed her charge, saying his legislation now pending in Congress would cover the money for the trust fund via general revenue.

Obama said the tax holiday plan would only save drivers a total of $25-$30 and may not reduce prices.

“This isn’t an idea designed to get you through the summer, it’s an idea designed to get them through an election,” he told a town hall-style meeting in Winston-Salem, North Carolina.

Slideshow ( 5 images )

Bush said he was willing to consider suspending gasoline taxes.

“We’ll let the candidates argue out their ideas,” Bush said. “If it’s a good idea, we embrace it. If not, we’re analyzing the different ideas coming forward.”

However, Bush again rebuffed calls from U.S. lawmakers to suspend filling the nation’s emergency oil stockpile to boost supplies -- saying that U.S. reserve shipments amount to one-tenth of 1 percent of global oil demand.

Slideshow ( 5 images )

Senate Democrats are pursuing legislation that would bar the federal government from socking away oil until prices fall, and 16 Republican senators on Tuesday said oil shipments should stop. All three presidential hopefuls support such a move.

Instead, Bush has repeatedly called on OPEC -- source of about a third of global oil supplies -- to boost production to tame record prices, but so far cartel members have rejected output hikes.

Bush declined to say whether he will pressure Saudi Arabia -- OPEC’s top exporter -- to boost output when he visits the kingdom next month.

“To your question on the Saudis, look, I have made the case that, you know, the high price of oil injures economies,” Bush said. “But I think we better understand that there’s not a lot of excess capacity in this world right now.”

Additional reporting by Jeff Mason and Ellen Wulfhorst; editing by David Wiessler