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Bush rejects calls for tax on oil company profits

President Bush said Friday that taxing enormous oil industry profits is not the way to calm Americans’ anxieties about pain at the gas pump, and that his “inclination and instincts” are that major oil companies are not intentionally overcharging drivers.
/ Source: The Associated Press

President Bush said Friday that taxing enormous oil industry profits is not the way to calm Americans’ anxieties about pain at the gas pump, and that his “inclination and instincts” are that major oil companies are not intentionally overcharging drivers.

Bush’s remarks suggested the former Texas oilman is unlikely to take harsh action against oil companies despite public anger about the rising cost of fuel. Gasoline is averaging $2.92 a gallon across the country, up 69 cents from a year ago, according to AAA’s daily fuel gauge report.

With politicians concerned the issue could tilt what are expected to be close midterm elections this fall, the president and many in Congress have been rushing to offer solutions, most of which would offer little immediate relief.

Some Democrats have viewed this week’s announcement by major oil companies of huge first-quarter profits as a chance to renew their push for a windfall profits tax. But though a few Republicans, including Sen. Arlen Specter of Pennsylvania, have said the idea ought to be examined, Bush and most GOP lawmakers strongly oppose it.

“The temptation in Washington is to tax everything,” the president said in a wide-ranging news conference.

Instead, Bush called on Congress to ease regulations that make it difficult to expand the nation’s refining capacity. He also urged oil companies to plow their profits into finding and producing more energy, such as by building natural gas pipelines or pursuing renewable energy sources — all ventures that could further boost the companies’ bottom lines.

Three days ago, the president announced a series of steps, including calling on his administration to investigate possible price gouging. But he admitted Friday that he thinks it’s probably not happening.

“I have no evidence that there’s any rip-off taking place,” Bush said. “It’s the role of the Federal Trade Commission to assure me that my inclination and instincts is right.”

The president has supported the rolling back of some oil industry tax breaks that were enacted with his support just eight months ago. That tax break recission is part of a broader gas price-relief plan offered by the Senate GOP leadership, but House Republicans signaled this week they won’t go along.

Bush called reporters to the Rose Garden to trumpet recent positive economic reports. But, aware that high gas prices are one of the reasons that good news hasn’t sunk in with much of the public, he acknowledged fuel costs threaten to derail economic progress — and used a driving metaphor to make the point that tax cuts are the key to continued strength.

“With gas prices on the minds of Americans, we need to keep our foot on the pedal of this strong economy,” the president said.

Iran’s suspected desire to build nuclear weapons dominated the president’s half-hour session with reporters, during which Bush and his two top economic advisers stood facing a blazing sun.

The International Atomic Energy Agency said Friday that Tehran had ignored the U.N. Security Council’s deadline for it to stop all activities related to enriching uranium. But Iran pledged anew to continue with its nuclear program, which it insists is only for peaceful energy production, with Iranian President Mahmoud Ahmadinejad saying his nation “won’t give a damn” about Security Council resolutions.

“Today’s IAEA report should remind us all that the Iranian government’s intransigence is not acceptable,” Bush said.

The Bush administration wants the Council to impose economic or political sanctions on Iran for its defiance. But with Council members Russia and China opposing such a move, the president would not discuss sanctions.

He merely stressed that “the diplomatic process is just starting” on devising a strategy for dealing with Iran, and noted he talked earlier Friday with German Chancellor Angela Merkel, who is also due back at the White House next week. Undersecretary of State Nicholas Burns plans to meet in Paris next Tuesday with counterparts from Britain, France, Germany, China and Russia, while Secretary of State Condoleezza Rice is to confer at U.N. headquarters May 9 with those countries’ foreign ministers.

Bush also declined an opportunity to be directly critical of Ahmadinejad’s escalating rhetoric. Bush’s aides believe Iran is digging an international hole for itself with such statements, and that it will help the U.S. case with its allies to let it do so without reciprocating.

Turning to problems at home, Bush promised his administration is using the lessons of Hurricane Katrina to prepare for June 1 start of the next hurricane season. “I feel pretty good about the coordination,” he said.

Though his advisers have rejected, at least for now, abolishing FEMA as a Senate panel proposes, Bush left the door open. Of the numerous recommendations from White House and congressional inquiries, Bush said “we ought to take them all seriously. The objective is to respond to these natural disasters as well as we possibly can. ... My attitude is, let’s make it work.”