With oil prices still climbing, President Bush is coming under increasing criticism for his handling of the burgeoning political issue of gasoline costs, not only from Democrats but also from administration allies in the oil-refining and chemical industries.
Half a dozen Senate Democrats plan to call on Bush today to begin releasing as many as 60 million barrels of oil from the nation's Strategic Petroleum Reserve. Such a move would inject much-needed supplies into a market choked by the Organization of Petroleum Exporting Countries and pulled tight by rising world demand, they say.
The Democratic call will echo some oil industry officials, who say Bush should at least stop shipping about 170,000 barrels a day to the Louisiana salt caves that hold the emergency supply. The reserve currently holds nearly 660 million barrels, a record. The administration intends to keep filling it until it reaches its 700 million-barrel capacity, Energy Department spokeswoman Jeanne Lopato said.
"Our policy . . . has been clear for a long time," Treasury Secretary John W. Snow said yesterday. Oil will be released only for "genuine emergencies," not price fluctuation, he said.
The national average price of a gallon of unleaded gasoline jumped yesterday to a record $1.97, up nearly two cents over the weekend. Maryland gas prices hit $1.94, up three cents in a day. Oil prices, already in record territory, surged close to $42 a barrel in trading after the assassination of the head of the Iraqi Governing Council heightened fears of disruptions to the Middle Eastern oil supply.
Democrats have begun hammering Bush daily on gas prices, but criticism is coming from some surprising quarters as well. Executives at refiner Valero Energy Corp. have repeatedly urged a stop to the transfer of oil into the petroleum reserve. That may not drive down prices on its own, they say. But it would signal to commodity traders that the White House is serious about oil prices, and that would persuade them to dump overpriced oil futures. Prices would fall fast, said William E. Greehey, Valero's chairman and chief executive.
Instead, he said, "they didn't do anything. They tell Saudi Arabia to produce more oil. Then they put it into the Strategic Petroleum Reserve. It just doesn't make any sense at all."
Bob Slaughter, president of the National Petrochemical and Refiners Association, said the industry lobby has not adopted Valero's position, but he acknowledged "some different opinions in the refining community." If the administration is bent on filling the reserve, it should be doing so in secret rather than trumpeting it as a response to the terrorism threat, said Fadel Gheit, an oil and gas analyst at Oppenheimer & Co.
"The administration totally missed the boat on this," Gheit told CBS MarketWatch.com. "It has backfired and spiked oil prices higher."
Jon Meade Huntsman, founder of Huntsman Co., the largest privately held chemicals maker, was similarly blunt on another issue that may be reducing gasoline supplies: the spate of oil refinery mergers on the administration's watch.
"The average guy on the street is getting killed because this administration does not care," Huntsman told Bloomberg News.
Lopato said the administration asked the department's Energy Information Administration to examine whether the current reserve policy was affecting prices.
"They came back, and said the price effect was close to zero," she said.
John Felmy, chief economist at the American Petroleum Institute, agreed. The amount of oil going into the reserve amounts to less than two-tenths of 1 percent of the world supply, or "maybe a couple of cents a gallon," he said.
A change of policy could lower prices three to five cents, said Mark A. Baxter, director of the Maguire Energy Institute at Southern Methodist University's Cox School of Business. But, he added, "that's not the kind of impact consumers are looking for right now."