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Democrats to fight Bush with gasoline

The party sees a winning issue in the high price of fuel, combined with administration ties to the oil industry.

Washington Bureau Chieffritz
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By SARA FRITZ

© St. Petersburg Times,
published June 4, 2001


WASHINGTON -- As Democrats see it, rising gasoline prices are President Bush's worst political nightmare. And that is why they are undertaking a coordinated public relations campaign to portray him as a close ally of a greedy oil industry.

"This issue has become his Achilles' heel," said Erik Smith, press secretary for House Minority Leader Richard Gephardt, D-Mo. "He's perceived to be an oil man, along with (Vice President Dick) Cheney. And this White House is doing nothing to change that perception."

At every opportunity in the next few months, Democrats are planning to remind American motorists that Bush was reared in the oil fields of Midland, Texas, and once ran his own oil exploration company; that Cheney's last job was as chief executive of Haliburton, an oil field construction company; and that the administration has resisted short-term moves to curb the rise in gasoline prices.

The centerpiece of the Democrats' plan is an investigation of oil industry profits launched last week by Sen. Carl Levin, D-Mich., the new chairman of the Senate Permanent Investigations subcommittee. Republicans fear Levin's inquiry will turn into a "show trial" where oil company executives will be called to answer why at a time of record profits the industry is raising gas prices.

Levin said he decided to initiate the hearings when gasoline prices rose 20 to 25 cents in Michigan at the start of the Memorial Day weekend.

"We don't see a shortage here causing an increase in prices," Levin said. " ... We hear various explanations as to why we have again suffered a dramatic increase in gas prices, but so far the explanations haven't been satisfactory. The oil companies need to explain why gas prices have increased so dramatically given that there has been no comparable increase in the per barrel cost of oil to them."

Levin noted a recent Federal Trade Commission study found that while the oil companies are not conspiring to raise prices, there is evidence that at least one company has held back supply to boost prices.

In addition to conducting his own hearings, Levin has asked the FTC to determine whether recent oil company mergers have contributed to rising prices by limiting competition. He also asked the General Accounting Office, Congress' watchdog agency, to look into the mergers.

Meanwhile, Democrats also are pressuring the president to take immediate action to curb prices. Last week, Gephardt and 76 other House Democrats sent a letter to the White House, demanding that Bush put pressure on OPEC to "open your spigots" and increase the supply of crude oil, which likely would allow retail prices to fall. OPEC's oil ministers are scheduled to meet this week.

In the Democrats' letter, Gephardt said administration officials seem to be confused over the role OPEC is playing in the current rise in retail prices.

On May 8, they noted, Cheney said in a television interview, "We can't blame the problem on OPEC." He attributed the price increases to a shortage of refining capacity. On the same day, however, John Cook, director of petroleum production for the Energy Information Agency, told a congressional committee that "actions taken by OPEC and several other crude oil exporting countries are largely responsible for the sharp increase in oil prices."

When asked to clarify what role the president believes that OPEC has played, White House press secretary Ari Fleischer straddled the issue. "I think if you take a careful look at what both have said, they're both accurate," Fleischer said.

He explained that the price is dependent both on the supply of crude and the capacity of the oil industry to refine it. He noted that the nation's refineries are running at near capacity because the industry has not been investing in new facilities.

"Even if more supply were to come on the market from OPEC," Fleischer said, "until refinery capacity goes up, it's going to be harder to get that supply to markets, particularly in the tight summer months."

Fleischer noted that the president's long-term energy plan for the nation would increase refinery capacity. In addition, he said, the administration has undertaken "quiet diplomatic conversations" with OPEC nations without bringing any public pressure to bear.

While some have urged the president to resort to price controls, not all Democrats share the view that the administration should take immediate action. Rep. Jim Davis, D-Tampa, who did not sign Gephardt's letter to the president, said he wants to await the results of Levin's investigation before recommending what steps should be taken to solve it.

Davis indicated he fears that pressure to control gasoline prices will assist those who would increase supply by drilling for oil off the west coast of Florida.

"Something has to be done," Davis said. "But let's not rush into these fixes, like drilling in the Gulf of Mexico."

Privately, Republican strategists question whether the president can continue to oppose short-term solutions -- such as price caps or putting public pressure on OPEC to increase supply -- as motorists grow increasingly outraged about high prices. Publicly, however, Republicans are standing foursquare behind Bush.

In Iowa last week, Sen. Charles Grassley, R-Iowa, said he is not surprised that prices are rising because production has not kept up with demand. According to the Cedar Rapids Gazette, Grassley bluntly told one audience: "Don't be complaining to Chuck Grassley while you're sipping on bottled water. Why would you pay $5 a gallon for water and complain about $1.75-a-gallon gasoline?"

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