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Bush: Raise fuel-efficiency standards

Rising gas prices spur action from both sides in Congress

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President Bush speaks to motorists at a gas station Thursday in Biloxi, Mississippi.

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WASHINGTON (CNN) -- President Bush on Thursday said he wants to raise fuel-efficiency standards on automobiles, as members of both parties jockeyed for political position on the issue of rising gas prices.

Bush called on Congress to give him the authority to set the standards for passenger cars sold in the United States as a means of reducing the nation's demand for gasoline.

"I encourage them to give me that authority," Bush told reporters during a visit to a service station in Biloxi, Mississippi. "It's an authority I used for light trucks, and I intend to use it wisely if Congress will give me that authority." (Watch political frenzy spurred by gas prices -- 2:01 )

The president's comments, delivered as he stood next to gas pumps during his 11th visit to the Gulf Coast area devastated by Hurricane Katrina, were soon followed by a letter from Transportation Secretary Norman Mineta to the GOP House and Senate leaders.

"At the president's request, I hereby ask that the Congress take prompt action to authorize the U.S. Department of Transportation to reform fuel economy standards for passenger automobiles," Mineta wrote.

"Along with other previously announced energy policies, the president believes these actions are critical to promoting our nation's energy security and independence."

Congress first set the passenger car standard for fuel economy in 1975, and it has remained at 27.5 miles per gallon since 1990. The mileage is a weighted average of an automaker's fleet, not a requirement for individual models.

Mineta's letter noted that the Bush administration has used its authority to set standards on light trucks and sport utility vehicles to raise gas mileage levels.

"The DOT raised the light truck and sport utility vehicle standards twice in the last four years," Mineta wrote.

Mineta said the National Highway Traffic Safety Administration could set the fuel economy standards "in a manner that is cost effective, based on sound science and safeguards vehicle occupants."

He said the administration would oppose any increase in fuel standards that did not include rules that would prevent cars from becoming less safe as carmakers reduced their weight to help gas mileage.

Democrats: Cut firms' tax breaks

Republicans proposed an amendment Thursday that would give the Transportation Department authority to issue fuel efficiency standards for passenger vehicles, expand tax incentives for the use of hybrid vehicles and push for more research into alternative fuels and expansion of existing oil refineries.

It would also provide most American taxpayers with a $100 rebate check to offset the pain of higher pump prices for gasoline. (Full story)

However, the GOP energy package might face tough sledding because it also includes a proposal to open part of the Arctic National Wildlife Refuge (ANWR) in Alaska to oil exploration, which most Democrats and some moderate Republicans oppose.

Senate Majority Leader Bill Frist of Tennessee called it "a bold package ... that will give consumers relief at the pump and help to bring down the price of gas over the longer term."

Wednesday, on the other side of the aisle, Democrats called for a new energy bill and federal legislation to punish price gougers. House Minority Leader Nancy Pelosi of California said Democrats want to roll back billions in tax breaks for oil companies.

On Thursday, she reiterated her party's interest in forcing oil companies to ease the burden of high gas prices.

"The oil companies are making record profits; they're getting billions of dollars of subsidies and royalty holidays from the Republicans in Congress and the Bush administration," she said.

"What do the Republicans suggest? Let's do away with the environmental rules, let's drill in the ANWR."

Sen. Bob Menendez, a New Jersey Democrat, called Thursday for an amendment that would suspend the federal gas tax for 60 days, which he said would save taxpayers $100 million dollars per day.

He said the lost tax revenue would be covered by repealing $6 billion worth of tax breaks for major oil companies.

"While Exxon Mobil executives are popping champagne and celebrating their record profits, American families are popping antacids under the strain of soaring gas prices," Menendez said.

Exxon Mobil reported increased quarterly profits Thursday, saying it earned $8.4 billion in the first quarter of 2006. (Full storyexternal link)

Menendez said he would join Sen. Bill Nelson, a Florida Democrat, in offering an amendment to increase funds for energy efficiency programs, renewable energy research and federal purchases of alternative-fuel vehicles.

Unlikely to pass

The Republicans' energy package will be offered as an amendment to an emergency spending measure before the Senate to fund the Iraq war and hurricane relief, according to a senior GOP leadership aide.

It is sponsored by Sens. Charles Grassley of Iowa, Ted Stevens of Alaska, Pete Domenici of New Mexico and Rick Santorum of Pennsylvania.

Under Senate rules, either the GOP amendment or the Democratic alternative would probably need 60 votes to pass, which is considered unlikely. However, the amendments would give senators a chance to cast votes on measures designed to help constituents being hit by high gas prices.

As outlined by the senior GOP leadership aide, the energy package would give taxpayers the $100 rebate, repeal tax incentives for oil companies and allow the Federal Trade Commission to prosecute retailers unlawfully inflating the price of gasoline.

The GOP senators are also calling on the Bush administration to suspend deposits into the Strategic Petroleum Reserve for six months to increase the nation's oil supply. President Bush announced Tuesday that he would halt new deposits into the reserve until after the summer driving season. (Full story)

No short-term relief

If any of the proposals survive election-year partisanship to pass, Democrats and Republicans said they would be unlikely to affect the price of gas in the short term.

That opinion was shared by Federal Reserve Chairman Ben Bernanke during congressional testimony Thursday.

"Unfortunately there's nothing, really, that can be done that's going to affect energy prices or gasoline prices in the very short run," Bernanke said.

He warned, however, that record high oil prices remain a concern that could pose a risk to both economic growth and the inflation outlook. (Full storyexternal link)

"After many years of not really doing as much as we should on the energy front, this situation has arisen," he said, calling for actions over a number of years to either increase supply or reduce demand in order to keep prices down.

Increased fuel-economy standards, advocated by environmental groups, was not among the proposals Bush outlined in this year's State of the Union speech, when he said the nation needs to break its "addiction" to Middle Eastern oil using technological solutions. (Full story)

Nor was it part of last year's energy bill, which critics said did little to reduce energy prices or dependence on foreign oil, while providing billions in tax breaks for the energy industry.

The Senate Judiciary Committee passed a bill Thursday to restrict future oil company mergers and enable the United States to sue OPEC for unfair practices. (Full storyexternal link)

CNN's Dana Bash contributed to this report.

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