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Last Updated: Tuesday, 25 April 2006, 16:03 GMT 17:03 UK
Bush plans to tackle petrol price
President George W Bush
Alternative fuels like ethanol make economic sense, Mr Bush said
US President George W Bush has unveiled plans, including an inquiry into price fixing, to lower the cost of oil and cut climbing petrol prices.

Mr Bush told the Renewable Fuels Association that the US needs to "get off its dependency on oil" as crude costs have moved towards record levels.

The US will also stop topping up the strategic oil reserve, boost domestic output and promote alternative fuels.

Mr Bush said that oil and petrol prices were a matter of national security

'Fairly treated'

He said that the main problem facing the US is that it now gets 60% of its crude from foreign suppliers, many of whom have unstable governments and anti-American policies.

As a result, the US had to step up its efforts to become energy independent, especially when consumers were bearing the brunt of oil market problems by having to pay more for their petrol, he explained.

Long-term we need to power our automobiles with something other than oil
President George W Bush

Calling high petrol prices a hidden tax that hurts consumers and companies, Mr Bush said a main worry was that corporate and retail spending will decline as gasoline prices top $3 a gallon.

Mr Bush said that he is asking the Federal Trade Commission and the Department of Justice to look into whether the higher price of petrol was being caused by market manipulation.

Consumers need to be "treated fairly at the gas pumps", he added.

In an effort to get more crude oil and petrol onto the market, Mr Bush said the US would not top up the strategic petroleum reserve over the summer.

"By deferring deposits until the fall, we'll leave a little more oil on the market. Every little bit helps," he said.

Different views

However, Mr Bush warned that any steps he introduced would simply be short-term measures that needed to be backed up by a shift in mentality among US consumers and companies.

"Long-term we need to power our automobiles with something other than oil," Mr Bush said in Washington.

What the US now needs to do is step up its efforts to conserve energy, and invest in new, environmentally friendlier sources of fuel such as ethanol, he explained.

Voters expected oil companies to spend more on developing alternative energy sources, especially as they were making massive profits, Mr Bush said.

To help promote the use of more fuel efficient cars, Mr Bush called on lawmakers to give greater tax breaks for hybrid vehicles that use electricity as well as petrol.

His comments took some of the steam out of the oil market, and crude dipped in both London and New York.

Prices are still near record levels, however, and are unlikely to tumble while concerns exist about Iran's nuclear programme and demand remains strong in developing nations including China and India, analysts said.

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