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Republicans backtrack on gasoline proposals

WASHINGTON—Seeking to end days of public ridicule, Republicans in Congress backed away Tuesday from a proposal to offer taxpayers $100 rebates to offset high gasoline prices. They tried instead to convince voters that there's no immediate remedy for the pain at the pump.

It was the second oil-related setback in as many days for Senate Republican Leader Bill Frist, R-Tenn., who was forced Monday to drop a proposal he made last Thursday to change the way business treats inventories for tax purposes, which would have cost corporations billions in higher taxes. That was to be a prime source of revenues to pay for the $100 rebates.

Democrats gleefully rubbed their hands over the Republicans' quandary and blamed an oil-friendly administration for today's high energy prices. Democrats called for more fuel-efficient vehicles and a broader investigation into price-gouging than what President Bush has already proposed. Republicans pressed for greater refining capacity and more oil production.

High gasoline prices this spring are especially troubling for Republicans, who face difficult re-election prospects in November. The partisan scrambling illustrated both the difficulty of identifying realistic solutions and a bipartisan desire to make a populist appeal to the public.

Frist last week linked the $100 rebate to an energy-relief package that included the accounting changes and a call for oil drilling in the Arctic National Wildlife Refuge, a proposal the Senate frequently rejects. But even as Frist and Sen. Rick Santorum, R-Pa., defended the rebate proposal on Tuesday, other Republicans were declaring it dead.

"It is off the table. It is gone," said Sen. Larry Craig, R-Idaho.

House Majority Leader John Boehner, R-Ohio, called Frist's rebate proposal "insulting."

"Over the weekend I heard about it from my constituents a few times," Boehner added. "They thought it was stupid."

Sen. Ted Stevens, R-Alaska, disavowed it, too.

"The 100 rebate? That was never my idea," he said.

The $100 was supposed to represent the amount of federal gasoline taxes that motorists pay in one year. Santorum said the rebate would temporarily help consumers faced with higher prices.

But even Frist was playing down its importance by Tuesday.

"That's not the main point in the plank," he said on NBC's "Today" show. "We've got to increase supply. We've got to diminish the demand, increase conservation, support alternative sources of fuel, and we need to ... make sure that those markets are working fairly with absolutely no price-gouging."

Republican leaders didn't appear to be in sync on what's behind today's high fuel prices. Boehner attributed them to increased global demand and static supply. "We don't have enough oil," he said.

But House Speaker Dennis Hastert, R-Ill., emerged from a meeting with Rex Tillerson, Exxon Mobil's new chief executive, to say that today's prices are "disconnected from supply and demand. We need to know why that's happening."

Later, on CNN, Tillerson said: "There's not anything that can be done that is going to change this situation overnight. It's all about supply and demand fundamentals."

Oil analysts say that today's prices result from many factors, including a tight balance between global demand and supply, anxiety that geopolitical tensions over Iran may further disrupt supplies, slumping production in Nigeria owing to an armed insurgency and in the U.S. Gulf Coast region because of last year's hurricanes, and financial speculators bidding up oil contracts in the expectation that prices will rise further.

The House of Representatives is scheduled to vote Wednesday on two energy-related bills. One would ban price-gouging and another would give oil companies incentives to build more refineries. Both are expected to pass with bipartisan majorities.

But Democrats also demand an end to tax breaks for oil companies, increased mileage standards for automobiles and more money spent to produce alternative fuels.

"Their strategy is addicted to oil—drill, drill, drill, drill," Senate Democratic Leader Harry Reid, D-Nev., said of the Republicans.

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(c) 2006, Knight Ridder/Tribune Information Services.

GRAPHIC (from KRT Graphics, 202-383-6064): 20050501 US gas prices

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