WASHINGTON—The prospect of sharply higher fuel prices, including $4-a-gallon gasoline, may not have made it into Oval Office briefing books, perhaps explaining why President Bush was surprised Thursday when a reporter mentioned what energy analysts are saying could happen soon in many parts of the country.
"Wait, what did you just say? You're predicting $4-a-gallon gasoline?" Bush responded to a reporter who said some analysts expect prices to soon climb that high. "That's interesting. I hadn't heard that. . . . I know it's high now."
Gasoline prices: An article in Section A on Friday about President Bush's surprise on learning of predictions that gasoline soon could hit $4 a gallon in many parts of the country said the price of regular gasoline at a Shell station in San Mateo, Calif., was $4.29 a gallon Thursday. The station was charging $4.239 a gallon. —
The price of oil set another record Thursday, jumping $2.95 to close at $102.59 a barrel in New York futures trading.
But even before the recent surge in oil prices, analysts were predicting that the average price of a gallon of gasoline could reach $3.75 nationwide in the near term and top $4 in states such as California and Hawaii.
Bush's acknowledged unfamiliarity with the recent cost of gasoline produced some fumes at the pump.
At a Shell service station in the Bay Area city of San Mateo, the price of a gallon of regular had already reached $4.29, well above the state average of $3.42, as measured by the AAA auto club.
"Bush is out of touch with a lot of things we are facing today," said 33-year-old Marisa Cajbon, who was filling her Toyota Sequoia SUV with the expensive fuel. "I have to buy gas. I need to work. I have two kids. I think it's unfortunate. I think it's a crime."
Not surprisingly in a presidential election year, Bush's remark provoked comparisons to his father, George H. W. Bush, who took a serious political hit in 1992 after appearing to be out of touch with Americans' everyday lives.
The current occupant of the White House isn't seeking reelection, but Democratic presidential hopeful Sen. Barack Obama immediately seized on the gasoline issue, accusing the younger Bush of failing to understand the hardships ordinary Americans are facing as prices rise and the economy falters.
"When I hear George Bush say that he doesn't think we're in a recession, when somebody tells him that, you know, gasoline prices might reach $4 a gallon and he says, 'That's interesting. I didn't know that'. . . . That's a sign we have a Washington that is out of touch," the senator from Illinois said to cheers and laughter from a crowd of about 2,000 at a campaign stop in Beaumont, Texas.
Obama's rival for the nomination, Sen. Hillary Rodham Clinton of New York, expressed concern about fuel costs during a visit with two families in Pomeroy, Ohio. "We need to give more authority to the government to go after these oil companies to ask the hard questions," she said.
During a White House news conference, Bush tried to put the best spin on months of bleak economic news. "I don't think we're headed to a recession, but no question we're in a slowdown," Bush said.
In his second day of congressional testimony, Federal Reserve Chairman Ben S. Bernanke repeated his warning that the U.S. economy faces a triple threat of declining growth, recurring credit crunches and rising inflation. But in contrast to his assessment Wednesday, the central bank chief shared a note of optimism on the nation's odds of dodging the worst of the problems.
Bernanke told the Senate Banking Committee that he didn't see much danger of so-called stagflation, the combination of falling growth and rising prices that ravaged the economy three decades ago.
"I don't think we're anywhere near the situation that prevailed in the 1970s," Bernanke said.
However, he acknowledged that higher food and fuel prices were creating "inflationary stress" that could make it tougher for the Federal Reserve to keep the economy out of recession by cutting interest rates.
Bernanke's testimony came as the Commerce Department reported that the gross domestic product, the broadest gauge of the nation's output of goods and services, grew at a weak 0.63% rate in the fourth quarter of last year. Economists had hoped that the GDP number, which the government had estimated at 0.6%, would be revised substantially upward.