President Bush said Friday "it makes sense" to reduce at least temporarily the import tax on ethanol and that he would work with Congress to suspend some or all the 54-cent tariff.
Any such move would prompt a fight with both Republican and Democratic farm-state lawmakers who say a change would undermine the domestic ethanol industry.
But Bush, in an interview with CNBC, made clear he views the tax as a barrier to imports. "I think it makes sense ... when there's a time of shortage of a product that's needed, so consumers have a reasonable price, it seems to me to make sense to address those shortages," Bush said.
"And dropping a tariff will enable the foreign export of ethanol into our markets, which will particularly help on our coasts."
Energy Secretary Samuel Bodman said that while the administration "will continue to consider" ways to boost imports, including removing the tariff, "it's largely a congressional matter."
Oil companies have attributed part of the recent increase in gasoline prices — as much as 8 cents a gallon, according to some estimates — to refiners shifting from MTBE as a gas additive to corn-based ethanol.
MTBE, or methyl tertiary butyl ether, has been found to contaminate water supplies, which prompted a rash of lawsuits.
Congress last summer required a ramping up of ethanol use to 4 billion gallons this year and 7.5 billion gallons by 2012.
The domestic ethanol industry said there is plenty of product available.
In futures trading Friday, crude oil crept back above $70 a barrel after sinking more than $4 a barrel during the previous two sessions because U.S. government data showed an increase in gasoline supplies.
Light, sweet crude for June delivery on the New York Mercantile Exchange rose 25 cents to settle at $70.19 a barrel.
Gasoline futures, meanwhile, gained 4.6 cents to close at $2.0406 per gallon.
While New York oil futures have fallen more than $5 from their intraday peak of $75.35 reached April 21, prices remain roughly 40 percent higher than a year ago and analysts do not expect them to free-fall anytime soon given the high level of geopolitical tensions.
Iran's state-run television reported Friday that the oil ministry took a step toward establishing an oil trading market denominated in euros, rather than the dollar, by granting a license for the bourse. Trading on oil markets such as New York and London is conducted in dollars.
