LANSING ? Gov. Jennifer Granholm urged Marathon Oil, operator of the only gasoline refinery in the state, to lower its prices now that crude oil supplies are flowing again after Hurricane Katrina slammed the oil producing southern states. Marathon responded by rolling back prices for regular gas to $2.99 a gallon at its Speedway stations.

Granholm also asked President George Bush to impose profit controls on oil companies while the country is dealing with the hurricane?s impact. The governor’s moves came as the state continues to ramp up its response to providing aid to states affected by Hurricane Katrina, with an emergency operations center coordinating volunteer and donation activities.

And Attorney General Mike Cox, who joined with other attorneys general in urging the Federal Trade Commission to investigate the spike in gasoline prices, also joined with more than 30 counterparts across the country in new program monitoring retail prices. The attorneys general will conduct a coordinated review of gas pricing in the 30 days prior to August 27, focusing on points of entry of crude oil and costs associated with the refining process.

At the state’s emergency operations center where many department deputies were helping to coordinate the state’s response to the disaster, Granholm told reporters her major concern for Michigan is the price of fuel.

AAA Michigan had reported earlier in the day that Michigan saw the highest increase in retail gasoline prices in the nation, going up 36.1 cents per gallon over the past two days to an average of $3.05.

“It is unacceptable that just because we’re at the end of the pipeline that Michigan has to pay so much more,” Granholm said. With the major pipeline that serves the Midwest now back in operation, the governor said there is no reason why the wholesale price of gasoline should not be reduced.

Granholm also signed an executive order (EO 2005-20) waiving state law that prohibits sale of dyed diesel fuel for highway use as part of the effort to increase the availability of fuel. The order mirrors U.S. Internal Revenue Service orders waiving any tax penalties for using the agricultural fuel in vehicles. The executive order expires September 15.

The governor noted the state has the second lowest gasoline tax in the Great Lakes yet sees higher prices at the pump, something which she said merits further investigation.

Ohio, for instance, has a 28-cents-per-gallon tax, compared to Michigan’s 19-cent tax, and its two-day price spike was 25.9 cents. But Michigan also applies its 6 percent sales tax on gasoline, which Ohio does not. At $3 per gallon, that adds 18 cents per gallon to the end price.

Cox’s office already had been getting daily information regarding the retail and wholesale price of fuel and will continue gathering and analyzing information that have occurred since Hurricane Katrina hit.

“Today’s effort is the latest step my office has taken this week to prevent and investigate potential gas gouging as a result of Hurricane Katrina,” Mr. Cox said of the coordinated effort with attorneys general. “All of these efforts will ensure that if criminal activity took place at any point along the supply chain, we will find it.”

Robert Cleary of the Michigan Petroleum Association/Michigan Association of Convenience Stores, which adamantly denies gouging at the service station level of the system, said the volatile situation has left stations in a state of squeezed profits and where many of them “are fighting for their lives.”

In urging the president to impose a profit cap, Granholm criticized Exxon’s 32 percent profit in the past quarter. “I think that wholesalers and oil companies are not hurting,” she said.

“We need our citizens able to go to work, we need our companies able to thrive and we cannot have one industry reaping profits at the expense of victims, at the expense of the rest of the country,” Granholm said.

Wood criticized any move to a profit cap and denied that the industry is out of line on the profits it earns. “If you look at the 10 most profitable companies last year, in a year when we saw escalating crude prices, only one was an oil company,” he said. He said the average over the past 20 years was in single digits, and in some years the profit was negative. “People don’t recognize how cyclical the earnings are in our industry,” he said.

Granholm also said the crisis demonstrates some failures of the Federal Emergency Management Agency and the need for every state to ensure it has adequately prepared for breakdowns in communications and other systems.

“Things are not working. The system is not working,” she said. Granholm said Michigan was forced to test its own preparedness in the recent electric blackout, adding, “I would just hope and pray that if something like that happened in Michigan that we would be able to respond.”

U.S. Sen. Debbie Stabenow (D-Lansing) was careful in her observation of the response, saying the immediate focus should be on rescue efforts and humanitarian aid.

But she said, “At the opportune time, we do have to ask some very tough questions.” The focus will be framed in part by what the members of Congress from the affected states have to say about their experiences, she added.

The state is partnering with the Michigan Association of Broadcasters a statewide program to mobilize aid. The radio and television stations, including public stations, will participate in the Michigan Cares/Michigan Gives fundraising effort throughout the Friday, September 9, with a particular emphasis from 6-9 a.m.

Other details of the state response include:

In addition to the nearly 500 National Guard troops deployed to the stricken areas, two C-130 transport aircraft have taken supplies to the region and two others are on call. Tom Cutler, director of the Department of Military and Veterans Affairs, said the state was immediately ready to send vehicles and troops, but had to wait to be notified of how and where the assistance would be needed.

The Department of Human Services is cataloging housing that could be made available to evacuees.

The Department of Education is cataloging excess school bus supply for possible use in evacuating victims and the Department of Transportation is contacting all charter bus companies for possible assistance.

The Department of Environmental Quality is mobilizing 50 conservation officers and inventorying surplus equipment such as boots and waders and the Department of Agriculture is identifying veterinarians to assist with animal disease issues.

The governor’s office of Community and Faith Based Initiatives is coordinating help from churches.

Links on the state’s Website (www.michigan.gov) to places to provide assistance to victims and establishment of a toll-free helpline at 1-888-535-6136.

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