By TERENCE HUNT, AP White House Correspondent
President Bush defended the huge profits of Exxon Mobil Corp. Wednesday, saying they are simply the result of the marketplace and that consumers socked with soaring energy costs should not expect price breaks.
In an interview with The Associated Press, Bush also addressed oil's future, offering a more ambitious hope than in his State of the Union speech for cutting imports from the volatile Mideast.
However, he said his oft-stated goal of a Palestinian state in the region cannot be realized if a Hamas-led government refuses to renounce its desire to destroy Israel.
Bush, a former Texas oilman, said of oil costs, "I think that basically the price is determined by the marketplace and that's the way it should be."
"I believe in a relatively quick period of time, within my lifetime, we'll be able to reduce if not end dependence on Middle Eastern oil by this new technology" of converting corn, wood, grasses and other products into ethanol, he said.
In his address Tuesday night, Bush had set a goal of reducing the nation's Mideast oil imports by 75 percent by 2025.
With three years left in his second term, Bush declined to say what — if any — role he would take in the selection of a Republican candidate to succeed him in the 2008 presidential race. But he accepted the proposition that Secretary of State Condoleezza Rice would not be a contender.
"I think you need to take her at her word that she's not running," Bush said in a conversation on Air Force One as he flew to Tennessee for a speech.
"My political focus is on 2006," said Bush, who plans a major campaign role this year in the midterm congressional elections. "To the extent that I am thinking politics, it is to retain the (Republican) leadership of the House and the Senate."
Early this week, Exxon reported record profits of $10.71 billion for the fourth quarter and $36.13 billion for the year — the largest of any U.S. company. While some politicians raised furious objections, Bush had a different reaction.
"There is a marketplace in American society," he said.
"There's also a responsibility for energy companies to continue to invest and improve the ways that the American people can get energy," he said. "I would very much hope that Exxon would participate in the development of a pipeline out of Alaska, for example, in order to make sure there's more natural gas available for families and small business owners so the economy will grow."
Bush said his goal is to diversify away from a "a hydrocarbon society. I meant what I said last night, that America's addiction to oil is bad for this country. In order to remain competitive we've got to use technology to diversify away from dependence upon oil."
"I am told we are close to significant breakthroughs when it comes to the production of ethanol ... and that within six years the development of technology will be able to produce energy on a competitive basis," he said.
On the international front, Bush talked about trouble in Iran and in the Palestinian territory.
He said it was too early to tell what path Hamas would choose in dealing with Israel. "The conditions for peace and the conditions for a settlement will be up to Hamas to make the right decisions," he said.
Bush was the first U.S. president to espouse a Palestinian state living side by side in peace with Israel. Those prospects have dimmed with the triumph of Hamas in Palestinian parliamentary elections last week.
"I made the position of this government very clear," Bush said. "Hamas must renounce its desire to destroy Israel; it must recognize Israel's right to exist and it must get rid of the armed wing of its party."
"In order for there to be democracy and in order for there to be two states living side by side with peace, you can't have the party of one state intending to destroy the other state," he said.
On Capitol Hill, the Senate approved a nonbinding resolution condemning Hamas and expressing support for halting assistance to the Palestinian government.
Bush was asked about Iran in view of Iranian President Mahmoud Ahmadinejad's vow to resist the pressure of "bully countries" as European nations circulated a draft resolution urging that Tehran be brought before the U.N. Security Council for its nuclear activities.
"We cannot afford to have Iran with a nuclear weapon," Bush said. "We want them to have nuclear power but under the conditions that we describe." The United States supports a plan in which Russia would handle the reprocessing of spent fuel from Iran.
But Bush held out little hope of avoiding a showdown.
"It looks like to me the process is headed toward the Security Council, and that if the Iranians would like to avoid that, they ought to work in good faith to get rid of their nuclear weapon ambitions," the president said.
Bush said he had called Russian President Vladimir Putin to discuss Iran and had thanked him for Russia's reprocessing plan.
On other subjects:
• The president appeared untroubled by the outbursts and chaos surrounding the trial of former Iraqi leader Saddam Hussein.
"Saddam Hussein was the person who made a mockery of justice," Bush said. "He never gave his victims any chance for trial. This fledgling democracy is working through the issues of its Justice Department."
• Bush dismissed the idea of increasing fuel efficiency standards for cars, trucks and SUVs as a way of curbing foreign oil dependence. "My plan is to diversify away from oil. ... You're asking questions about how you deal with cars running on gasoline made from oil, I'm telling you let's get some cars running on fuel other than oil."
• He rejected calls from some Republicans for the White House to disclose all its contacts with disgraced lobbyist Jack Abramoff. Bush said there was an investigation of Abramoff's activities and "to the extent they ask for information, they'll get it."
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