The sell off began Thursday after the Commerce Department reported that gross domestic product – the broadest measure of the economy -- grew by nearly 2 percent in the second quarter. Though positive, the gain was below trade expectations. Investors also were concerned about Labor Department data revealing the number of people seeking jobless benefits jumped to its highest level in five years.
Economic angst was evident on Wall Street, where the Dow fell more than 200 points on Thursday, despite hefty earnings reports in its energy sector. Exxon Mobil reported second-quarter earnings of $11.7 billion, the largest quarterly profit ever by a U.S. corporation. But per-share earnings fell well short of Wall Street's forecast, and stock in the world's largest publicly traded oil company fell nearly 5 percent.
Though prices at the pump have fallen from record highs posted last month, the Bush administration claims America's dependence on foreign oil threatens both economic prosperity and national security. And this week, the president called on Congress to intervene before adjourning for its August recess.
President George W. Bush: "There are now just a couple of days left before Congress leaves for its August recess. Legislation to open up this offshore exploration is pending in both the House and the Senate -- all Democratic leaders have to do is allow a vote. They should not leave Washington without doing so."
President Bush sent a stern warning to congressional lawmakers this week in a Rose Garden plea for offshore oil drilling. Bush's midweek call to action came amid a flurry of failed legislation on Capitol Hill. The U.S. Senate and House each failed to pass a measure regarding oil drilling on the Outer Continental Shelf.
A House bill to counter oil market speculation failed on a 276 to 151 vote – just nine votes short of the two-thirds needed for approval. Congressional Republicans hoped to sink the bill and point House efforts in the direction of an up-or-down vote on offshore oil drilling. House Speaker Nancy Pelosi argues oil companies have vast regions available for drilling but have yet to develop them. Democratic Presidential Candidate and U.S. Senator Barack Obama echoed those sentiments this week.
Sen. Barack Obama, D-Illinois: "And this is what Washington does. It pats you on the back and says, "We're going to do something." And in the meantime, the oil companies are shoving this thing down the throats of Congress because they know everybody wants to try to pretend like they're doing something about the energy crisis, and they end up making out like bandits again."
But Arizona Senator John McCain rebutted Obama and reissued the President's call for action on oil drilling.
Sen. John McCain, R-Arizona: "And we ought to start drilling for more oil at home, including off-shore. We ought to start drilling. Senator Obama opposes that. Meanwhile, the Congress of the United States is gridlocked. They're gridlocked. The speaker of the House has said that they won't have a vote on off-shore drilling. The Democrat majority in the Senate will not allow an up-or-down vote on off-shore drilling. My friends, that's what's wrong with Washington, D.C., today and that's what we've got to change."
Congressional gridlock also affected a renewable energy package offering a litany of tax incentives. A Senate bill aimed to spur investment and $18 million in tax credits for wind, solar, and plug-in electric vehicles collapsed nine votes short of full floor debate. Senate Republicans took credit for the defeat and claimed that congressional efforts should be directed to oil drilling legislation.
Meanwhile, a representative from the American Wind Energy Association says the wind power sector risks losing $11 billion in investment and 75,000 jobs if the tax credits expire next year.