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Election-Year Jump in Energy Costs Pressures Bush
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USA: March 26, 2004


WASHINGTON - The White House this week fended off calls to tap emergency oil reserves to stem record-high gasoline prices as surging energy costs prompted Democrats to open a new avenue of attacks on President Bush.


Bush faces rising pressure from lawmakers to stop adding to the U.S. oil stockpile known as the Strategic Petroleum Reserve. Critics say replenishing the reserves is taking energy supplies off the market at a critical time.

While some Republican lawmakers also want to halt shipments to the reserves, Democrats have pounced on the issue, seeing it as an election-year vulnerability for Bush, a former Texas oilman who has made energy policy a high priority of his presidency.

"You really have to scratch your head about why the White House is refusing to budge from a policy that is contributing to higher gas prices," said New York Democratic Sen. Charles Schumer.

The Bush administration insists the stockpile should only be reserved for dire circumstances, such as a severe supply disruption.

"Like most Americans, the president is concerned about rising gas prices," White House spokesman Scott McClellan told reporters.

But he added: "The Strategic Petroleum Reserve is for national emergencies. That's what it's there for. And we need to make sure that we have the necessary supply of oil in reserve."

Underscoring the administration's determination to continue building the stockpile, the government awarded six-month contracts to three major oil companies to deliver 100,405 barrels a day of oil to the strategic reserve.

With the peak U.S. driving season just a few months away, Americans on average are paying an all-time high of $1.74 per gallon of gasoline - an 18 percent increase from January 2001, when Bush took office.

Global demand and security concerns after the Madrid train bombings on March 11 spurred the latest price jump. The Organization of Petroleum Exporting Countries is due to meet next week and some analysts believe the cartel may hold off on its decision to cut production.

NEW UNCERTAINTIES

A further climb in energy prices could create additional economic uncertainties at a time when the U.S. economic recovery is spurring concern because of tepid job growth.

Schumer and two other Democrats released the results of a study they said showed higher gasoline costs would total $350 this summer for the average family, which they said would eat up most of the $400 tax rebate given to families with children last year under the Bush tax cuts.

Bush spokesman Trent Duffy countered that higher costs for families were an argument for making Bush's tax cuts permanent, not for bashing Bush's policies.

Bush's Democratic presidential rival, John Kerry, while on a ski vacation on Tuesday, issued a statement calling the administration's energy policy a failure.

"It's clear that we need a new energy policy," Kerry said. "But George Bush stubbornly refuses to admit that his economic policies aren't working, and now even in the face of record high gas prices, he still stubbornly refuses to change his failed energy policies."

A bill that forms the core of Bush's energy policies is languishing in Congress. The measure would provide billions in tax incentives to boost domestic oil and natural gas drilling.

Opponents see it as a giveaway to oil companies that would bloat the budget deficit.

Bush has taken aim at Kerry on energy as well, accusing him of having supported a 50-cent-a-gallon rise in gasoline taxes in 1994.


Story by Caren Bohan


REUTERS NEWS SERVICE

Reuters



© 2008 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Reuters.
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