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Published: Tuesday, 10/12/2004

Oil and politics

ALMOST hidden in the news about U.S. crude oil prices hitting a record $50 per barrel was the sudden postponement of a government report on how to boost U.S. oil refining capacity. Apparently political considerations outweighed public interest.

Fearful of inviting campaign controversy, the release of a report eagerly awaited by the oil industry and environmentalists alike has been delayed by the administration until after the election.

The National Petroleum Council report to Energy Secretary Spencer Abraham reportedly contains a number of suggestions like easing environmental regulations for oil refineries, which is not particularly surprising considering the strong oil industry ties of the Bush White House.

However, when the Environmental Protection Agency allegedly raised objections to some of the group's recommendations to roll back some clean air and water rules to allow the oil industry to build more refineries or expand existing ones, the government advisory panel abruptly canceled a Sept. 30 meeting to release its report.

The reason given was a scheduling conflict with the Energy secretary, but that explanation has plenty of skeptics especially since the panel's rescheduled session will likely be at the end of November.

"We've had record energy prices throughout this (Bush) Administration," said Phil Singer, a spokesman for the Kerry-Edwards campaign. "Instead of taking pro-active action to address the situation, they cancel meetings. That is no way to deal with this crisis."

And it will be a crisis as long as global demand for oil continues to surge against tight supplies with threatened disruptions from problems like an unstable Iraq, political unrest in Nigeria, and one Caribbean hurricane after the other. Some analysts predict a rattled market could drive oil prices even higher.

Over the next few weeks worried buyers will be reacting to geopolitics, OPEC output, and the shape of U.S. oil inventories. Oil producing nations may temporarily calm the situation with boosted production but the price shock remains an ominous sign for big, foreign-oil dependent consumers, like the U.S.

Yet the administration's response to this energy train wreck has been to focus on finite solutions like oil drilling in the Arctic, while passing on serious fuel efficiency or providing incentives for the market of gas-saving hybrid vehicles. There is no comprehensive energy policy to help stabilize U.S. oil consumption.

Still, with oil prices hitting record levels and average prices at the pumps expected to rise above $2 per gallon soon, the Bush Administration is worried not about the economy but about tipping its hand with an oil industry report so close to the presidential election.

Whose interests are being served here?

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