With an eye toward the east

March 16, 2001
WASHINGTON, Mar. 15-Democratic leaders that oppose Bush Administration and Republican lawmaker proposals to drill in the Arctic National Wildlife Refuge are asking the General Accounting Office to weigh in on the fight.

It's good politics for a new US president to focus almost exclusively on domestic issues his first year in office. At least that's what pollsters, lobbyists, and others that fancy themselves public opinion experts dictate. Acknowledging that Washington truism, President George W. Bush, within his first month in office, established an interagency energy task force. He placed oil industry veteran, Vice-President Dick Cheney, in charge and then called on Capitol Hill to pass legislation quickly before consumers got their first air conditioning bill.

His actions showed the White House can react swiftly to America's often shifting political pulse: a recent national public opinion poll found higher energy costs bothered Americans more than stock market dips or the omnipresent tensions in the Middle East.

OPEC cuts loom

Yet even if industry's most ambitious efforts to boost US production occurred, it would only marginally impact the country's foreign oil dependence. And what happens in the Middle East has a direct impact on US prices.

A month before the interagency task force report comes out, the Organization of Petroleum Exporting Countries will have initiated another round of cuts. That action alone could give Bush the clout he needs to push his more controversial domestic policy ideas forward, including drilling on the coastal plain of the Arctic National Wildlife Refuge. However, the cold reality is that OPEC is still a key US supplier. And two key members of the group, Iraq and Iran, are each looking to force Bush 's foreign policy hand sooner rather than later, even if it is not politically convenient for the White House.

Saddam Hussein, with the support of key US allies, ignores existing international sanctions and attempts to diminish US clout in the process. Iran, meanwhile, sends mixed signals. Some of its moderate leaders court US investment, while others seek to deepen ties with Russia, which is perceived as threatening US security and possibly shutting off vast reserves to US companies.

Timing is everything

One obvious way to reduce pressure on US consumer prices would be to lift oil sanctions against both Iraq and Iran. Sec. of State Colin Powell says the White House is reviewing these embargoes. Early indications suggest Bush may ease sanctions against Iraq and Iran, but that is unlikely before his interagency report is released in the spring. Powell contends an overhaul of sanctions policy must come sooner rather than later-yet it remains to be seen whether he can convince his fellow cabinet members of that. Sec. of Commerce Don Evans was one of the independent producers who sought antidumping rules against major oil producers, including Iraq.

Policymakers hint the group's main focus will be on ways to boost US fossil fuel production to meet domestic market demands. Better access to oil-rich public lands will no doubt be advocated as well as a call to simplify environmental permits. Sanctions reform also has the potential to help resolve the "energy crisis" by normalizing international oil markets that have been manipulated by artificial constraints set by politics and not market forces. Yet whether Bush is prepared to tackle such a thorny issue so soon in his term is an open question industry is still asking.