Following a narrow victory over his rival, Gorge.W. Bush was sworn in on Jan.20 as the 43rd president of America, with most of his cabinet members already nominated. A key selection of Bush has been the appointment of Spencer Abraham as the Secretary of Energy.
The 48 years old ex-Senator from Michigan, who failed to be re-elected as a senator this year, was in the past one of the main opponents to the existence of the Department of Energy on the grounds that the totally open economy of the U.S has rendered the Department practically useless.
In fact he was critical of the Department in the American open Energy market and found it inefficient.
The combination of Abraham and Vice President Cheney, who both favour an open door policy for oil companies, can bring about major changes in the energy sector both inside and outside America.
During the past several years, oil industry issues have been so intensely intertwined with the domestic and foreign policies of the U.S. administrations that, at times, they can hardly be separated.
For instance, when Cheney served as the Secretary of Defence under President Bush he safeguarded the huge oil reserves of Kuwait and Saudi Arabia while chasing Saddam Hussein out the former.
The increases in gasoline and natural gas prices in America, coupled with the forecast of further rise of the same during cold season, had stirred up hot debates during the election campaigns and were used effectively by the Republican camp to undermine the Democrat administration.
Now, however, the American public will be watching the new administration's efforts in dealing with lasting high energy prices, especially that of natural gas.
Can Secretary Abraham do anything? Impracticality of the energy policies of the previous administration, in that it caused a steep rise in the volume of imported crude oil and products, was a favourit subject in the pro-Bush campaign.
Indeed the current energy situation in the U.S market, the unruly rise in the natural gas prices, the abnormal differentials of WTI and Brent, electricity rationing in California, are ample example substantiating the inefficiency of those policies. This in turn makes the responsibility of the new administration even heavier.
This could be reason enough for Bush's efforts to rise domestic crude oil and gas production to safeguard security of supply in order to counter the growing American dependence on the import of this vital commodity, especially from the Middle-East.
In the course of the presidential election campaign, Bush was supported by the American oil companies, who were promised that, once he wins, areas known to have oil and gas potentials (such as Alaska and Gulf of Mexico) would be made available to them for further exploration.
Here the question of the environment will play a major role. Environmentalists will surely stand up to the government on sensitive subjects and noteably Alaska.
The sticking point is that if the new administration takes heed of warning on what environmentalists see as sensitive issues, then the companies will hardly be left with much potential to raise the domestic production of oil and gas.
Additionally, tough environmental regulations have mitigated incentive for fresh investments in oil and gas industry, particularly in the refining sector.
If the Bush administration fails to offer the investors acceptable concessions, then the existing recession in the oil and gas industries will continue to loom large and with the rise in demand the present restrictions in the production and supply of energy will be further intensified.
In general the present indications show that the domestic energy issues enjoy top priority in the mind of the new White House team and only after those are settled comes the turn of the related foreign subjects, especially of the Middle-East and the Caspian regions.
Therefore one can expect hot debates to come on energy issues in the U.S. Congress and Senate.
Source: www.iies.ac.ir
© 2001 Mena Report (www.menareport.com)
