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Wednesday, March 30, 2011

Obama calls for deep cuts in U.S. oil imports

(Reuters) - President Barack Obama set an ambitious goal on Wednesday to cut U.S. oil imports by a third over 10 years, taking up a challenge that eluded previous U.S. leaders, as high gasoline prices threaten to undermine the country's economic recovery.

Obama outlined his strategy in a speech after spending days explaining U.S.-led military action in Libya, where fighting, accompanied by unrest elsewhere in the Arab world, has helped push U.S. gasoline prices toward $4 a gallon.

"There are no quick fixes...And we will keep on being a victim to shifts in the oil market until we get serious about a long-term policy for secure, affordable energy," Obama said.

In his speech to roll out a blueprint on energy security that directly acknowledged the "big concern" caused by fuel prices, Obama said the country must curb dependence on foreign oil that makes up roughly half of its daily fuel needs.

But previous presidents have made similar promises on energy imports and failed. And any new policy initiatives can expect tough opposition from Republicans who control the House of Representatives and see high energy prices hurting Democrats in the 2012 presidential and congressional elections.

Republicans have mocked the idea of Obama curbing oil imports a week after visiting Brazil, where he said the United states wanted to be a good customer for its oil exports.

Obama laid out four areas to help reach his target of curbing U.S. dependence on foreign oil: lifting domestic energy production, fostering the use of more natural gas in vehicles like city buses, making cars and trucks more efficient, and boosting alternative energy by encouraging biofuels.

"We cannot keep going from shock to trance on the issue of energy security, rushing to propose action when gas prices rise, then hitting the snooze button when they fall again," he told students at Georgetown University in Washington.


Analysts and experts said Obama's goal is ambitious.

"All U.S. presidents since the early 1970s have outlined ambitious plans to reduce their reliance on imported oil," said John Sfakianakis, chief economist at the Banque Saudi Fransi.

Truly reforming U.S. energy use would involve sweeping changes, including possible fuel taxes to encourage Americans to change their habits, which could be politically toxic, analysts said.

Polls show Americans have mixed feelings about getting entangled in a third Muslim country, with the United States still engaged in Iraq and Afghanistan, and they are clearly worried by high gas prices before the summer driving season.

The latest measures of consumer confidence have also been dented by rising energy prices, which sap household spending and could derail the U.S. recovery if prices stay high enough for a long time, hurting Obama's re-election prospects.

A Quinnipiac University poll released on Wednesday showed that 48 percent of American voters disapprove of Obama's job performance, and 50 percent think he does not deserve to be re-elected in 2012, compared with 42 percent who approve and 41 percent who feel he does deserve to be re-elected.

Those were his lowest ratings ever, Quinnipiac said.

The poll of 2,069 registered voters, conducted March 22-28, has a margin of error of plus or minus 2.2 percentage points.

Some analysts reckon Obama may tap America's emergency oil stockpiles if U.S. oil prices hit $110 a barrel. Prices were hovering just over $104 a barrel in Wednesday's trade.

The United States consumed almost 20 million barrels of oil a day in 2010 of which roughly half was imported. Canada and Mexico are the country's two largest suppliers, followed by Saudi Arabia and Venezuela.

The U.S. Interior Department estimates millions of acres (hectares) of U.S. energy leases are not being exploited by oil companies and the White House wants that to change.

This argument also helps the administration push back against Obama's Republican opponents, who claim he is tying the hands of the U.S. energy industry by denying leases and restricting offshore drilling in the wake of the 2010 BP Gulf of Mexico oil spill.

(Additional reporting by Timothy Gardner and Caren Bohan; Editing by Vicki Allen and Doina Chiacu)

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