The Oval: Oil Dilemma

"I wish I could simply wave a magic wand and lower gas prices tomorrow," George Bush told Latino business leaders at the Ronald Reagan building in Washington on Wednesday. "I'd do that." Yet what followed--a speech previously described by his aides as a major policy address--said nothing about how to lower prices any time soon, with or without a magic wand. Instead, Bush focused his attention on his long-delayed energy bill, which includes plenty of long-term strategy about the future of America's energy supplies.

That's a considerable gamble for a White House that believes the reason Bush's poll numbers have dropped sharply is almost entirely because gas prices have risen sharply. According to the latest poll by the American Research Group, Bush's approval rating stands at a low 44 percent, while his handling of the economy is rated at an even lower 38 percent. More than 60 per cent of those polled say the economy is bad, very bad, or downright terrible.

Bush's aides say the president is taking action now to lower gas prices, even though they admit there's little he can do directly. "We're going to continue to talk to producing nations--OPEC and non-OPEC producing nations--to make sure that there are abundant, affordable supplies of energy available," said White House press secretary Scott McClellan. "We have a growing global economy, and we need to make sure that we have affordable supplies of energy." First stop: Saudi Arabia's leader, Crown Prince Abdullah, who travels to Bush's ranch in Crawford on Monday.

The only problem in raising the issue with oil-producing countries is the response Bush is likely to hear. According to officials from some of those nations, their position is that the United States can affect oil prices significantly on its own. Those officials say there are two big factors that have nothing to do with the growing demand from China and the rest of the developing world: fear of instability and financial speculators. "If you take out the speculators' effect and the fear factor, you should be able to see oil prices $15 less than they are now," says one senior official from an oil-exporting nation. The fear factor rests in large part on Iraq, where Bush has yet to detail an exit strategy in the foreseeable future. It also rests on Russia's political future and its attitude to foreign investors in the energy industry, something President Bush will once again discuss with President Vladimir Putin next month in Moscow. As for the speculative element, some oil producers believe that rising interest rates in the United States is the best way to shift the dynamic among the hedge funds to move out of oil.

A third factor is already part of the stalled energy bill: reducing the regulatory burdens that have blocked investment in new refineries inside the United States. But even those found little room in Bush's speech on Wednesday, as the president applied only the most general pressure on members of Congress.

He could do worse than to start leaning on the one man who effectively killed the energy legislation two years ago: Tom DeLay. It was DeLay's determined defense of a single provision--establishing legal protection for producers of MTBE, an environmentally-unfriendly gasoline additive--that blocked compromise between the House and Senate. Behind the scenes, Bush's aides say DeLay isn't the problem. "It's a regional issue that cuts across party lines," said one senior White House official. "It's one of the issues that has held up the bill and the president wants Congress to resolve it."

Mutual Friend

On Wednesday, Republicans on the House Ethics Committee offered to open an investigation into Tom DeLay's alleged ethics violations, as long as House Democrats agree to certain procedural rules. If the investigation moves forward, there's one name that is certain to come up: Jack Abramoff, who until recently was a close ally of both DeLay and President Bush.

Long before he came under investigation for his lobbying practices and ties to power brokers like DeLay, Abramoff was an enthusiastic fundraiser for Bush's election races. In 2000, Abramoff was among the first Washington lobbyists to jump on the Bush bandwagon and eventually became one of the campaign's top fund-raisers. In 2004, the now-embattled superlobbyist brought in even more money and was christened a "Major League Pioneer" by the campaign. While his exact take isn't known, Abramoff told The New York Times in July 2003--months before active fund-raising really began--that he had already raised $120,000 for the president's re-election effort. "And I haven't even started making phone calls," Abramoff told the Times. An Orthodox Jew, Abramoff was considered an important intermediary between Jewish groups and the Bush campaign, which worked heavily to make inroads with the voting bloc. When fundraising began for Bush's re-election effort, Rabbi Daniel Lapin, a prominent Seattle radio host and activist, urged friends and colleagues to steer campaign checks to Bush via Abramoff.

But the lobbyist's ties to the White House extended well beyond money. When top Bush adviser Karl Rove was looking for an assistant in early 2001, Abramoff suggested his own top aide, Susan Ralston. She remains one of Rove's top deputies. At the same time, Bush tapped Abramoff as member of his Presidential Transition Team, advising the administration on policy and hiring at the Interior Department, which oversees Native American issues. That level of close access to Bush, DeLay and other GOP leaders has been cited by many of the Indian tribes who hired Abramoff with hopes of gaining greater influence with the administration and Congress on gaming issues. Whether the tribes got their money's worth is a question still being investigated by Congress, but there's no question some doors were opened. In 2001, Bush met personally with a group of Indian leaders--including at least one tribe represented by Abramoff--to talk about his tax cut plan. The meeting was reportedly arranged by Grover Norquist, a prominent GOP activist with close ties to the administration and Abramoff.

While many GOP lawmakers have sought to distance themselves from Abramoff, the White House has remained largely quiet on Bush's ties to the controversial lobbyist. Last fall, when Congress opened hearings into Abramoff's lobbying and fund-raising, the Bush-Cheney campaign pointedly refused to return a $2,000 contribution check from the lobbyist and said there was no reason to question any other checks Abramoff brought in as a top fund-raiser for the campaign.