Newspaper article The Christian Science Monitor

Samuel Bodman ; US Energy Secretary Says Increased World Oil Demand Means a Whole New World of Oil Price Increases

Newspaper article The Christian Science Monitor

Samuel Bodman ; US Energy Secretary Says Increased World Oil Demand Means a Whole New World of Oil Price Increases

Article excerpt

When it comes to determining the price consumers have to pay for gasoline and heating oil, it's a whole new world.

So says Samuel Bodman, the Massachusetts Institute of Technology- trained chemical engineer now serving as US energy secretary.

At a breakfast with reporters sponsored by the Monitor, Mr. Bodman noted that "for the first time in my lifetime, in my professional existence," major oil suppliers like Saudi Arabia are "right at the ragged edge" in their ability to meet the demand for oil.

The energy secretary says that despite increased world thirst for oil and constraints on US refining capacity, there is little possibility major oil-producing countries could increase production and have "a radical effect on prices."

The result, says Bodman: "We are for the first time in the hands of the traders. The free market, without outside supply interference [is]....setting the prices."

Bodman was president and chief cperating Officer of Fidelity Investments, the big mutual fund company, before moving into government service. "One of the things I learned at Fidelity is never to speculate on what the prices of common stocks or bonds might be in the future and I tend to apply that here," to energy prices, he said.

Without specifically forecasting prices, Bodman cautioned that "we are in a new situation...we are likely at least in the near term to be dealing with a different pricing regime than we have seen before." It appears to be a situation where new demand for oil appears likely to push up prices.

Despite what he calls an "extraordinary" rate of increase in the US demand for oil - up 2.7 million barrels a day in 2004 - Bodman disagrees with critics of the Bush administration's energy policies who call for imposing new, tougher fuel economy standards for automobiles.

"There really are issues related to safety and issues related to the position of US manufacturers and jobs for the people who are making these cars," Bodman said. …

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