GOP renews offensive on domestic drilling

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By Jon Ward

President Bush, top administration officials and congressional Republicans on Tuesday renewed their energy offensive, accusing Democrats of obstructing increased domestic production and criticizing the notion that market speculation is driving prices up.

David McCormick, undersecretary of the Treasury for international affairs, not only dismissed the idea that speculation is raising prices, but said that in the long term, speculation helps the market.

"Short-term investors can move prices, sometimes in a good way ... and sometimes in a bad way," Mr. McCormick said, during a speech at a downtown D.C. think tank.

"However, by creating a large and liquid market, they also help reduce volatility, and over the longer haul, short-term investors do not systematically move prices away from the levels dictated by the fundamentals of supply and demand," he said.

Democrats charge speculation is a major factor in higher prices, and have proposed legislation to eliminate futures bets by traders who never actually take physical possession of the oil commodities. Such a move would lower the number of traders who are eligible to buy futures shares.

On Capitol Hill, Senate Majority Leader Harry Reid, Nevada Democrat, and House Speaker Nancy Pelosi, California Democrat, heralded second-quarter profits released Tuesday by BP Global, a leading energy company, which jumped up 28 percent over last year, to more than $9 billion, as evidence that the Republican Party is protecting the oil industry.

"On the day when big oil's profits soared again, Bush-McCain Republicans continue to put big oil's bottom line and Wall Street traders ahead of the interests of the American people," Mr. Reid said.

The debate took place under the shadow of a looming Friday deadline, when Congress is expected to leave town for a monthlong summer recess.

The president, speaking at an electric company in Euclid, Ohio, said that Democrats should allow a vote to increase domestic oil production.

Mr. Bush did not call on Democrats to hold a vote before they leave Washington, but White House press secretary Dana Perino made such a demand earlier in the day.