Richardson must walk tight rope when lobbying OPEC

Bill Richardson stands little chance of repeating March's OPEC lobbying trick at the group's upcoming June 21 conference, analysts say.

By Tom Doggett

Saudi has recently expressed less favorable views to the US on oil policy.

May 17, 2000, 10:08 AM WASHINGTON (Reuters) - US Energy Secretary Bill Richardson risks fighting a losing battle if he thinks he can again convince the OPEC cartel to raise oil production and cool red-hot prices, industry analysts said on Tuesday. "If you're really asking me what (Richardson) can do, I have a very short answer: Keep his mouth shut!" said Vahan Zanoyan, president of Petroleum Finance Corp (PFC), an energy consulting group in Washington, D.C..

Richardson said earlier Tuesday the Clinton administration was nervous about rising oil prices and that more OPEC oil may be needed to calm prices which have shot back to $30 in the United States in recent days.

But while his aggressive lobbying helped to persuade OPEC release an extra 1.7 million barrels per day (bpd) at its last meeting in March, Richardson stands little chance of repeating the trick at the group`s upcoming June 21 conference, analysts say.

PFC's Zanoyan said Richardson's high-profile lobbying of OPEC backfired among some cartel members, particularly Iran, who viewed it as Washington interfering with the cartel's business.

"I think its a fairly open secret that the OPEC members...

were really irritated with the way Richardson handled things the last time around," said one industry analyst, who spoke on condition of anonymity.

"If he were to approach it in the same manner again, the irritation factor might just overwhelm the substance of the US case," the analyst said.

OPEC has already sent out strong signals that it has no plans to raise output again in June, preferring to wait until September before taking more action.

Ali Al-Naimi, Oil Minister of OPEC powerhouse Saudi Arabia said on Tuesday that he saw no need to increase supply now.

These days Richardson is making several phone calls a week to OPEC oil ministers, instead of the previous three a day, his aides told Reuters.

He has met recently with some ministers -- including OPEC President Ali Rodriguez of Venezuela -- in the United States, but does not plan to travel to any OPEC countries at this point.

"Sending messages behind the scenes, that is very responsible," Zanoyan said.

High oil prices pressure in election year

While Richardson does not want rub OPEC the wrong way, he needs more of the cartel's oil to keep energy prices down, especially in a election year, analysts said.

Rising oil and gasoline prices could cause a consumer backlash and hurt Democrat Al Gore in the presidential election as well as Richardson's chances of being his vice presidential running mate.

"Anything bad that happens to oil prices certainly hurts Richardson's prospects for vice president," said Richard Semiatin, assistant professor of government at American University in Washington D.C.

US oil prices traded above $30 a barrel this week, the highest since mid-March. Retail gasoline prices have risen 7.2 cents a gallon over the last two weeks to an average $1.49.

Senator Frank Murkowski, chairman of the Senate Energy Committee and critic of the administration`s energy policies, said White House officials are trying to avoid the highest gasoline prices on record during a presidential election.

"I think they`re under tremendous pressure," he said.

"They're hoping against hope this doesn`t come down on their watch." Murkowski co-sponsored legislation on Tuesday to reduce US dependence on imported oil, in part by giving companies access to more federal lands for oil exploration and drilling.

Richardson rejected the idea that the presidential election is pushing him to lower energy prices and influencing the administration`s dealings with OPEC.

"Neither American politics or OPEC politics should play a part in this issue," said Richardson. "Market conditions should dictate production and prices, and not artificially set limits."

Lack of OPEC sympathy slims chances of more oil

While Richardson said the Clinton administration won't take a formal position until early June on whether OPEC should increase production, the White House still faces an uphill battle to get the cartel to agree on any additional supplies.

Petroleum Finance's Zanoyan said there is not much sympathy among OPEC members for high American gasoline prices because the US economy is the strongest in a generation and the federal government has a budget surplus.

By comparison, many OPEC nations are still suffering from high budget deficits sustained when oil prices crashed just two years ago. ) 2000 Reuters

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-- Martin Thompson (mthom1927@aol.com), May 17, 2000