Treasury Secretary Snow Cites ‘Headwinds’ from Oil Prices

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Record prices for oil are taxing the disposable income of American consumers and threatening to hinder economic growth, Treasury Secretary John Snow said.


“Well, it is a drag,” Mr. Snow said on CNN’s “Late Edition with Wolf Blitzer,” according to a transcript of the interview. “It is creating headwinds for the otherwise very strong economy.”


Mr. Snow also defended the Bush administration’s economic record after the Labor Department reported weaker-than-expected job growth in September. The economy and Iraq are two leading issues in the race between President Bush, who is seeking re- election, and his Democratic challenger, Senator Kerry of Massachusetts.


Oil futures in New York touched $53.40 a barrel Friday, the highest intraday price since the contract began trading in 1983. Futures are up about 22% since Hurricane Ivan disrupted operations in the Gulf of Mexico last month, and 79% in the past year.


Mr. Bush supports legislation giving tax breaks for domestic oil and gas production and authorizing a natural gas pipeline from Alaska to the lower 48 states. The proposal is stalled in the Senate amid debate over the size of tax breaks and language shielding makers of the gasoline additive methyl tertiary butyl ether from product liability lawsuits.


“It passed the House twice,” Mr. Snow said. “It’s time for the Senate to act.”


Messrs. Bush and Kerry each propose tax credits for companies that develop oil and alternative energy. Mr. Bush would allow drilling in Alaska’s Arctic National Wildlife Refuge, which Kerry opposes.


Mr. Kerry in August offered a $30 billion plan for giving American automakers tax credits of as much as $10 billion to produce fuel-efficient cars and credits of as much as $5,000 for customers who buy low-pollution autos.


Higher-than-anticipated demand for oil has led members of the Organization of Petroleum Exporting Countries, including Saudi Arabia, to boost output. OPEC in September pumped oil at the highest rate in 25 years, Bloomberg data showed.


Saudi Arabia, Kuwait, and the United Arab Emirates, the producers of almost half OPEC’s oil, said yesterday they’re committed to boosting capacity. On October 1, finance officials from Saudi Arabia and Qatar met in Washington with their counterparts in the Group of Seven Industrialized nations.


“I just left a series of meetings with Middle Eastern finance ministers, where we put on the table the need for expansion of output in quotas, and I must say that we got a very good response on that,” Mr. Snow said.


Mr. Snow said a report Friday that American employers added 96,000 workers in September, down from 128,000 in August, was affected by hurricanes in Florida.


Mr. Kerry said in the presidential debate two days ago that Mr. Bush would be the first president since the Great Depression to witness a drop in employment during his term. Since Mr. Bush took office, the economy has lost 821,000 jobs.


“This economy has been through the most serious set of negative body blows any economy has faced in a four-year period, going back to the meltdown of the equity markets, the bursting of the bubble, the recession that the president inherited, 9/11, the corporate scandals, and so on,” Mr. Snow said.


A separate survey of households that determines the unemployment rate shows a net gain of 3.2 million jobs under Bush’s term, Mr. Snow said.


“When people say you’ve lost jobs, they’re not looking at the whole job picture,” Snow said. “They’re looking at this narrower survey that deals with establishments and firms that have been around for a while.”


The two surveys use different methods and definitions of employment. The household survey polls about 60,000 households, compared with about 160,000 businesses and government agencies in the establishment report, according to the Labor Department.


The smaller survey for households makes it more liable to sampling error, an analysis by the Labor Department says. The payroll survey may not immediately capture new businesses, and the household survey includes the self-employed.


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