Snow Says Oil Prices Create `Headwinds' for Economy (Update1)
Snow Says Oil Prices Create `Headwinds' for Economy
March 6 (Bloomberg) -- U.S. Treasury Secretary John Snow said rising oil prices are creating ``headwinds'' for continued economic growth.
While the U.S. economy is ``so robust right now that we've blown right through'' the jump in crude oil over the past year, ``clearly these energy prices create headwinds,'' Snow said today on ABC's ``This Week'' program.
Crude oil for April delivery rose 21 cents, or 0.4 percent, to $53.78 a barrel on the New York Mercantile Exchange March 4. That was highest close since Oct. 26 and a gain of 4.5 percent over the last week.
Oil consumption is growing as the U.S. and Chinese economies expand, boosting demand for gasoline and jet fuel. That's left producers, including OPEC, pumping oil close to capacity. Crude oil prices may climb above the all-time high of $55.67 a barrel in New York amid speculation that global oil production will fail to keep pace with rising demand, a Bloomberg survey of analysts and strategists showed.
Oil prices are ``way, way too high,'' Snow, 65, said, and ``act like a tax'' on consumers.
He said Congress should pass President George W. Bush's energy proposals, which includes incentives intended to spur domestic energy production. Democrats have blocked the legislation for the past four years because they object to a provision allowing drilling in an Alaskan refuge and say it focuses too much on production rather than conservation.
Consumption and Growth
The U.S. consumes about a quarter of the world's crude oil. New York oil futures are 46 percent higher than a year ago. Still, U.S. gross domestic product rose 4.4 percent in 2004, the most in five years, and the Labor Department reported last week that employers added 262,000 jobs to payrolls in February.
Separately, Snow said in response to a question that he ``fully expects'' the next president of the World Bank to be from the U.S.
World Bank President James Wolfensohn has announced he will resign at the end of his current term on May 31. By tradition, the U.S. chooses the World Bank President and Europe picks the head of the International Monetary Fund.
Recently ousted Hewlett-Packard Co. Chief Executive Carly Fiorina, Treasury Undersecretary for International Affairs John Taylor and the Bush administration's AIDS policy chief Randall Tobias have been mentioned by administration officials or in news media reports as possible contenders.
Snow declined to comment on any specific candidates. Asked about a Feb. 25 editorial in the Los Angeles Times suggesting Bono, lead singer of the Irish rock band U2, Snow said he was ``somebody I admire.''
Bono is an advocate of debt relief for poor African nations and for efforts to fight AIDS in Africa.
``He does a lot of good in this world of economic development,'' Snow said. Bono is ``a rock star of the development world.''
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