Bush Turns to Rita's Hit on Oil Industry

Offshore Oil Drilling

9-26-05 - Concerned about Hurricane Rita's damage to coastal oil refineries, President Bush turned his attention to the nation's energy industry as early economic indicators offered reason for optimism and a speedy recovery.

Officials prepared to brief Bush at the Energy Department on Monday after a weekend of monitoring Rita's damage in Texas and Louisiana.

While preliminary assessments show little damage to most refineries, a key economic Bush aide said hundreds of thousands of jobs were at risk if the storm stunted oil production.

"I remain pretty optimistic about the economy," Ben Bernanke, chairman of the White House Council of Economic Advisers, said in a speech Sunday.

However, he added, "There is of course the direct impact of the shutting down a part of the economy, the loss of several hundred thousand jobs and reduced energy production in the Gulf."

Oil prices slid Monday, as markets reacted to reports of relatively light damage to crucial U.S. petroleum processing zones in Texas. Light sweet crude for November delivery fell 9 cents from Friday's closing price to $64.10 a barrel in electronic trading on the New York Mercantile Exchange. It had dropped as low as $62.65 in an unusual electronic trading session Sunday.

But 16 Texas oil refineries remained shut down after the storm, and crews found significant damage to at least one in the Port Arthur area, said Energy Department spokesman Craig Stevens.

Government officials were satisfied with the response to Rita, including better stockpiling of supplies, early evacuations and more military muscle than deployed four weeks ago against Hurricane Katrina.

Sen. David Vitter, R-La., said Monday he had urged the president to place "a strong federal leader on the Katrina reconstruction effort" beyond the short-term relief effort. Such a "reconstruction czar" would also need to make sure there were no improprieties in awarding the lucrative reconstruction contracts, Vitter said in an interview on NBC's "Today" show.

"If the American people lose confidence in this effort, Louisiana and the victims of the storm are going to suffer, so we have to have those protections in place," Vitter said.

Bush, anticipating future disasters, began pushing a politically sensitive proposal to give the military a larger role in search-and-rescue missions.

"Clearly, in the case of a terrorist attack, that would be the case," he said. But if there is "a natural disaster _ of a certain size _ that would then enable the Defense Department to become the lead agency in coordinating and leading the response effort," Bush said.

The president said he would ask Congress to consider putting the Pentagon in charge of disaster rescues after senior officers indicated the need for such a national plan.

His proposal divided lawmakers trying to balance an adequate federal response against trampling on states' rights.

Currently, the Homeland Security Department and the Federal Emergency Management Agency lead response missions in large-scale disasters. If federal troops are brought in to help, they do so in support of FEMA, through the U.S. Northern Command. The command was set up as part of a military reorganization after the Sept. 11, 2001, attacks.

Officials said that over the weekend federal teams rescued more than 400 people and treated more than 200 for injuries from Rita. They also pointed to hundreds of truckloads of food, water, ice and cots that were lacking during the immediate aftermath of Katrina.

R. David Paulison, FEMA's acting director, credited early evacuations as the key to saving lives, but he and local officials warned against letting residents return too soon to twice-flooded New Orleans.

"Our response operation is in full swing," Paulison said. "The coordination and smooth preparation for this hurricane has been absolutely phenomenal."