High petrol prices 'here to stay'. 01/05/2006. ABC News Online

The US Energy Secretary Samuel Bodman says soaring petrol pump prices are here to stay for at least the next couple of years and the US Government can do little in the short term to mitigate it.

US Opposition Democrats have lambasted the administration of President George W Bush for not having formulated a long-term energy policy and blasted oil companies for raking in multi-billion dollar profits.

"Suppliers have lost control of the market," Mr Bodman told NBC television, in explaining how petrol prices had risen as much as 60 cents a gallon (3.8 litres), or at least 25 per cent, in one month.

He also cited short-term hiccups as the US changes fuel mixes and demand for gasoline surges as the summer begins, and also noted that the continuing conflict in Iraq has tightened crude oil supplies.

"Clearly we are going to have a number of years, two or three years, before suppliers are going to be in a position to meet the demands," Mr Bodman said.

Meanwhile Mr Bodman has rejected some lawmakers' allegations that consumers are being deliberately gouged by oil companies, and said popular calls to set a windfall profits tax on the companies would not work.

"This is one of those situations where I guess I would call it 'trust but verify'," he said.

Speaking on America's ABC television, Democratic Senator Charles Schumer blamed much of the problem on the lack of competition among oil producers and oil companies.

In addition to the Oil Producing and Exporting Countries (OPEC) cartel, he said, "Here at home (US), you used to have 20 or 25 oil companies ... Now we have five vertically integrated oil companies.

"They don't compete. And so while supply and demand pushes the price up some, they exacerbate the situation.

"What happens is, because this administration believes what's good for Exxon Mobil is good for America, they simply do what the oil companies want.

"The oil companies are happy with high prices and record profits ... We never should have let Exxon Mobil merge, Chevron Texaco merge."

With skyrocketing fuel prices battering consumers and threatening to slow the economy, the issue has become a top issue as more than 560 members of Congress gird for mid-term elections in November.

In a recent NBC News/Wall Street Journal Poll, 45 per cent of those Americans questioned said that petrol prices were the issue of most concern, while 33 per cent cited Iran's alleged program to build a nuclear weapon, and 23 per cent said the war in Iraq.

Federal Reserve Chairman Ben Bernanke warned last week that rising energy prices "pose a risk to both economic activity and inflation".

Republican Senator Lisa Murkowski also blamed the government for bad policies.

"We are here because we've had a failed energy policy in this country (US) for decades ... And we've got to recognise that what we're faced with are the laws of supply and demand," she said.

Speaking on Fox News Sunday, new White House chief of staff Josh Bolten said the government was taking short-term measures to alleviate the petrol price pain for consumers, and down played the effect of high oil prices on the economy.

"This is a very large problem. It's built up over many years, decades, in fact," Mr Bolten said.

"It's not going to be solved in the short run by some silver bullet."

-AFP

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