Treasury Secretary: Arab Finance Ministers to Cut Oil Prices

Oil costing roughly $53 a barrel is a major drag on the U.S. economy, and Arab finance ministers have told the Bush administration they are committed to bringing the price down, Treasury Secretary John Snow said Sunday.

Snow said the need is urgent because sky-high gasoline prices in effect impose an undeclared tax on Americans so dependent on petroleum products.

"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," Snow said.

"I must say that we got a very good response on that, and they've indicated that they are committed to bringing the price of oil down," the Treasury chief told CNN's "Late Edition."

Snow hosted a meeting of those ministers earlier this month in Washington.

Because of the current record high prices, oil "is creating headwinds for the otherwise very strong economy," Snow said. "It acts like a tax, taking disposable income away from people."

The United States imported almost 9.7 million barrels of oil per day in 2003, a 6.6 percent increase over the almost 9.1 million barrels daily in 2000. At that time, the price of oil was in the middle to high $30s per barrel.

Snow was asked his view about whether, considering the overall situation, the price of oil should go down soon. The Organization of Petroleum Exporting Countries has raised its daily production quotas by 2.5 million barrels a day this year.

"I think the price is above what's justified by the fundamentals of the marketplace," Snow said. "It's out of line with the fundamentals, and there will be a movement back toward the fundamentals, which means a lower price. Yes," Snow said.

Snow said part of the solution to the current problem would mean lessening the United States' reliance on imports by enacting the administration's proposed energy policy.

"The president sent to the Congress three years ago legislation to make us less dependent on these uncertain foreign supplies," Snow said. "It passed the House twice; it's time for the Senate to act."

The proposal is given little chance of passage. Democrats and moderate Republicans reject the bill because it would do nothing to promote fuel economy.

Also, an administration proposal to recover oil from Alaska's Arctic National Wildlife Refuge has met strong opposition. The refuge represents the biggest untapped U.S. oil resource, but the Energy Department has acknowledged that production there would slow the growth of imports only modestly.