Bush Names Treasury’s No. 2 to Head Energy

President Bush on Friday nominated Samuel Bodman, a former MIT chemistry professor and business executive who has held senior positions in both the Commerce and Treasury departments, to become the nation’s next secretary of Energy.

Bodman, who has been serving as second-in-command at the Treasury Department, is considered a seasoned government administrator with deep knowledge of the technical and economic aspects of energy issues. He would replace Spencer Abraham.

But Bodman would face daunting challenges as Energy secretary, including a renewed push for Bush’s controversial national energy plan, looming decisions on nuclear waste disposal and possible political challenges from within the administration.

Moreover, at a time of volatile oil prices, a declining dollar and rising federal deficits, energy is a highly charged element of overall economic policy.

“It will be part of fixing the U.S. economic problem,” said Philip K. Verleger Jr., a senior fellow at the Institute for International Economics and a former Treasury official. “We have a weak dollar. We have a zero savings rate. There is a real risk of an economic meltdown. With a weaker dollar, oil prices could go way up.”

Verleger praised Bodman, saying, “For once we’ll have a secretary of Energy who actually knows a good deal about the subject and will be pretty well plugged in.”

In making the appointment, Bush vowed to renew his campaign to reduce U.S. dependence on foreign energy supplies and urged Congress to enact his energy plan, which has been stalled in part because it would allow drilling in parcels of the Arctic National Wildlife Refuge.

“I am optimistic about the task ahead, and I know Sam Bodman is the right man to lead this important and vital agency,” the president said during a brief White House ceremony.

Independent analysts said one of the biggest challenges facing Bodman would be making his presence felt in an administration in which energy policy had been largely dictated by two veteran oilmen: Bush and Vice President Dick Cheney.

“There’s a feeling in the industry that no matter who is at Energy, the really important decisions are made in the vice president’s office,” said Rick Mueller, senior oil analyst at Energy Security Analysis Inc., a Boston-based consulting firm. “Cheney definitely has hands-on experience in the oil patch and perceives himself as the administration’s energy guy.”

If confirmed by the Senate, Bodman would take the helm amid turmoil in global oil markets. Prices rose to record levels earlier this year as producers strained to keep up with rising demand and traders tacked on a “fear premium” to reflect the threat to oil supplies posed by the Iraq war, the risk of terrorist attacks and other possible disruptions.

“He’s got to be able to deal with rising prices, rising dependence on energy exports and the whole issue of energy security,” said Anthony Cordesman, an energy specialist at the Washington-based Center for Strategic and International Studies. “In the real world, energy is an international issue.”

Bodman would take over a department that also is responsible for securing the nation’s nuclear facilities, encouraging conservation, reducing the risk of global nuclear proliferation and upgrading the country’s energy infrastructure.

Bodman also may become the administration’s point man in lobbying Congress on the Bush energy blueprint -- a task that would test his political skills. On certain aspects of energy policy, some lawmakers are divided along regional lines rather than party lines.

One dispute is over whether new energy legislation should include legal protections for manufacturers of a gasoline additive that has been blamed for polluting water supplies.

House Majority Leader Tom DeLay (R-Texas), whose home state has produced the additive, has insisted on the provision. But some Republicans from states contaminated by the additive have objected, complaining it could force their taxpayers to pick up the tab for the cleanup.

Bodman also faces the task of completing plans to open a long-term storage facility for nuclear waste at Yucca Mountain in Nevada.

Another potential headache would be choosing a contractor to run Los Alamos National Laboratory, the nuclear weapons design lab managed for more than 60 years by the University of California.

UC’s Los Alamos contract expires in September. Last year, after the disclosure of management lapses at the lab, the Energy Department said it would open the contract to competition for the first time.

Congress later ordered that other national lab contracts, including Lawrence Livermore, also managed by UC, be put up for bid.

Bodman, 66, grew up in rural Illinois but spent most of his adult life in Boston, first as a chemical engineering student and then as a professor at the MIT. He left MIT in 1970 to join a fledgling investment firm, Fidelity Investments, and spent 17 years there, the last 10 as its president. Fidelity now is one of the nation’s largest financial services firms.

He next spent 15 years as chairman and chief executive of Cabot Corp., a specialty chemical manufacturer in Boston. He moved to Washington nearly four years ago to become deputy secretary of Commerce, a department headed by Don Evans, one of the president’s closest friends.

In February, Bodman moved to the Treasury Department, also as the deputy secretary.

At both Commerce and Treasury, Bodman largely supervised the day-to-day operations.

Bodman said the Energy secretary post “in many ways, combines all aspects of my life’s professional work” in that each job “dealt with the financial markets and the impact of energy and technology on those markets.”

He vowed to help the president “ensure a steady supply of affordable energy for America’s homes and businesses, and to work toward the day when America achieves energy independence.”

If confirmed, Bodman would replace Abraham, a former U.S. senator from Michigan, who was the 10th and longest-serving Energy secretary.

Bodman’s nomination was hailed by key GOP lawmakers, including Sen. Pete V. Domenici (R-N.M.), chairman of the Energy and Natural Resources Committee. He said Bodman “understands the critical role of science, research and advanced technologies will play in meeting our energy challenges.”

With Bodman’s nomination, the president has two more Cabinet positions to fill -- at the Department of Health and Human Services and the Department of Homeland Security.

Times staff writers Richard Simon in Washington and Rebecca Trounson in Los Angeles contributed to this report.