Bush Reasserts Economic Reason for Gulf Policy : Security: But critics say oil supply is a stronger reason for defending Saudis than for freeing Kuwait.

Faced with mounting criticism that he has not adequately explained the reason for a possible attack on Iraqi forces in Kuwait, President Bush has returned to citing economic security as the major reason the United States is in the Persian Gulf.

The President had referred to the economic security issue when he first deployed U.S. forces in the region, warning that if Iraq took over Saudi Arabia it would control a sizable portion of global oil reserves.

But Bush, a one-time oilman himself, backed away from that rationale when critics charged that he was only trying to protect the interests of the oil industry.

Instead, until this week the White House had sought to portray the U.S. deployment as necessary to curb aggression in a post-Cold War world. It repeatedly rejected charges that the Bush strategy was designed merely to avoid higher prices at the gas pump.

But now, as the Administration again plays the oil card, critics are beginning to make the case that America’s economic interests in Kuwait are far less compelling than they are in Saudi Arabia, where U.S. troops are in a defensive posture.

“The question is, does the cost of an invasion (of Kuwait) outweigh what there is to gain?” asked Sen. Robert Kerrey (D-Neb.), a winner of the Medal of Honor in Vietnam and now a leading critic of Bush’s Persian Gulf policy.

“I come down on the side that says absolutely yes, the cost is too high,” Kerrey said.

Those who counsel patience, urging Bush to give the economic sanctions against Iraq time to work, say that the President will be on weak ground if he uses America’s reliance on gulf oil as an argument to support an invasion of Kuwait.

They underscore their point with one simple truth: The Western world has all the oil it needs today and will have plenty for the foreseeable future, even without supplies from either Kuwait or Iraq.

Saudi Arabia has seen to that. Since the Aug. 2 Iraqi invasion of Kuwait, a surge in production by the Saudis and other oil-producing countries has made up all of the supplies lost to the West by the embargo imposed on Iraq and occupied Kuwait, oil industry experts say.

Saudi oil production alone has doubled to more than 8 million barrels a day and is to rise to 8.5 million barrels daily by early next year.

In a new report this week, the Energy Department found that while 9% of the world’s oil production was lost because of the Iraqi invasion and the later trade embargo, those losses “should be fully offset in November by surge production by other countries,” primarily Saudi Arabia.

And oil analysts now say that the Saudis are widely expected to make the investments needed to ensure that the industry is capable of sustaining those high output levels indefinitely.

Now, even top officials of the Energy Department acknowledge that the loss of Kuwaiti oil has not caused an oil shortage or an energy emergency in the United States.

“In the sense that the oil has been made up, there is no immediacy” for the United States to regain access to Kuwaiti oil fields, said John Easton, assistant secretary of energy for international affairs and energy emergencies.

“Do you go in to liberate (Kuwait) simply to free lost oil?” Easton asked. “The answer is no, it’s been made up.”

Oil prices have soared since the Iraqi invasion, peaking at more than $40 per barrel when talk of an imminent U.S. attack was at its height. Those higher prices have forced the U.S. economy over the edge into a mild recession, economists now believe.

But most analysts say that much of that spike in oil prices resulted from a premium placed on prices by traders fearful that a war would devastate the huge Saudi oil fields.

Analysts said this week that a prolonged stalemate that kept Iraqi and Kuwaiti oil off the market would bring oil prices down below $25 a barrel, only a little higher than the $21-a-barrel benchmark price set by the Organization of Petroleum Exporting Countries before the Iraqi invasion.

“It sure looks like we can get by without Kuwait and Iraq,” said Philip Verleger, an oil expert at the Institute for International Economics in Washington.

“Our strategic interest in the Persian Gulf is to keep Saddam Hussein from dominating oil,” said James R. Schlesinger, who served both as secretary of energy and secretary of defense during the Jimmy Carter Administration. “He doesn’t do that with just Kuwait.”

So, while Congress and the rest of the nation have provided broad support to Bush’s efforts to defend Saudi Arabia and its enormous oil reserves, that consensus may rapidly erode when the Administration moves beyond the defense of Saudi Arabia to a strategy calling for a costly attack to liberate the much smaller--and less economically critical--oil fields of Kuwait.

Certainly, few of Bush’s critics would be willing to allow Hussein to annex Kuwait permanently. They recognize that, if left unchecked, the Iraqi dictator could intimidate the other major oil producers and thus largely control world oil prices.

Indeed, most congressional leaders who now question the need for an offensive military strategy say that they would support military action to dislodge the Iraqi forces at some point in the future.

“The issue is that his behavior could intimidate Saudi Arabia and other producers into following Iraqi pricing policies,” one Senate staffer noted.

“We don’t want to have one person with hegemony over the world’s oil fields,” added Daniel Yergin, director of the Cambridge Energy Project.

Still, some critics don’t believe that Bush has yet made a case for an immediate invasion--at least not on economic grounds.

“I have supported the President’s moves to defend Saudi Arabia and to apply sanctions against Iraq,” said California Rep. Henry Waxman (D-Los Angeles).

“But we are functioning (economically) reasonably well now, so I believe we can leave the sanctions in place for a time and see how they work. If they aren’t working six months from now, then we have further decisions to make.”