Obama vows to dampen fuel prices, calls for reform

By Jeff Mason

WASHINGTON (Reuters) - The United States must reduce its dependence on oil and begin to reform energy policy, President Barack Obama said on Friday, pledging to do all he could to keep gasoline prices low.

Obama, whose prospects for re-election in 2012 may hinge partly on fuel prices and their effect on the economy, said the world could manage oil supply disruptions stemming from unrest in Libya and violence across the Middle East and North Africa.

He said he was prepared to tap U.S. strategic oil reserves quickly if necessary, though he declined to say what price oil would have to hit in order to trigger such intervention.

The White House has emphasized repeatedly that Obama is aware of the strain that rising fuel prices place on Americans' budgets. The White House rejects criticism from Republicans that its policies have led to less domestic oil production -- a theme that may surface in the 2012 campaign.

Defending his policies and promising more action, Obama told a news conference that domestic production alone is not the answer to U.S. energy woes.

"If we want to secure our long-term prosperity and protect the American people from more severe oil shocks in the future, the way to do it is to gradually reduce demand and then do everything we can to break our dependence on oil," he said.

VOTERS WORRIED

A Reuters/Ipsos poll this week showed the proportion of people who believe the United States is on the wrong track rose 7 percentage points to 64 percent from February.

Ipsos pollster Cliff Young said the rating was a result of the higher fuel prices. "Gas prices specifically are things that affect people's pocketbooks and have an immediate impact," he said.

When Obama came into office he promised a broad overhaul of U.S. energy and climate policy, but legislative efforts stalled in the U.S. Senate. Republican gains in last year's congressional elections forced the White House to scale back its energy proposals dramatically.

Obama signaled, however, that rising fuel prices could be an impetus for tackling changes again.

"Every few years, gas prices go up, politicians pull out the same old political playbook and then nothing changes. And when prices go back down, we slip back into a trance, and then when prices go up, suddenly we're shocked," he said.

"I think the American people are tired of that."

U.S. House of Representatives Speaker John Boehner said the Obama administration is to blame for not doing enough to bolster domestic production.

"While the Obama administration claims to be committed to American energy production, the facts and its own actions say otherwise," he said in a statement.

(Additional reporting by Steve Holland, Tabassum Zakaria, Timothy Gardner; editing by John Whitesides)