Energy said to top a President McCain's policy list

ST. PAUL (Reuters) - John McCain would spend his first 100 days as president focused on energy policy, one area where he sees common ground with Democrats who will probably control Congress, his economic adviser said on Tuesday.

His choice of little-known Alaska Gov. Sarah Palin for his running mate came as a shock but the adviser didn't expect the Arizona Republican senator to pull any major surprises with his appointments of top Treasury Department staffers who will help direct the biggest financial regulatory overhaul in 70 years.

"He's going to arrive with a very aggressive agenda on energy," said Douglas Holtz-Eakin, McCain's top policy adviser, adding that Democrats and Republicans agree on the need to break the country's oil addiction, if not the method.

"At least there is some commonality (between the parties) and we can build on that," he said at a Republican panel discussion on McCain's policy priorities.

House of Representatives Speaker Nancy Pelosi, a California Democrat, reversed her outright opposition to offshore drilling last month.

Democratic presidential nominee Barack Obama has opposed lifting the congressional moratorium on drilling in federal lands off U.S. coasts, but now says he would support limited offshore drilling as part of broader legislation to help solve America's energy problems.

Interviewed by Reuters, Holtz-Eakin said offshore drilling was a viable shorter-term option while the country develops new energy technology.

"If we were to do more exploration in places like the Gulf, the outer continental shelf, we can get new product to market in something that looks like 3 1/2 to 5 years," he said. "That's important to get going because America needs options and alternatives to imported oil."

PALIN SHOCK

None of the five panelists, who included two congressmen and a member of President George W. Bush's cabinet, had met Palin and they acknowledged being surprised by the choice.

"Welcome to my life," quipped Holtz-Eakin. "This is business as usual for John McCain."

But while the unexpected move helped McCain reclaim the headlines after last week's Democratic National Convention, surprises aren't always welcome -- especially on Wall Street, which dislikes uncertainty.

Holtz-Eakin told Reuters separately that McCain understood how vital Treasury appointments would be for the next administration as lawmakers debated how to modernize banking regulations, many of which date back to the aftermath of the Great Depression.

"We do know that this is an important issue," he said, adding that there was "no question" that a McCain administration would address regulatory reform promptly.

He said the McCain campaign was studying a reform blueprint that Bush's Treasury Secretary Henry Paulson released in March calling for streamlining the patchwork of regulators and putting more power in the hands of the Federal Reserve.

(Editing by Howard Goller)

(To watch the full interview with Holtz-Eakin, click here)