Obama says Wall St bailout may cut his energy plan

OXFORD, Mississippi (Reuters) - U.S. Democratic presidential candidate Barack Obama said on Friday that if elected he might have to scale back his plan for energy investment to help pay for a proposed $700 billion financial industry bailout.

"I want to make sure that we are investing in energy in order to free ourselves from dependence on foreign oil. Now, that is a big project. That is a multi-year project," Obama said in a televised debate with Republican rival John McCain.

"I'm not willing to give up the need to do it, but there may be individual components of it that we can't do," Obama said.

Obama did not give details on what part of his energy plan might have to be cut, but he added, "we're not going to be able to do everything" because of the high cost of the bailout.

The U.S. Congress is trying to hammer out a $700 billion rescue plan with the Bush administration to prevent the financial industry crisis from worsening and engulfing the U.S. economy. The issue dominated the start of the first of three presidential debates ahead of the November 4 election.

Obama said he wanted to free the United States from reliance on Middle East oil imports within 10 years by boosting U.S. oil production, investing in alternative energy sources and building more fuel efficient cars.

McCain said he would eliminate billions of dollars in federal ethanol subsidies to help cover the cost of the Wall Street bailout.

Separately, Obama said he supported oil drilling in U.S. offshore areas now closed to energy exploration.

McCain also backs expanding offshore exploration, but he would open more areas than Obama would.

"We know that if we drill offshore and exploit a lot of these (oil) reserves, it will help, at least temporarily, relieve our (foreign) energy requirements," McCain said during the debate.

Congress will allow a ban on drilling off the U.S. East and West coasts -- in place since the early 1980s -- to expire at the end of the month.

However, government energy officials say it would take five to 10 years before any oil supplies pumped from opening new offshore areas to drilling would be available in the market.

(Writing by Tom Doggett in Washington, Editing by Frances Kerry)