One Army official acknowledged Tuesday that while all active Army units serving in the war zone are "100 percent" ready, the situation is not the same for those at home.

"In the continental United States, there are plenty of units that are rated at significantly less than a C-1 rating," said Lt. Col. Carl S. Ey. "Backlogs at the depots, budget issues and the timeliness of receiving funds to conduct training are all critical to the Army's ability keep their force trained, ready and at the highest readiness level possible."

Once a taboo subject for the military, often buried deep in classified documents, readiness levels - generally ranked from C-1 (the best) to C-4 (the worst) are now being used as weapons themselves to force money out of Congress and the administration.

And while Army officials still won't specify how many units are at which levels, they are being more open about the overall declining state of readiness.

A key element of the problem is that Army units returning from the war have either left tanks, trucks or other equipment behind or are bringing them home damaged. Once back, many soldiers either leave the Army or move to other posts, forcing leaders to train others to replace them. As a result, the unit's ratings drop, said Ey, an Army spokesman.

Last week, several House Democrats said publicly that two-thirds of the Army brigades are rated not ready for combat, and Army officials have not disputed that figure. On Tuesday, Sen. Christopher J. Dodd, D-Conn., also declined to be specific, but said the Army is "very much worse off" than it was in late 1999 when the military said two of the 10 Army divisions were ranked at the lowest readiness level, C-4. At the time, two divisions equaled six brigades.

The issue gained political momentum when then-candidate
George Bush, during his nominating convention, said the Clinton administration let the U.S. military might erode. Now, as the 2006 elections approach, Democrats are saying the Bush administration is shortchanging the military.

The Senate late Tuesday agreed to an amendment, offered by Sen. Ted Stevens, R-Alaska, to add $7.8 billion for the Army and $5.3 billion for the Marine Corps to the defense spending bill for 2007. The added funding would bring the bill to a total of $467 billion, including $63.1 billion for the wars in Iraq and Afghanistan.

Stevens said the new $13.1 billion is for equipment repair and replacement, and to meet the requirements for continued combat operations, primarily in Iraq. The Senate planned to continue debate on the bill Wednesday.

Stevens said earlier that lawmakers were talking with the
Pentagon "to see if they really need that money." Congress members, including Senate Armed Services Chairman John Warner, R-Va., discussed the issue at a breakfast meeting with Defense Secretary Donald H. Rumsfeld in the Pentagon late last week.

In addition to the National Guard's needs, the Army has said it needs $17 billion this year to meet its equipment and combat needs. Dodd said Tuesday he wants to see the Army's full request met, and he plans to offer an amendment to do that later this week.

The Army's readiness score is based on four factors: whether a unit has all the equipment needed; whether the equipment is working; whether it has the number and types of personnel needed; and whether they are properly trained.

"Now more than ever, America needs American energy," Senate majority leader Bill Frist said Tuesday just before the vote.

The bill's boosters say that if signed into law, the bill would make available enough natural gas to heat and cool about six million homes for 15 years.

The Gulf of Mexico acreage has been protected by a drilling moratorium for the last 25 years, which Congress has renewed annually, to protect the sensitive coastal environment.

Environmental groups have raised concerns about lifting the long-standing drilling prohibition, saying doing so only feeds the insatiable US demand for fossil fuel, while calling for the development of alternative energy sources.

The bill now goes to a conference committee to reconcile House of Representatives and Senate versions, but substantial differences between the two versions may mean trouble in creating a single piece of legislation that can be submitted for US President George W. Bush's signature.

U.S. light, sweet crude for September delivery rose 35 cents to $75.26 a barrel by 0715 GMT, rising for a third session and extending Tuesday's 51-cent gain. London ICE Brent crude rose 39 cents to $76.28 a barrel.

Analysts said prices would be driven more by fundamentals that could trigger supply disruptions such as the looming hurricane season and falling U.S. inventory levels than political tensions in the next one to two months.

"There are many bullish factors now. But I believe the hurricanes and U.S. stock levels will have more impact than the issues going on in the Middle East," said Tetsu Emori, chief commodities strategist with Mitsui Bussan Futures in Tokyo.

"The impact of the political situation is more psychological. For example, I don't think Iran will stop exporting oil, simply because they need the money. They are not crazy, I hope."

Tropical Storm Chris, the third named storm of the Atlantic hurricane season, brushed the Caribbean's northern Leeward Islands on Wednesday and could become the year's first hurricane bound for the Gulf of Mexico this week, U.S. forecasters said.

The Miami-based National Hurricane Center said Chris was set to strengthen and could become a hurricane later on Wednesday as it moved on a track that could take it into the Gulf of Mexico, where it could damage U.S. oil and gas facilities.

U.S. STOCKDRAW SEEN

U.S. gasoline stocks are forecast to have fallen by 1.6 million barrels to 211 million barrels for the week ended July 28, having consistently fallen over the past three weeks, a Reuters survey showed.

Crude stocks are expected to have dropped by 700,000 barrels but distillates, which include heating oil and diesel, are set to show another build, by about 700,000 barrels. The U.S. oil stock data are due at 1430 GMT.

In the Middle East, Israeli commandos snatched five suspected Hizbollah militants deep inside Lebanon on Wednesday, in a raid Lebanese security sources said killed at least 19 civilians as Israel sought to maximize the damage to Hizbollah before diplomatic efforts can bring about an end to the war.

U.S. Secretary of State Condoleezza Rice said a ceasefire could be reached within days and Israeli Prime Minister Ehud Olmert also saw movement toward a ceasefire now that Hizbollah had suffered what he said were heavy losses.

"We are at the beginning of a political process that in the end will bring a ceasefire under entirely different conditions than before," said Olmert, without giving any immediate time-frame.

Adding to worries over supplies, an Iraqi pipeline carrying crude from the country's northern oilfields to Turkey's Ceyhan port was bombed, pushing back the planned restart of exports along the route.

Concerns over Iran persisted as President Mahmoud Ahmadinejad insisted on the country's right to produce nuclear fuel, despite a United Nations resolution demanding that Tehran suspend its nuclear activities by August 31 or face the threat of sanctions.

And in Russia, daily oil production inched down in July to 9.68 million barrels after reaching a post-Soviet high of 9.69 million barrels in June, Energy Ministry data showed.

"GM and GMAC are now working with the consortium to consider ways to try to avoid delaying the targeted closing date until 2007," GM said in a filing with the U.S. Securities and Exchange Commission that came after the close of trade.

Shares in GM slipped 1.5 percent to $30.80 in after-hours trade from a New York Stock Exchange close of $31.30.

That disclosure marked a reversal from last Wednesday when GM chief financial officer Fritz Henderson said that the deal was on track to close in the fourth quarter.

GM said prospects for the GMAC closing had been complicated by a move Friday by the Federal Deposit Insurance Corp., which announced a six-month moratorium on approving the change in control of industrial loan companies.

Obtaining FDIC clearance had been a condition for closing of the GMAC sale, GM said.

GM's deeper quarterly reported net loss marked the second consecutive quarter that the world's largest automaker has had to revise results because of changes in its accounting treatment of charges.

In Tuesday's SEC filing, GM said its revised net loss for the second quarter was $3.4 billion, or $5.97 per share, compared with the loss of $3.2 billion, or $5.62 per share reported last week with its quarterly results.

The Detroit-based automaker said it had increased its after-tax charge to $690 million from $490 million to reflect a difference between the book value and taxable value of several, unspecified GMAC subsidiaries.

On Wednesday, when GM reported its second-quarter results Henderson had told financial analysts that the GMAC deal was on track.

"We do expect to close the sale of our 51-percent controlling interest to the Cerberus-led consortium in the fourth quarter of this year. We have done a lot of work. There is a lot of work underway within GMAC and by the corporation to facilitate this, along with Cerberus and the consortium," Henderson said then.

GM shares, which have gained over 60 percent since the start of the year, rose sharply on Wednesday, as traders reacted to evidence that the automaker's cost-cutting efforts were showing results in adjusted earnings.

GM said its operating earnings, which exclude one-time charges, were not affected by its revision to its net loss for the second quarter.

GM and chief executive Rick Wagoner both came under tough investor scrutiny over accounting practices in March, when GM delayed filing its 2005 annual report and disclosed accounting errors going back to 2000.

At the time, those accounting errors were seen adding to the pressure on Wagoner, who had risen through the ranks of the automaker's financial operations.

In April, GM's board issued a statement announcing the GMAC sale and offering an endorsement for Wagoner's leadership. In May, GM said it would restructure its corporate controller's office and hire an outside advisory firm to help with its accounting and financial reporting.

More recently, GM's largest individual investor, Kirk Kerkorian, proposed that the automaker ally itself with Nissan-Renault, a move widely seen as keeping pressure on Wagoner for a faster turnaround.

Many analysts, however, read GM's improved operating results for the second quarter as vindication of Wagoner's cost-cutting plans for the automaker, which is closing 12 plants and has cut over 34,000 factory positions through buyouts and early retirement offers.