WASHINGTON, June 7 (Reuters) – The BP oil spill crisis has put U.S. President Barack Obama on the defensive, upsetting his agenda and threatening to derail his fellow Democrats as they position themselves for November’s congressional elections.

Obama had been expected to spend the summer focused on rebuilding the U.S. economy and pushing through major items on his domestic policy agenda such as an overhaul of energy legislation and sweeping financial regulatory reform.

He had also set a busy international schedule, with a trip to Indonesia and Australia and a G20 summit both set for this month.

But the administration’s resources are being drained by the massive Gulf of Mexico oil spill, even as it grapples with issues like last Friday’s worrisome jobs report and looks toward elections in which the Democrats will struggle to keep their majorities in the House of Representatives and Senate.

Things could get far worse — for the country and Obama — if BP fails to stop the flow, causing not just an ecological disaster but an economic one, with millions of jobs lost in tourism, fishing, oil drilling and other coastal industries.

BP (BP.L) said it made progress over the weekend capturing an increasing amount of oil spewing from the ruptured well.

“If there are long-term consequences, if the oil hits the beaches of the Gulf, if it goes around Florida and up the East Coast, that will be a terrible situation for the president because he would get the blame,” said Merle Black, a professor of politics at Emory University in Atlanta.

“He’s not in charge of the situation, but it happens on his watch. It always works out this way,” he said.

Obama has been the subject of scathing criticism, including from fellow Democrats, that he took too long to pressure British-based BP to stop the gushing oil and failed to engage emotionally with coastal residents whose lives could be ruined by the disaster.

But analysts noted that Obama’s job approval ratings had held steady through the spill, at about 47 percent, a sign the public has not drawn a final conclusion about his handling of the crisis.

That could be good news for the Democrats, especially given Republicans’ traditional close ties to Big Oil, with the most intense anger over the spill focused on BP.

On Nov. 2, U.S. voters will elect 435 members of the House of Representatives and 36 of the 100 seats in the Senate. The Democrats are expected to lose seats due to discontent over unemployment, and the oil disaster could further dent their support if Obama does not handle it well.

“It depends on whether the spill is contained or whether it gets bigger and bigger,” said Black, who said public opinion around the early September Labor Day holiday was typically the best indication of how the election would go.

UNDERSCORING DOUBTS ABOUT GOVERNMENT

If the spill is not controlled, it could underscore a growing sentiment among many Americans that major institutions, including the federal government, just do not work, said William Galston, a former Clinton administration aide now at the Brookings Institution in Washington.

“Unless this is turned around very quickly, it will feed into an overall narrative that will create an environment of frustration going into the fall,” he said. “And I find it difficult to believe that it will be good for incumbents. And there are more Democratic incumbents than Republican incumbents.”

The Gulf crisis has dominated Obama’s recent remarks and public appearances — he shortened his holiday weekend in Chicago to visit the Gulf, and discussed the spill during a speech on the economy last week in Pittsburgh.

Despite aides’ insistence the president can handle several issues at once, the administration announced on Friday that Obama had canceled his trip to Indonesia and Australia to stay home and deal with the spill.

“When you get right down to it, the White House isn’t that big a place. There are not that many people there in senior policy-making positions, and at some point as problems accumulate, it becomes harder and harder to give each one of them the attention it deserves,” Galston said.

Obama made his second trip to the Gulf in seven days on Friday, and his third since the crisis began.

A CBS News poll released on Friday found that 63 percent of Americans felt the Obama administration should be doing more in response to the spill, and only 28 percent believed the government was doing all it could.

BP scored only slightly worse, with 70 percent believing it should be doing more and 24 percent saying it was doing everything it can.

The widespread public perception that Obama’s administration has failed to adequately address the ecological and economic crisis has damaged his reputation as a calm and capable leader, even though aides say the federal government cannot be expected to have the expertise to plug a broken well far under the sea.

If Obama had been able to convince Americans earlier on that he was in command, he might have been able to travel this month as he had planned, leaving the public confident he could deal with BP even from the other side of the globe.

“A creative writer … would be hard-pressed to come up with a plot in which a British oil company not only fouls the world-renowned Gulf oyster but also derails a significant element of U.S. foreign policy in Asia,” wrote Ernest Bower, director of the Southeast Asia Program at the Center for Strategic and International Studies in Washington. (Editing by Alistair Bell and Peter Cooney)