www.globeandmail.com Bloomberg News Thursday, January 30, 2003 – Page B22

Crude oil rose almost 3 per cent yesterday as U.S. inventories fell and U.S. President George W. Bush signalled that he was moving closer to an attack on Iraq.

Mr. Bush said yesterday that Iraq's ties to terrorists make it a danger, and said "the full force and might" of the U.S. military was available to disarm the country. An attack would threaten oil from the Persian Gulf, which accounts for almost a fourth of U.S. imports. The Energy Department said U.S. supplies were down 14 per cent from a year ago after falling last week.

"Prices will soar the moment it's clear an invasion is imminent," said Marshall Steeves, an analyst with Refco Group Ltd. in New York. "They could easily pass $40 [U.S.] a barrel. Once it's clear that the U.S. is about to take the oil fields, there will be a major collapse."

Oil has rallied 23 per cent during the past two months on concern that there might be a war in Iraq and as a strike in Venezuela disrupted exports.

The surge in crude oil yesterday helped pull gasoline futures to a 20-month high and heating oil to the highest price in two years.

Natural gas futures rose 4 per cent after freezing U.S. temperatures boosted heating demand in the past two weeks, shrinking fuel supplies that were already down from last year.

Analysts estimated that gas inventories fell 12 per cent last week after declining 9.6 per cent the previous week. That would be the largest single-week decline in three years and leave supplies down 27 per cent from last year, raising concern that production this year won't be enough to build supplies sufficiently before next winter.

"The trading community is looking for a very large drop" in stored supplies, said Joe Terranova, director of trading for MBF Clearing Corp. in New York. "It's much larger than you've seen in years past. It's suggesting that the demand is far greater, and supply is slightly less than what it needs to be to meet the demand."

www.nytimes.com By ENRIQUE KRAUZE

MEXICO CITY — Focused on its enemies, the Bush administration has forgotten its friends. Only one world region went entirely unmentioned in the State of the Union speech: Latin America. In another, far distant age — five days before terror struck New York and Washington — President Bush pledged a new alliance with President Vicente Fox of Mexico, on the grounds that a strong Mexico makes for a stronger United States. After 9/11, however, everything changed.

All of Latin America now seems aware that the United States has returned to an essentially reactive diplomacy that seems to come to life only when there are missiles pointing at its shores, Marxist guerrillas in the jungles, or revolutionary governments in the old banana republics. This is unfortunate because Latin America (with the exception of Cuba) has for a decade been abandoning its old grievances, drawing closer to the United States, opting for democracy and rejecting militarism, statism and Marxism. What is needed to make Washington take this Copernican shift seriously and support it in tangible ways?

Maybe what is needed is for the miracle to end. And it may indeed end, if, in the face of American neglect, Latin Americans turn toward the biggest specter of the past: populism, the age-old temptation to put power in the hands of a heaven-sent strongman — yesterday in Alberto Fujimori's Peru, today in Hugo Chávez's Venezuela, and tomorrow perhaps in a charismatic Mexican politician.

Unfortunately, populist sentiment has been reinforced by Washington's mistakes. It lost democratic credibility by not condemning the coup against the populist but democratically elected Mr. Chávez. There was the scolding of Brazil and Argentina by Paul H. O'Neill, the former Treasury secretary, which sent their currencies tumbling. And there is the supreme shortsightedness of the economic blockade of Cuba.

More worrisome still is the administration's attitude toward its neighbor. The shelving of the 2001 immigration agreement was a mistake that has been compounded by new subsidies for American farmers, which fly in the face of the reforms required of Mexican agriculture under Nafta. Mexico's rural regions are its most sensitive. It was peasants who fought the Mexican Revolution 90 years ago, and it is from rural Mexico that the next explosion would likely come.

I agree with Mr. Bush that if Saddam Hussein is not evil "then evil has no meaning." But to combat evil, one must find strength in friendship. In dealing with the south, George W. Bush should try a different doctrine: pre-emptive cooperation.

Enrique Krauze is author of "Mexico: Biography of Power." This was translated from the Spanish by Natasha Wimmer.

www.abs-cbnnews.com Thursday, January 30, 2003 1:28:34 p.m

CARACAS, Venezuela - Venezuelan private banks decided on Wednesday (early Thursday in Manila) to restore normal working hours, delivering a fresh blow to a faltering 8-week-old opposition strike against leftist President Hugo Chavez.

But striking oil workers at the heart of the opposition campaign stayed firm in their shutdown, which has battered Venezuela's fragile economy and rattled energy markets by slashing crude output in the world's No. 5 petroleum exporter.

Commercial banks, which make up nearly 90 percent of the Venezuelan financial sector, had been operating for limited daily hours and restricting transactions since December in support of the strike to pressure Chavez from office.

"This is a result of demands from the public and deposit holders ... banks don't belong to their presidents," Federal banking group President Nelson Mezerhane said after banking associations voted to restore normal hours beginning on Monday.

Chavez, a populist former paratrooper, had threatened to seize striking banks, schools and factories to break the strike.

As the shutdown nears the two-month mark, backing for the protest in non-oil sectors has begun to fray as private businesses and stores reopen to fend off bankruptcy.

Opposition leaders, who brand Chavez's rule as dictatorial, inept and corrupt, offered on Tuesday to ease their strike by exempting food production and education. But they have vowed to stay out until Chavez accepts elections. The president, whose term ends in 2007, has so far shown no signs of accepting their proposals for an early vote.

But economic pressure is building on the government. With the strike disrupting oil exports that account for half of its revenues, the government plans to slash its budget and has suspended foreign currency trading while it prepares a fixed exchange rate to protect its reserves.

Battered by economic uncertainty, the local bolivar currency has plummeted more than 24 percent and Venezuela's international reserves have dipped more than 7 percent to $11.05 billion since the start of the year.

Venezuela's sovereign bonds climbed more than 1 percent on Wednesday as the cracks in the strike gave investors hope that stalled economic activity and oil output could recover.

Chavez, who was elected in 1998 and survived a coup last year, has dismissed calls for him to resign. Though his popularity has fallen sharply this year, he maintains a solid base of support among poorer voters who believe his left-wing reforms are the key to a better life.

The Venezuelan leader, who led a botched coup himself six years before his ballot box victory, has fought back against the strikers by firing oil workers and deploying troops and replacement crews to oil installations.

"To the oligarchs, the immoral traitors who are threatening to oust me from government I say you will not manage it," Chavez said in a national broadcast.

Still, attempts to restart the industry have had limited success. Crude production stands at about one third of the 3.1 million barrels per day the OPEC member produced in November.

The opposition, a loose alliance of political parties, unions and business leaders, has struggled to present a united front recently as they debate strategy to sustain the strike. Some are pushing for shopping centers and franchises to reopen to ease the toll on the weakened private sector.

But the creeping rollback has left a question mark over the future of thousands of striking oil workers, who are demanding fired colleagues be reinstated. That could prove a sticking point in negotiations to end the strike as the state oil firm PDVSA is now more firmly under government control.

Please send your comments or feedback to newsfeedback@abs-cbn.com

www.quicken.com Thursday, January 30, 2003 00:20 AM ET     Crimped by high oil prices and declining crude inventories, refiners are likely to hold off stockpiling gasoline for the spring, and that could result in sharply higher prices at the pump during the busy summer-driving season, Thursday's Wall Street Journal reported

Gasoline prices already have been climbing, pushed upward by the rising price of crude oil. The U.S. average retail price of a gallon of regular unleaded gasoline has risen 8% since early December to $1.47 as of Monday, and prices are expected to go even higher. The Energy Information Administration, the statistical arm of the Department of Energy, predicts an average price of at least $1.50 a gallon in February, a 40-cent-a-gallon jump above the same period last year, and of $1.54 a gallon by midspring.

Those forecasts don't take into account a possible war in Iraq and a subsequent disruption of oil from that Middle East country. A cold February, too, could result in refiners making more heating oil at the expense of gasoline.

The worrisome outlook comes as a strike in Venezuela, aimed at forcing President Hugo Chavez from office, has depleted U.S. crude-oil stocks about 5% since December to 273.8 million barrels. The EIA considers that "very low" -- 11% below the five-year average for this time of year.

Low crude-oil stocks have begun impacting gasoline production. Although nationwide inventories of gasoline are at 216.3 million barrels, about the same as a year ago, the EIA reported that the amount of crude run through U.S. refineries dropped last week by about 400,000 barrels a day to 14.6 million barrels a day, the lowest level since October.

Wall Street Journal Staff Reporters Thaddeus Herrick and Alexei Barrionuevo contributed to this article.

Dow Jones Newswires 01-30-03 0020ET

web.baytownsun.com Contact our news staff at (281) 422-8302. By Robbie Magness The Baytown Sun Published January 30, 2003

BAYTOWN — Heading into the spring season, Lee College’s Diana Martin is the best player on the best junior college tennis team in the nation.

Forgive her if she has other things on her mind.

Martin, 20, a sophomore from Valencia, Venezuela, has watched as a nationwide strike in opposition to the proposed policies of President Hugo Chavez has crippled the nation’s economy.

Here in Baytown, 2,200 miles away, Martin finds herself unable to visit her parents, cut off from her lifelong source of emotional and financial support. Talking about the home she has not seen since Christmas 2001, her voice remains strong, and she shows a remarkable grasp of her country’s sociopolitical structure, but her emotions clearly play across her face and in her voice.

“I have a lot of feeling going on because me and my family are really close, and I know they are having a hard time,” Martin said Wednesday, as the Lady Rebels stayed indoors following the afternoon rains. “It’s like my mind is not completely here with me. It has been real hard hearing all the stuff about the political system, how horrible Venezuelan citizens are doing right now. How are my family and friends? ... It hurts.”

Venezuela, on the northern coast of South America, has reached a 60th day in an opposition drive designed to strangle the world’s fifth-leading oil exporter and force Chavez to step down or call for elections.

While Chavez so far has refused to give in, the strike has put Venezuela on the verge of economic collapse, caused long-term damage to oil infrastructure and forced Chavez to extend his ban Tuesday on U.S. dollar purchases to preserve foreign reserves.

For Martin, that means her family cannot send money to help her with everyday expenses.

“My parents used to send me money just from their account ... They would transfer the money from Bolivars to dollars. ... I can’t get money from my parents anymore.”

Martin’s tennis scholarship includes tuition, fees, books and food, but the college has no on-campus housing, so there are living expenses. Martin shares an apartment with two teammates, Adriana Garcia of Mexico and Kalie Koening of West Columbia, Texas.

“The main things I need, thank God, the scholarship gives to me,” Martin said. “But, when it comes to bills and all that, that’s when I need the money. ... They have supported me since I was 16. They have sent me all the money I need. Everything I need, they have been there for me.”

Martin came to the United States when she was 16, spending most of two semesters at Troy State University in Alabama learning English. At 18, she took an internship at the John Newcombe Tennis Academy in San Antonio, where she both taught and learned the game.

Lee College coach Jason Haynes saw her there, and she joined the Lady Rebels in January 2002. She is ranked No. 2 individually nationwide, and the defending national champion Lady Rebels are ranked No. 1. There is much to enjoy, but perspective can dull the shine on such things.

“I’ve never had to work in my life, like work for money,” Martin said. “At Newc’s (Newcombe Tennis Academy), I was in an internship. I was learning. But this is actually my first time that I’ve got to step up for myself and start getting my money somehow. That’s kind of weird. And I’ve got to do it. If not, I can’t pay my bills.”

Martin said she hopes to land an assistant trainer position with Lee College, and she will continue to help the team with summer camps, for which players receive some compensation.

Martin said she has missed her family all along, “but it wasn’t like I was worried about them or anything.

“Since the president got there, things have been changing, new laws that most of the people do not agree with. But nothing really bad, nothing as bad as it is right now. ... To be honest, I don’t think (Chavez is doing a good job). I think he is trying to be a communist instead of a democratic (president). ... He is a really good friend with Fidel Castro. That’s a huge thing. Everybody’s scared because he’s listening to (Castro). Let’s hope he doesn’t want to turn Venezuela into Cuba.”

Martin said one of the policies Chavez tried to implement which most affected her family was an “equal society” system, under which landowners with large holdings would be forced to give up some of the land. This was particularly important to the Martin family because Carlos Martin Jr., Diana’s father, is an administrator of a large ranch in Venezuela, the former King Ranch. Her mother, Elizabeth, and one brother, Julio Castrillo, 30, round out her immediate family.

“(Chavez) was trying to make it a law,” she said, “but in the end, it didn’t happen. But when people hear this, they try to go over the ranch and take over, and it was a pretty rough time.”

Martin said two people working as security for the ranch were shot and killed in such a clash.

It’s just one more thing for her to worry about as she tries to focus on graduating, tennis and what she will do after Lee College. She admits to having “no idea what to do next” but says she wants to stay in Texas, partly because of her boyfriend of two years, Jason Wilson.

Wilson, of Marble Falls, recently moved from San Antonio to Houston to be closer to Martin.

“I would like to believe that,” Martin says with a laugh. “I don’t know if it’s true, though.”

Meanwhile, her concerns for her family are never far from the surface.

“I would love ... to really believe that this is gonna end real soon, but I don’t see it at an end anytime (soon). ... I was supposed to go at Christmas with them, and I couldn’t, and that was a big deal for me — my first Christmas without my parents. That was hard for me. Martin reassured herself with the thought that she could go for spring break instead, but that possibility is dimming as well.

“Now that I’m seeing how it’s getting long,” she said, “I don’t think I’m gonna get to go. I would love to believe that it’s gonna end shortly, but ...”

Her voice trails off as she thinks beyond her family to her downward-spiraling homeland and the president at the heart of what amounts to a civil war — one that thankfully has not given way to full-blown violence.

“I think (Chavez) has a lot of pressure from the population, and he knows that everyone is against him,” she said. “I don’t think a country can last this long in the same situation that it is. I don’t think it could last six months more because this is ridiculous. They have no food.

“I say thank God they are on the ranch, my parents, because they can (get food), but for the people who don’t have that opportunity, the country’s just going straight down, and the petroleum and the economic system is going down. I would say that if the population keep up with what they are doing, I think sooner or later he’s gonna give up.

“It seems so funny to me. I’ve seen interviews of him on the TV, like with another country, and he’s like, ‘In my country, nothing is happening.’ And I’m sitting here, and I’m saying, ‘Come on. How can you lie in front of everyone?’ I think he’s trying to (make) other countries believe that nothing is happening, but he knows it is.”

She said the press in Venezuela is fairly free from government control and that, despite the rhetoric, the people “definitely” know what’s going on.

Forty years ago, Martin’s grandfather, Carlos Martin, left behind wealth and property in Cuba and fled with his family to the United States, after telling Castro he could not live under a communist regime.

The family spent nearly 20 years in the United States before resettling in Venezuela. Now, Martin’s grandmother, Annamaria Martin, says she is “reliving Cuba.”

It’s one more worry piled on an already overburdened Diana Martin. So well versed in the real world, she allows herself at least a fleeting moment of fantasy.

“One of my dreams,” she said, “is the United States going down there and taking over that country. That would be my dream. I know it’s not gonna happen, but that would be my dream.”