www.smh.com.au February 3 2003

Crude oil prices, which reached a two-year high in London last month, might drop in the second quarter because of excess supply, the president of OPEC said.

"If Venezuela's oil output recovers in the coming weeks, we could see 3 million barrels per day of oversupply in the second quarter," Abdullah bin Hamad al-Attiyah said in Abu Dhabi before an environmental conference.

The Organisation of Petroleum Exporting Countries would be unable to reduce prices now because of "political crisis" in Iraq, said Mr al-Attiyah, who is also the oil minister of Qatar.

Oil prices in New York have held above $US30 a barrel for six weeks, the longest period in two years. A $US5 to $US10 drop would ease pressure on economies in the US and Europe, where growth has slowed and oil demand has stagnated since 1999. The unemployment rate in the US, the world's largest oil consumer, has risen to 6 per cent. In Germany one in 10 workers is jobless.

OPEC agreed last month to increase quotas by 1.5 million barrels to 24.5 million barrels a day starting last Saturday. The move was intended to push prices below $US28 a barrel and allow some members to make up for a shortfall from Venezuela, where a two-month nationwide strike has crippled oil exports.

"Venezuela could reach 2.6 million barrels a day within weeks," Mr al-Attiyah said. "It looks like the strike in Venezuela is coming to an end."

OPEC might be forced to cut quotas when they meet on March 11 in Vienna, he said. "We will have to study the possibility of an oil surplus."

Demand for oil will drop by about 2.5 million barrels a day in the second quarter, compared with the first, Saudi oil minister Ali al-Naimi told reporters at a press briefing in Abu Dhabi. International inventory levels were on the low side, particularly in the US, he said.

Officials from Saudi Arabia, the top producer among OPEC countries, Qatar, Kuwait and the United Arab Emirates have said they can do nothing to lower oil from about a two-year high because the threat of war with Iraq is inflating prices.

"What more can they do," said Salim Shaban, deputy oil minister of Oman, the sixth-largest Middle East oil producer and a non-member nation that has cooperated with OPEC to bolster prices. "You could see oil prices fall by a third if the Iraq issue were solved tomorrow," he said.

Most OPEC states are pumping as much oil as they can to fill a gap caused by a nine-week strike in Venezuela.

www.news-miner.com72521153333,00.html Article Last Updated: Sunday, February 02, 2003 - 4:46:32 AM MST

We all know the deep, resonant clang that comes from beating an empty 55-gallon steel drum.

Unless Congress acts, it's a sound that could come from the trans-Alaska oil pipeline--even while there's North Slope oil still to be pumped.

To ensure we don't hear it, Sen. Lisa Murkowski last week proposed that Congress declare that the environmental documents supporting the recently signed 30-year federal pipeline right-of-way comply with federal environmental law. That simple act tells the courts that the documents cannot be challenged.

The measure, agreed to by the Senate and forwarded to a conference committee with the House as part of a national budget bill, removes the possibility that costly, protracted legal action over the documents could shut the pipeline when the current right of way, which is insulated in a similar manner, expires early next year.

With Alaska's treasury and the national and state economies so reliant on oil, a court-ordered pipeline shutdown is something we simply cannot risk, no matter how remote the possibility.

Sen. Murkowski's action, which drew immediate criticism from environmental groups, is nothing new. Rather, it is a wise reflection of what Congress allowed in 1973 when, at a time of the Arab oil embargo, it authorized the pipeline's construction and the awarding of the first 30-year right of way.

Two points made by Congress back then are relevant today.

First, Congress stated that the delivery of North Slope oil to domestic markets "is in the national interest because of growing domestic shortages and increasing dependence upon insecure foreign sources."

Today, the U.S. is still a major oil importer, and market insecurity again threatens those sources: A war with Iraq could destabilize that entire oil-producing region, and Venezuela, the world's fifth-largest oil exporter and a U.S. supplier, is suffering a lengthy strike that has cut its oil production in half. U.S. gasoline prices have risen for six weeks straight.

Second, Congress noted in 1973 that, "because of the extensive governmental studies already made of this project ... the trans-Alaska oil pipeline be constructed promptly without further administrative or judicial delay or impediment."

Today, the pipeline has again been the subject of extensive government study. The environmental document for the right-of-way renewal is more than 1,600 pages and was the subject of six public meetings around Alaska.

Now a third point exists in favor of legal protection for the pipeline.

Sen. Murkowski's proposal comes at a time when environmentalists are skillful fighters. Left without the congressional and White House support they enjoyed in the 1970s, they are turning more to the remaining branch of government, the judiciary, and are scoring major victories.

Since the arrival of the Bush administration, courts have upheld new clean air standards for vehicles and power plants, blocked oil and gas exploration in Utah and reinstated a Clinton-era rule to prevent logging and road construction in nearly 60 million acres of national forests, including areas of the Tongass National Forest in Southeast Alaska.

The successes haven't gone unnoticed at the Interior Department, where the undersecretary of natural resources and environment acknowledged recently that environmental groups have been highly effective in choosing their targets.

Pipeline critics say they were, until Sen. Murkowski's proposal, considering action against the current right-of-way renewal. It wouldn't have been the first time: In 1970 they used the courts to tie up the budding pipeline project for three years, ultimately leading Congress to overcome the challenge by bypassing environmental law.

Exempting a project from legal action, essentially denying a citizen the ability to sue, should be done sparingly. But in this case, and for the national interest and the well-being of Alaska, approval of Sen. Murkowski's proposal is the right decision for Congress to make and for the president to agree with.

We don't want to hear that hollow sound in the pipeline just yet.