Posted on Sat, Feb. 08, 2003 www.charlotte.com Carolinas see cost jump almost a dime in month DIANNE WHITACRE Staff Writer

Gasoline prices in the Carolinas have jumped almost a dime in the past month, and one analyst says the likelihood of war in the Mideast could send them to near $2 a gallon.

Pump prices nationwide are at the highest level in 17 months, since the terrorist attacks in New York and near Washington.

On Friday, major suppliers, including Exxon and Phillips raised prices at their terminals by 5 to 7 cents a gallon -- a rise that will soon show up at local stations.

"In the next 90 days, we could see fuel price swings (upward) of 10 to 15 cents a gallon each week," said Tom Kloza, chief oil analyst at the Oil Pricing Information Service, a leading tracker of the petroleum industry.

North Carolina's average price for a gallon of regular grade is $1.518, up more than 9 cents in the past month. South Carolina has seen an 8 cent increase, to $1.454, according to AAA Carolinas and OPIS.

Currently, Charlotte has some of the lowest gas prices in the state, averaging $1.489 for regular, a nickel cheaper than Raleigh and 3 cents less than Greensboro.

The U.S. average is $1.557 a gallon, up 9.5 cents in the past month. It's $1.425 in Atlanta (up 9.4 cents); $1.63 in Washington, D.C. (up 5 cents); $1.704 in Los Angeles (up 10.5 cents), and $1.647 in Chicago (up 12 cents).

Jackie Andrews of Charlotte's Coulwood neighborhood paid $1.49 a gallon Friday at a South Boulevard station.

"I know it was at least a nickel cheaper last week," she said. "I don't need a full tank, but I wanted to fill up before it went up again."

Unrest in the Mideast could affect gasoline supplies for many months, said Stanley Black, an economics professor at UNC Chapel Hill. "I'm afraid we are in for a long siege of increasing prices."

The U.S. Department of Energy says colder-than-normal weather and reduced oil supplies from Venezuela also have fueled the higher prices.

The United States imports 55 percent of its petroleum. If war begins, shipping costs from the Mideast will rise, analysts say.

Crude oil is selling at $34.50 a barrel, up $12 in a year. The price could reach $40 a barrel if war breaks out with Iraq, said Mark Mahoney of OPIS.

Wholesale gasoline prices also are surging. A month ago they were 85 cents a gallon in the Southeast and now are $1.05 a gallon, said Fred Rozell, retail pricing director with OPIS.

Those higher prices show up at the pump about 10 days later, he said, when cheaper gas sells out.

Gas prices generally fall slightly at this time of year as refineries switch from heating-oil production to gasoline.

Heating oil is up 37 cents a gallon in the past year, including almost 4 cents in the past week, according to the U.S. Department of Energy, and averages $1.53 a gallon nationwide.

The cold winter increased demand for heating oil, which reduces gasoline production.

Dianne Whitacre: (704) 358-5099; dwhitacre@charlotteobserver.com

Saturday, February 8, 2003 www.canoe.ca By CAROL HARRINGTON, CP

CALGARY -- Canadian drivers and businesses that guzzle lots of fuel are pumped with anger over gasoline prices spiking because of war fears and concerns about world oil supply. Dane Baily, vice-president of the Canadian Petroleum Products Institute, said he has had a barrage of phone calls this week over pump prices that jumped at least six cents in some places. "A lot of people want to know when prices are going down," he said. "I do, too." Many of the calls are from Montreal where the country's most expensive gasoline was being pumped yesterday at 88.9 cents a litre. "It's too expensive. It's frightening," Pauline Paquette, a Montreal motorist, said while filling up her vehicle. "It's had an effect on my business," Dennis Doehl, owner of Jay's Moving and Storage, said from Regina where gasoline was 81.9 cents a litre. "When people move, they have to move. It's just sometimes they do it themselves if our prices get too high because of gasoline prices." Energy experts are blaming geopolitical events -- a looming war in Iraq, a national strike in Venezuela that has affected oil production and a 26-year low in U.S. oil inventories. But the pump pain isn't over yet, according to Wilf Gobert, energy expert at Peters & Co. in Calgary. He predicts gasoline prices are likely to leap again if the United States actually attacks Iraq. "An attack on Iraq will temporarily further cause a price shock because everyone will be afraid of what the longer-term implication is," he said. There's also some doubt about whether Venezuela will be able to pump out as much oil as it previously has when the strike ends because pressure in oil wells there has dwindled, Gobert added. The topic of rising gasoline prices was raised in the Commons yesterday when Bloc MP Benoit Sauvageau asked Industry Minister Allan Rock if the federal government plans to do anything about the situation. "The prices are influenced by a whole host of factors and it's a provincial jurisdiction," Rock replied. Baily said provinces rarely get involved in gasoline prices, although the federal and provincial governments collect gas taxes. Gas prices are driven by crude oil, an international commodity that rides on supply and demand. Even though energy companies have been reporting spectacular fourth-quarter results, the bonanza isn't being reflected on the stock market. "Investors are leery," Gobert said. "Oil and gas has a notoriety for its volatility." Ever since oil hit a low of $10 US a barrel in February 1999, prices have increased for the most part -- the longest period of sustained healthy prices since the early 1980s, Gobert pointed out.

www.economist.com 6th 2003 | CARACAS From The Economist print edition EPA

Having survived a devastating opposition strike, Hugo Chávez is preparing to take the offensive. That looks like bad news for the beleaguered private sector

NO SELF-RESPECTING revolutionary lets slip the chance to bestow an important-sounding name on a year. For President Hugo Chávez, 2002 was “the year of the consolidation of the Bolivarian revolution”. This year, he promises, is that of the “strategic offensive”. Having ridden out a two-month strike against his government, which brought the economy close to ruin, Mr Chávez sees less reason than ever to negotiate with an opposition which he dismisses as run by “coup-mongers”.

With many of its supporters facing bankruptcy, the opposition bowed to the inevitable on February 2nd, and lifted the strike in the private sector. The strike continues in the state oil company, but it is fraying. To save face, the opposition organised a ballot, in which it claims that 4m citizens voted on several different ideas for ending the political conflict that has wracked Venezuela for 14 months. Two of these were suggested by Jimmy Carter, a former American president, who has been trying to mediate in Venezuela. They are a recall referendum on Mr Chávez's rule in August, or a constitutional amendment to cut short his term.

Venezuela's conflict Feb 6th 2003 Venezuela's oil crisis Feb 6th 2003

Venezuela Latin American economies

Venezuelan presidency (site in Spanish), Petróleos de Venezuela, LatinSource

Mr Chávez, with the army and now the oil company under his thumb, has other plans. Some of his opponents remain convinced that he is merely an incompetent autocrat whose “Bolivarian revolution” is largely in his own head. Others, pointing to his veneration for Fidel Castro, accuse him of seeking to create another Cuba. Neither view is wholly right, says Alberto Garrido, a political consultant and the author of several books on Mr Chávez. He says that the president is indeed pursuing a revolution; he has been doing so since well before 1992, when as an army officer he led an attempted coup against a democratic government. But Mr Chávez has not yet “decided to bring down the guillotine” on democracy, says Mr Garrido.

What would Venezuela look like if and when he does? Neither socialist nor communist. Unlike Mr Castro, Hugo Chávez does not propose to abolish private property. But the private sector he has in mind would consist of enclaves of foreign investment, plus small firms dependent on the state. Neither would threaten his grip on power.

Many larger Venezuelan companies, most of which back the opposition, will struggle to survive. On top of the economic effects of the strike, they now face exchange controls, announced last month as oil exports dried up. The controls will enable the government to starve businesses of imports. They will be administered by a former army captain who took part in Mr Chávez's 1992 coup against a democratic government. The bolívar has been fixed 17% higher than its last trading rate, making corruption and a black market likely.

The outlook for the economy is bleak. Oil output is unlikely to return to its previous levels quickly, if at all (see article). The government says GDP will contract by not more than 5% this year; Venezuelan analysts at LatinSource, a New York-based consultancy, put this figure at 17-20%. But Mr Chávez will attempt to shield his own supporters. He is likely to divert scarce foreign currency and cheap credits to loyal small businesses or co-operatives; he also has plans to distribute urban plots and rural smallholdings to the poor.

The “revolutionary offensive” has other targets. The government has filed complaints against the main private television stations, which could lead to their being fined or temporarily closed. It has also sent a bill to the National Assembly that would allow the infrastructure minister to revoke the channels' licences. The government is also seeking to wrest control of police forces run by opposition mayors; it has already partly disarmed the Caracas police. And there is another bill in the assembly, this one to add ten judges to the supreme court (which has recently shown some signs of independence).

Mr Chávez calls all this the “revolution of the excluded”. While communists relied on a disciplined vanguard party and organised labour, the Bolivarian “revolution” seeks to draw its support from those that Karl Marx dismissed as the “lumpen proletariat”. For Mr Chávez, the army takes on the role of the missing revolutionary party. So if his plan is to succeed, he must turn Venezuela's armed forces, by recent tradition pro-American and apolitical, into a revolutionary militia. He must also ensure that his supporters among the poor, already less numerous than in the past, do not continue to desert him as the economy slides deeper into penury.

Mr Chávez dreams of a revolution that goes far wider than Venezuela. “The happy society we want to create is in order to change...the system of production and trade and the international political system,” says Eliécer Otaiza, a former head of the secret police who still advises the president. The dream begins with that of Simón Bolívar, South America's Venezuelan-born independence hero, for a single Andean nation with, Mr Chávez adds, its own NATO-style defence organisation.

The United States has rather different plans for the region: the Free-Trade Area of the Americas, rejected by Mr Chávez. But this is supported by most South American governments. And even Brazil, whose new president, Luiz Inácio Lula da Silva, has some sympathy for Mr Chávez, is wary of his pretensions to regional leadership. So far, the United States has not taken Venezuela's president very seriously, though it has given money and discreet encouragement to the opposition. But now that the opposition has twice failed to oust him, many governments in the Americas may have to think again.

abcnews.go.com — By Patrick Markey

CARACAS, Venezuela (Reuters) - Venezuelan President Hugo Chavez's government sparred with its foes on Friday over tough new foreign exchange and price controls as the nation's growing economic crisis complicated their political battle.

Local currency markets, closed two weeks ago to protect the nation's reserves and bolivar currency from a two-month opposition strike that failed to oust Chavez, remained suspended on Friday as the government struggled to define details of the new curbs.

Edgar Hernandez, the head of a five-member government agency created to oversee the controls, said it would soon set requirements for exporters and those who want to buy dollars for tourism or business trips overseas.

Opposition leaders, an alliance of political parties and private-sector representatives, warned the curbs would weaken Venezuela's battered economy. Accusing Chavez of ruling like a dictator, they predict he will use currency curbs to conduct a witch hunt of opposition businesses.

"We are worried about the time they are taking to establish the new controls. Up until now they have only put out the regulations for the public sector, but not for tourists or for the private sector," said Rafael Alfonzo, an anti-Chavez business leader and opposition negotiator.

Chavez, a populist first elected in 1998, introduced the controls after economic uncertainty sent the bolivar tumbling by nearly 30 percent during the opposition strike aimed at forcing him from office.

The former paratrooper, who survived a brief coup last year, threatened to use the new controls to limit his foes' access to U.S. currency. He has refused to step down.

Most private-sector businesses have returned to work after the opposition strike that began on Dec. 2. Strikers at state oil firm PDVSA are maintaining their shutdown of the oil exports that account for half the government's revenues.

Chavez says the government brought oil production back to nearly 2 million barrels a day using troops and replacement crews. Strikers say output is still about a third of the usual 3.1 million barrels per day in the world's fifth-biggest oil exporter.

POLITICAL FIGHT DEADLOCKED

Under the new foreign exchange system, the bolivar was set at a fixed rate of 1,600 bolivars to the dollar -- a 16 percent revaluation from the 1,853 bolivars rate at which it last traded. The controls also tightened access to U.S. currency and imposed price ceilings on basic food goods and services.

Economists have warned the curbs will create a black market as Venezuela's private firms -- heavily reliant on dollars for the imports that make up 60 percent of the nation's consumer goods -- skirt the restrictions. Imported goods will become scarcer and prices will climb, analysts said.

The fiscal crisis and the currency controls have become the focus of the political battle between Chavez and the opposition. Talks between the feuding parties have stalled over the timing of possible elections.

Jimmy Carter, the former U.S. president and Nobel Peace Prize winner, who is backing negotiations led by the Organization of American States, urged both sides on Friday to work to end their dispute through the ballot box.

Carter has proposed two electoral options: a constitutional amendment to shorten the president's term and trigger elections, or a referendum on Aug. 19. The government has dismissed the amendment option and responded evasively about the August referendum.

newsobserver.com

By ALEXANDRA OLSON, ASSOCIATED PRESS

CARACAS, Venezuela (AP) - Venezuelan motorists waited for hours to fill up at gasoline stations Friday - a sign life has been slow to return to normal after a two-month strike that failed to oust President Hugo Chavez and left the economy in shambles.

Thousands of employees at the state oil monopoly, Petroleos de Venezuela S.A, are still on strike or have been fired by Chavez. The government has raised crude oil production to about a third of normal, but refineries are largely idle. Energy and Mines Minister Rafael Ramirez said Friday that gasoline production was 150,000 barrels a day, compared to 250,000 before the strike. He said Venezuela would import 12 million barrels of gasoline this month to make up for shortages.

Venezuela - the world's fifth-largest oil exporter - has spent more than $500 million a day on fuel imports since the strike began Dec. 2. Because of the dependency on imports, "the situation with gasoline goes up and down," Ramirez said.

Hundreds of drivers joined lines stretching for several miles at Caracas service stations, most of which were dry and waiting for deliveries. Earlier this week, it took 20 minutes at most to fill up in Caracas, though huge lines had persisted in the rest of the country.

"The strike is over but we are still going through a critical moment," said Wilmer Acevedo, 30, a tow truck driver waiting at one station. "If I don't get gasoline I can't work."

The strike ended earlier this week in every other industry. But some restaurants and stores were having trouble opening because of the gasoline scarcity, which in turn was causing delays in deliveries.

The shortages could worsen as the government implements exchange controls to protect its foreign reserves and the bolivar currency, which lost a quarter of its value during the strike. Dollar requests could take as long as 45 days to process under the new rules, which could delay imports. Venezuela depends on imports for 60 percent of raw materials.

The government fixed the bolivar at 1,598 bolivars to the dollar.

Ramirez said crude oil production was 1.9 million barrels a day, while dissident oil monopoly executives put the figure at 1.3 million. It was 3 million before the strike.

"It will take a couple of months to bring refining capacity back up to a normal operating rate," said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York. "Part of the problem is they have fired a lot of the key people that used to run these things. You can't replace these people that easily."

Chavez has fired more than 9,000 of the state oil company's 40,000 employees, vowing to use the strike to restructure, downsize and eliminate dissent within the company. The president vowed Friday not to rescind the firings. "Not if I were crazy," he declared in a speech to diplomats.

Chavez said many fired executives were the same ones who led an oil strike in April that helped prompt a brief coup. Chavez rehired them after regaining power.

The fate of the fired workers is a sticking point in negotiations between the government and opposition sponsored by the Organization of American States.

Opposition leaders refuse to call off the oil strike until the government rehires the fired workers and agrees to an early vote on Chavez's rule.

Citing months of economic and political turmoil, Venezuela's opposition - a combination of leftists, conservatives, labor unions and business groups - wants to amend the constitution to end Chavez's six-year term and call general elections this year.

The government insists a referendum must wait until halfway through a president's term, as provided in the constitution - in Chavez's case, August 2003.

Nobel Peace Prize Laureate Jimmy Carter proposed both plans as a solution to Venezuela's crisis. On Friday, the former president praised both sides for using his proposals "as a basis for progress," and the opposition for scaling back the strike.