www.courier-tribune.com By J.D. Walker Staff Writer, The Courier-Tribune

ASHEBORO - Ugh! It's gasoline sticker shock!

Consumers are taking notice of the upward creep of gasoline prices.

"All of our customers have been complaining but they understand there's not much we can do about it," said Odell Graham, manager of Servco at 509 W. Dixie Drive in Asheboro.

The U.S. Department of Energy reports the U.S. average retail price for regular gasoline rose for the eighth week in a row last week, increasing by 5.4 cents per gallon as of Feb. 3 to end at 152.7 cents per gallon, the highest price since Sept. 17, 2001.

"We've had to go up on our prices about every other day as the wholesalers increase their prices to us," said Graham.

Donna Frazier, manager of the Randleman Phillips 66 station, said every effort is made by her company to hold down price increases to just once a week.

"But we did have to change our prices today (Friday)," she said.

Increasing by a total of 16.7 cents per gallon over the last eight weeks, the average retail price is 41.1 cents per gallon higher than last year. Prices throughout the country were up, with the largest increase occurring in the Midwest, where prices rose 6.5 cents to end at 152.4 cents per gallon, according to DOE reports. The smallest price increase occurred on the West Coast, where prices rose 4.0 cents.

The last time consumers saw prices this high was in the second quarter of 2001, just prior to the Sept. 11 terrorist attack, based on DOE statistics. Shortly after 9/11, prices plummeted, in part due to the slump in the airline industry.

So, why the increase this time?

Blame the cold weather. Blame the oil industry in Venezuela. And to a degree, blame the unstable situation in the Middle East.

January and February are traditionally times for the oil industry to conduct routine maintenance on equipment and to begin conversion from heating oil production to more gasoline production. The goal is to stockpile supplies in time for the summer driving season.

This year, the National Oceanic and Atmospheric Administration (NOAA) reports Old Man Winter has held a long, strong grip on the eastern half of the U.S. In particular, this winter has been 9 percent colder than average in New York and Pennsylvania; 6 percent colder in New England states; 8 percent colder in South Atlantic states and 8 percent colder in Tennessee, Alabama, Mississippi and Kentucky.

Odell Routh, owner of Routh Oil in Climax, supplies heating oil to many residents in the county.

"We've got people on fixed incomes and we feel real sorry for them but what can you do?" he asked.

Higher demand in January, continuing into February, has led to record draws on heating oil reserves, say DOE experts. It also puts pressure on suppliers to continue producing heating oil and put less emphasis on gasoline.

Adding to the problems caused by higher demand for heating oil is the unrest in Venezuela. Since December, nationwide strikes against the country's president, Hugo Chavez, have halted oil production throughout the country.

Venezuela is the world's fifth-largest oil exporter and supplies 14 percent of the crude oil used by the United States. Mid-western states in the U.S. get fully 40 percent of their crude oil from Venezuela, say DOE analysts.

It only took a couple of weeks for the effects of losing access to Venezuela's daily 2.7 million barrels to hit the United States. Since then, gasoline prices have inched up as much as 5 percent each week.

Government reports indicate the strike against the government is close to resolution but the oil strike continues with no clear end in sight.

In the meantime, the oil markets have begun to show pre-war jitters, said Larry Goldstein from the Petroleum Industry Research Foundation in New York. Gasoline prices are not only showing the effects of Venezuela, but also what is called a war premium in which investors boost oil prices because of uncertainty of future supplies.

"Two conditions are necessary to have a war premium - war must be inevitable and imminent," Goldstein said. After President Bush's State of the Union speech and Secretary of State Colin Powell's presentation to the United Nations Security Council, he said both factors are present.

"Up until now, you didn't have both those conditions," he said. "But you certainly have them now."

Don't expect any short-term relief, say DOE experts.

"World oil markets will likely remain tight through most of 2003, as petroleum inventories and global spare production capacity continue to dwindle amid blasts of cold weather and constrained output from Venezuela."

If that leaves consumers fuming at the pumps and wondering what they can do, maybe the advice of one former gasoline station manager will do the trick.

"I see all these folks driving those SUVs and I'm over here in my little Civic thinking, 'Ha! Ha!'" he said. "My advice to everyone is buy cheap and drive less."

February 9, 2003 THE COSTS www.nytimes.com

The strike has reduced Venezuela's oil capabilities.

Oil produced, total: 3.1 million barrels a day before the strike. 1.3 million now, say dissidents. The government says the figure is 1.9 million.

Oil exported: 2.7 million barrels a day before the strike, most to the U.S. 700,000 barrels now, according to Mines and Energy Ministry.

Work force: 33,000 full-time employees before the strike, and 37,000 contract workers, which fluctuated. Unclear how many now, but 9,000 of the full-time workers have been fired.

Gasoline produced for home market: 250,000 barrels a day before strike. 150,000 barrels now, the Mines and Energy Ministry says.

Gross oil revenues: 2002 (estimated) $22.2 billion. 2003 (forecast) $14.3 billion, according to UBS Warburg.

By Adolfo Pesquera news.mysanantonio.com Express-News Business Writer Web Posted : 02/09/2003 12:00 AM

A threat of war, a cold winter and falling petroleum reserves have combined to push gasoline prices steadily upward for two months.

Rufus Francis pumps gas at a Diamond Shamrock station on Broadway. The cost of unleaded was $1.48 a gallon there Friday. Edward A. Ornelas/Express-News

By Friday morning, the average gasoline price in San Antonio was $1.45 a gallon, according to the AAA Texas Inc.'s Weekend Gas Watch index.

Many San Antonio locations had prices up to $1.52 a gallon for regular unleaded, but the average cost was the lowest in the state.

Prices have been climbing for a while, AAA spokeswoman Rose Rougeau said, but there was a noticeable spike immediately after Secretary of State Colin Powell's address to the United Nations.

"(Consumers) have seen 3- to 5-cent jumps overnight," Rougeau said. "I think they anticipated that they would see increases, but when they see such rapid increases over such a short time period, it surprises them."

Powell's presentation Wednesday about Iraq had an immediate effect on crude oil futures prices. West Texas Intermediate rose 75 cents a barrel on the New York Mercantile Exchange that day to close at $33.93 per barrel.

Jesus Martinez, manager of the Sunglo at 1127 S. St. Mary's St., said his station's unleaded went from $1.39 to $1.48 a gallon in a week.

"I'd say it's expensive," he said. "It's almost getting to $2 a gallon."

Despite the prices, customers' comments about it are no more emotional or common than their comments about the weather, said Khalid Qureshi, owner of the Citgo at 11917 Toepperwein Road.

"They say prices are high, (but) they pay for the gas," Qureshi said. "They know already the prices are high everywhere."

U.S. average retail prices for regular unleaded had risen for the eighth week in a row by Monday, increasing 5.4 cents per gallon to $1.52, according to the Energy Information Administration. It was the highest price in 17 months, and this week appears certain to push the average still higher.

War jitters have a lot to do with the latest spike, said Neil Gamson, economic forecaster at the Energy Information Administration.

But the lingering effects of Venezuela's oil strike and an unusually cold winter in the Northeast and Midwest made a bad situation worse.

"Even though Venezuela says they're starting to come back, there was a lot of crude lost during that time," Gamson said. "They can't come back that quickly."

Weather also is a factor, he said. During bouts of cold weather, refineries produce more heating oil than gasoline. Gasoline supplies drop, and the price goes up.

Prices probably will remain high, at least for the short term. The Energy Information Administration is projecting an annual increase in demand for gasoline and diesel fuels of 2.4 percent. Analysts had expected the increase to be just under 2 percent, but a projected surge in light truck and SUV sales could mean more demand for gasoline.

Meanwhile, Texans — a truck-happy bunch — can count their blessings.

Rougeau said, "Texas tends to be at the bottom of the scale," with an average gas price this week of $1.49 a gallon. Georgia was lower at $1.42, but California was at $1.77.

apesquera@express-news.net

Last updated at: (Beijing Time) Sunday, February 09, 2003 english.peopledaily.com.cn

The death toll of Friday's car-bomb explosion in El Nogal night club in northern Bogota has risen to 33 and 162 others were injured, official sources said Saturday. The death toll of Friday's car-bomb explosion in El Nogal night club in northern Bogota has risen to 33 and 162 others were injured, official sources said Saturday. A car-bomb, loaded with about 200 kilograms of dynamite, Fridayevening ripped through the third floor of a 12-story building, where the El Nogal night club was located. Vice President of Colombia Francisco Santos attributed the attack to the 17,000-strong rebel Revolutionary Armed Forces of Colombia (FARC). The government has asked Venezuela, Peru, Ecuador, Panama and Brazil to list FARC as a terrorist organization, and requested thegovernments of these countries to help stop its subversive activities. In spite of the material damage to the building of the night club, a 12-year-old girl, Maria Garcia, was found alive on Saturday morning covered by the debris, said Colombia's Attorney General Luis Osorio. UN Secretary-General Kofi Annan and the governments of the United States and French condemned the bombing as a "terrorist attack." The UN chief's spokesman said Annan "strongly condemns this cruel bombing and all other terrorist attacks by any actor in the conflict." US President George W. Bush released a statement in Washington,condemning the attack as "barbaric act of terrorism," and said theUnited States "will offer all appropriate assistance to the Colombian government in bringing to justice the murderers responsible for this act."

www.sundayherald.com

Business desk leader

THE FACT that Scotland is now nearly three times bigger as a banking centre than Germany speaks volumes.

Not only does it tell us about the remarkable agility of the former Bank of Scotland and Royal Bank of Scotland, which have left their bloated European peers standing in the wake of their strategic focus and deft handling of mergers and acquisitions.

But it also highlights the dire performance of most European banks, especially of those in Germany, and more broadly of the German economy as a whole.

The one-time 'powerhouse' of the European economy was for most of the 1990s also a leading banking centre -- just look at the glitzy towers built in Frankfurt to house the headquarters of Commerzbank and Deutsche Bank.

But Germany, its economy in crisis, must now face the ignominity of having plummeted to the ninth-largest banking centre in Europe -- after much smaller economies such as Spain, Netherlands, Belgium and Scotland, for heavens's sake.

Commerzbank, Germany's third largest bank and a key lender to the Germany's 'mittelstand' of small and medium-sized businesses, last week posted a Û372m pre-tax loss, the first in the bank's history. A combination of high costs, soaring bad debts and paper-thin margins are conspiring to bring about Germany's worst banking crisis since the 1939-45 war.

It is not so long ago when the likes of the former Observer editor Will Hutton were wont to evangelise about the German business model. The way the nation's banks supported home-grown SME's with a mixture of large shareholdings and loans was seen by such liberal-leaning thinkers as a recipe for economic success. Our harder-nosed 'Anglo-Saxon' economic and business model was, by contrast, seen as driving short-termism and stunting productivity.

But today you don't hear many such claims for the superiority of Germany's system.

The critical problem facing the German financial services market is overcapacity. With its network of state owned landesbank's coupled with larger players such as Deutsche Bank and Commerz, Germany is massively over banked. As the economic tide floods out, the banks have been left stranded and vulnerable, with far too many staff and too many dodgy, unproductive loans. There are disturbing parallels with Japan.

Business failures in Germany are expected to continue soaring, with economists predicting 42,000 German businesses will go bust in 2003, up from 37,700 last year.

This is only going to exacerbate the trend of rising unemployment. Germany's Federal Labour Office said the unemployment rate rose to 10.3% in January from 10.1% a month earlier. Many of Germany's major companies have laid off thousands of staff in an attempt to cope with the prolonged economic downturn.

It all has serious ramifications for the banks, which directly finance German companies to far greater extent than their UK counterparts.

To the dismay of the rest of Europe, which risks being sucked into recession with Germany, the economic miracle seems to be turning into a chimera.

Manufacturers are shifting production to lower-cost economies in Asia, which has made it tough for economists to identify the bottom, as Germany's economy remains so heavily dependent on manufacturing. Sooner or later, the pain will become so acute that Germany will have to grasp the long-resisted nettle of structural reforms.

Oil players have vital role as war looms WORKING with black gold has never been easy. However, in the current economic and political environment even educated guesses on the oil sector's future embrace uncertainty.

The question of what will happen to oil prices before, during and after any war in Iraq is a hugely complex one. Oil giants such as BP will have spent a great deal of time and money working out possible scenarios, but no inter national player is prepared to comment on war or its possible aftermath.

Before the last Gulf War in 1991 the economic picture was very different and oil prices were around $15 a barrel. When the allied forces invaded Iraq prices spiked to $40 and then dropped back to $18 within weeks; a simplistic analysis of the situation in 2003 would offer up a similar series of events following a new conflict in the country.

Unfortunately, our thinking now must be more rigorous. Yes, a 'successful' war in Iraq would offer the US access -- eventually -- to oil reserves nearly as large as Saudi Arabia's, and thus weaken the status of the world's largest oil producer (a country already quietly suffering from political turmoil) and of the oil cartel, OPEC.

But once the effects of political and economic disruption in Venezuela, low levels of excess production capacity and small inventories are factored in, only a fool would attempt to predict which direction oil prices will head.

Looking at the picture closer to home the uncertainty that currently pervades the sector is bound to have consequences in the longer term.

Some industry analysts highlight the gains that could be made by small independent exploration firms as majors such as Shell and BP reduce their exposure to mature and costly assets such as the North Sea. On the back of this, oil service companies may also benefit from investment from other quarters. Nevertheless, it seems unlikely that such gains will outstrip the spend by the established operators.

The cut in the price of exploration licences proposed last week by energy minister Brian Wilson would also be a useful tool in stimulating new investment, although its effectiveness should not be over-estimated.

What should soften the blow of continuing uncertainty, in Scotland and internationally, is the natural confidence of virtually all oil players. In the months ahead, pessimism could do significant damage to already weakened markets. Tempered with common sense this confidence could yet prove vital in offering global stability.

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