www.cantonrep.com Tuesday, February 18, 2003 By TOM COHEN Associated Press writer

FORT McMURRAY, Alberta — Along the Athabasca River of remote northern Alberta is an engineer’s dream — miles of gigantic projects turning once unrecoverable oil from Alberta’s tar sands into black gold.

Trucks as big as houses rumble on tires 10 feet tall and buckle under 100-ton loads of oil-rich sand dropped in by towering shovels. The brown-black earth is turned into slurry, then travels by pipeline to plants where it ultimately will be refined into crude oil, diesel and other fuels and chemicals.

Such synthetic oil projects — those involving more than conventional drilling — often bear a stigma as high-cost, low-yield investment turkeys. The Alberta oil sands, though, have reached high-level production at a workable cost with reserves that will last decades.

And the global terrorist threat and instability associated with conventional oil sources such as the Middle East have made Canadian oil a crucial component of U.S. hopes for a secure energy supply.

“Sept. 11 was a watershed event for the oil sands,” said Patrick Bryden, a research analyst for FirstEnergy Capital of Calgary who considers the Canadian resource “a strategic asset for North American oil supplies.”

The U.S. domestic supply has matured, while supplies in the Middle East and former Soviet Union are tainted by uncertainty of access, Bryden noted. Political unrest has raised questions about Venezuela, a major U.S. supplier.

“When the going gets tough, the dependable oil is going to come from Canada,” Bryden said.

That means the oil sands and the mega-projects that use surface mining or more technologically advanced steam-driven extraction methods to produce almost 1 million barrels of crude or refined oil each day.

Production is expected to reach 1.8 million barrels a day by 2010, with known recoverable reserves of 315 billion barrels, comparable to Saudi Arabia.

Overall, Canada produces 2.3 million barrels a day and exports 1.4 million, all to the United States, making it one of the top four suppliers of foreign oil with Saudi Arabia, Venezuela and Mexico, according to Greg Stringham, vice president of the Canadian Association of Petroleum Producers, an industry lobby group.

The Canadian oil comprises 15 percent of total U.S. imports, and industry figures expect that to increase. Suncor Energy Chief Executive Rick George said the U.S. market currently buys 30 percent of his company’s production, and that figure eventually will rise above 50 percent.

President Bush mentioned the oil sands when referring to energy policy last year, thrilling industry figures, although he used an outdated phrase.

“Bush came out and called them the tar pits. That’s fine with us, as long as he recognizes the huge size and potential there,” Stringham said.

The tar reference comes from Canadian explorers who saw Indians using the thick, black substance known as bitumen bubbling from the Athabasca River banks to seal their canoes.

Decades of persistent but mostly futile research followed, with initial entrepreneurs trying and failing at conventional drilling in the early 20th century.

Scientists figured out as early as 1920 how to mix the black, sticky oil sand with hot water and caustic soda, then shake it up to separate the components, with the heavier sand sinking to the bottom and the bitumen rising to the top.

It took until 1967, though, for Suncor to develop the first major project, and others including Syncrude, ExxonMobil, Imperial and Shell have since put up money to get huge operations going, with a boost from government incentives that helped write down the investment more quickly.

Stringham said total investment in the oil sands — which include the Athabasca River, Cold Lake and Peace River regions around Fort McMurray, 210 miles northeast of Edmonton — was $11.3 billion from 1996-2001, with another $4.6 billion on new projects under construction and at least $16.6 billion more in potential projects through 2010.

Most production comes from the surface mining by Suncor and Syncrude, but more steam operations are planned because they can get to deeper reserves and hold down production costs.

Environmental groups call such major investment in oil technology shortsighted, prolonging the focus and dependence on an environmentally harmful industry.

Research and development money should go toward technology such as hydrogen-cell power to eliminate combustion engines, said Robert Hornung, policy director of the Pembina Institute, a nonprofit environmental research and advocacy organization.

www.pantagraph.com Pantagraph Editorial Tuesday, February 18, 2003

What have we learned since the price gouging in which some service stations engaged following the terrorist attacks of Sept. 11, 2001?

Gas prices have been rising rapidly in the past month, supposedly because of labor unrest in Venezuela and fear of another Persian Gulf War.

But the Venezuelan oil workers are back on the job.

And if "fear" of war is enough to increase prices, what is going to happen if the real thing hits?

Will we again see stations hiking their prices to nearly $4 a gallon, as happened after the 9-11 attacks?

Or did actions taken by then Attorney General Jim Ryan against the most flagrant price-gougers send a message?

In fall 2001, Ryan filed or threatened to file lawsuits against a number of companies that raised prices in the aftermath of the 9-11 attacks.

Casey's General Store Inc. settled the case against it by -- among other things -- giving $25,000 to the American Red Cross, but admitting no wrongdoing. Other individual stations gave $1,000 to disaster relief efforts to avoid a suit.

A timely reminder is needed from the state's new attorney general, Lisa Madigan, on how she will react to gasoline retailers who engage in profiteering.

The Legislature should clarify the state's consumer fraud law to specifically outlaw gasoline price gouging. High fuel prices don't just affect casual motorists. They also have an tremendous economic impact by increasing transportation costs for goods.

A spokesman for AAA, the nation's largest auto club, called recent price hikes "uncomfortably close" to gouging. We agree.

Average prices at the pump in Illinois have risen 16 cents since January. Bloomington-Normal motorists have seen prices jump that much -- and more -- overnight from time to time, with a slow drop down.

But this time, it doesn't look like prices are going to drop much for the foreseeable future.

The oil industry should exercise restraint in raising prices.

But, if gouging occurs, state and federal officials should not exercise restraint. They should aggressively go after the profiteers.

www.newsday.com The Associated Press February 18, 2003 Oil output could reach 2.8 million barrels a day within a month, when restrictions on sending tankers to Venezuelan ports are lifted, the head of Venezuela's state-run oil company said yesterday. Foreign shippers were warned against loading in Venezuelan ports during a two-month strike against President Hugo Chávez. The work stoppage ended on Feb. 3 in all sectors except the all-important oil industry. Some major companies in the shipping and oil industry, however, have decided to return to Venezuela. Exxon Mobil Corp. plans to resume loading this week while refiner Valero Energy Corp. has chartered a tanker to load 2 million barrels of crude. Once exports pick up, oil output could jump to 2.8 million barrels per day - Venezuela's quota as set by the Organization of Petroleum Exporting Countries - by mid-March, said Ali Rodriguez, president of Petroleos de Venezuela S.A., or PDVSA.

www.philly.com Posted on Tue, Feb. 18, 2003

IRAQ UNDER THE GUN

In Brussels, Belgium, divided European Union leaders sought to unite on Iraq at an emergency summit, putting the onus on Baghdad to disarm and accepting that the use of force could be a last resort if it failed to comply.

But while there was broad agreement to give U.N. weapons inspectors more time, the 15-nation bloc was split on how long to wait before declaring President Saddam Hussein had failed to rid Iraq of weapons of mass destruction.

See Story Page 15

OLD WAR REVISITED?

North Korea's army threatened today to abandon its commitment to the 1953 Korean War truce if sanctions such as a naval blockade are imposed on the isolated communist state over its nuclear crisis.

And Pyongyang said it would win any nuclear war with the United States as the crisis over North Korea's suspected drive to manufacture atomic weapons entered the fifth month.

HAMAS VOWS REVENGE

In Gaza, Israeli forces killed a leader of the military wing of Hamas, drawing threats of revenge at a massive Palestinian funeral in the Gaza Strip.

Riyad Abu Zeid died while being evacuated by a military helicopter to an Israeli hospital with wounds the Israeli army said had been sustained in an exchange of fire with soldiers trying to arrest him.

OIL KEEPS PUMPING

In Lagos, Nigeria, the government started sending replacement workers to its oil-export terminals yesterday, trying to stave off a shutdown of crude exports in a strike by a powerful oil workers union.

The two-day-old strike over pay and working conditions comes as the threat of war against Iraq and a prolonged strike in Venezuela have pushed oil prices near two-year highs.

Nigeria is the world's sixth-largest exporter of crude oil and half of its exports go to the United States. Oil exports account for more than 80 percent of government revenue.

SLOW DOWN, BLOKE!

In London, traffic levels dipped by a quarter as the city began charging $8 for motorists to drive into the city's center as part of a "congestion charge" scheme that went live under the watchful gaze of urban planners across the globe.

Cyclists celebrated and motorists fumed as the plan began in a bid to cut traffic by 15 percent in the city center, where average speeds have fallen below 10 mph.

www.timesdaily.com February 18. 2003 12:00AM

Gas prices got you down? They got to me a little last week as I drove to Montgomery and back for a meeting. I think the prices went up about a nickel between the time I left Wednesday and the time I returned Friday night.

The recent fuel price hikes seem to be a hot topic.

Q: Who makes the decision to either raise or lower retail gasoline prices? Also, why do all the major companies end up with price changes at the same time?

A: The decision to raise or lower gas or oil prices are entirely up to the individual companies that sell the products, but market factors seem to be the major thing prompting the changes.

Sometimes, those factors can be as simple as the time of the year. For instance, in the summer, when more people are taking car trips and vacationing, the demand is higher, and prices increase.

Lately, the threat of terrorist attacks, labor strikes in Nigeria and Venezuela, colder-than-average temperatures and the impending war with Iraq have caused gas prices to increase to the highest they have been since Sept. 11, 2001.

"It's just like milk or anything else you buy or sell," said Adam Kelley, a spokesman for AAA Alabama. "It's a market-driven product. It's supply and demand."

On Monday, Alabama's average gas price for regular unleaded fuel was $1.60 per gallon. That was up 18 cents from a month ago. Kelley said the South has been blessed with prices below the national average, so I guess we should feel good that we're about a nickel below the rest of the country.

Kelley said his office gets more complaints about companies that use the price increase to get a competitive advantage by artificially lowering prices in an effort to draw customers away from their higher-priced competitors.

In other places, prices are set based on what nearby stations charge. It's sort of like keeping up with the Joneses. When one goes up, the others follow suit. The cost from the supplier is roughly the same for all stations, but the individual businesses can choose how much to charge at the pump.

Q: What exactly is gas price gouging?

A: Price gouging is when oil and gas companies artificially increase prices at the pump even though the market factors haven't created supply or demand issues.

The AAA's Kelly said the national AAA office has recently expressed concern that "it's getting to the point where there are concerns about possible price gouging, but no one is saying it's happening yet."

Kelly said skyrocketing fuel prices certainly give consumers a reason to spend a little time shopping for the best prices.

"The thing that we would advise is to shop for your gasoline like you do your groceries," Kelly said. "A lot of people buy gas based on convenience. They need to look for the best deal possible."

Managing Editor Robyn Tomlin writes Just Ask, which runs Tuesdays in the TimesDaily. If you've got a question, e-mail it to justask@timesdaily.com, fax it to 740-4717 or send it to Just Ask c/o TimesDaily, P.O. Box 797, Florence, AL 35631. Include your name and contactinformation