www.themercury.news.com.au By KANE YOUNG 22feb03

TASMANIAN petrol prices could soar to more than $1.20 a litre if war breaks out in Iraq, the Tasmanian Automobile Chamber of Commerce warned yesterday. With world oil prices having reached a 2-1 year high, Tasmanian petrol prices have already cracked the $1 barrier and chamber general manager Malcolm Little says there may be worse to come.

"It wouldn't take very much for prices to get to $1.20 per litre," he said.

Mr Little said the price rises would affect the whole country, with Tasmania hit especially hard because of a 2c a litre premium paid by Tasmanian distributors.

The price of petrol is currently more than $1 a litre in most Australian capital cities, with Sydney motorists paying up to $1.10 a litre this week.

Mr Little said some international observers had predicted prices would rise to as much as $1.50 a litre, although he personally doubts the situation would get that bad.

He said several international factors had driven up Tasmanian prices lately, including the threat of war in Iraq, a general strike in Venezuela, and the heavy demand for oil during the Northern Hemisphere winter.

"At the end of the day, it's not you and me buying the product, or even the service station owners, who determine the prices," he said.

Mr Little called on motorists not to get angry when service station owners were forced to raise their prices.

"As prices go up, there is only ever one winner - the Federal Government," Mr Little said. "Service stations merely make a margin, and their prices reflect their costs.

"They are not winners in this, they are just doing their job.

"There's no point venting your frustration at service stations, just as there's no point venting your frustrations at grocery store owners when their prices go up."

money.cnn.com February 21, 2003: 4:17 PM EST

Treasurys hit by profit-taking after a solid week; economic data, war worries weigh on dollar.

NEW YORK (CNN/Money) - Treasury prices slipped back to the minus column Friday as profit-taking set in after a week of solid gains, though anxiety ahead of the weekend limited the losses.

Around 4:00 p.m. ET, the benchmark 10-year note fell 6/32 of a point in price to 99-27/32, yielding 3.89 percent, while the 30-year bond dropped 21/32 to 107-31/32, yielding 4.85 percent.

The two-year note was off 1/32 of a point to trade at 100-1/32, yielding 1.60 percent. The five-year note lost 3/32 to 100-22/32, yielding 2.85 percent. Yields move in the opposite direction from prices.

Treasurys were relieved at a very benign U.S. inflation reading for January. The consumer price index rose 0.3 percent, exactly as analysts had expected, quelling fears of a repeat of Thursday's surprisingly steep rise in producer prices.

The core CPI, which excludes volatile food and energy costs, was even better behaved, rising just 0.1 percent against forecasts of a 0.2 percent gain.

A 6.6 percent jump in gasoline prices was balanced by surprise falls in the cost of new cars and food, while annual growth in the core measure held at a three-year low of 1.9 percent.

Analysts noted that gasoline prices were up no less than 29 percent on the year and that would act as a tax on consumers, soaking up money that could have been spent on other things.

Also, with producer prices rising much more than retail prices, corporate profit margins were being squeezed, and that was a negative for equities.

Upbeat comments on the economy from Federal Reserve governor Ben Bernanke had little effect, since this is the standard line from the central bank and expectations of a sustained recovery have been disappointed in the past.

Geopolitical tensions were ever-present, with the U.S. seemingly moving a small step closer to war Friday when Turkey's Prime Minister Abdullah Gul said an aid agreement would be reached shortly granting an urgent U.S. request to station troops on its soil.

Turkey and the United States have been wrangling for weeks over the request, raising the possibility that Washington could abandon a planned northern front from Turkey it hopes would lessen the length of any war and reduce U.S. casualties.

A refusal would have complicated the military mission and perhaps delayed an attack.

Dealers have little doubt that war will come. Thursday the United States said it had massed a big enough force in the Gulf to attack Iraq at any time, and senior officials said Washington would seek United Nations approval next week for a possible war. Economic data, war worries weigh on dollar

The U.S. dollar sank to one-week lows versus the euro, hung over from poor U.S. economic data and worries about war in Iraq, but rose against the yen on signs of covert intervention by Japanese authorities.

"This latest pop-up in dollar/yen is probably stealth Bank of Japan intervention, because on a quiet day they can't keep it so covert when Japanese banks buy during U.S. trading hours in unison," said Lara Rhame, U.S. foreign exchange economist at Brown Brothers Harriman in New York.

She was referring to the dollar's jump from near three-week lows around the ¥118.30 level around noon to its current value of ¥118.71, a gain of 0.3 percent from Thursday's New York close.

The euro hit a one-week high of $1.0847 on Friday before easing back to $1.076 on the day.  

-- from staff and wire reports

www.wmtw.com Friday,February21,2003,7:55 AM

UNDATED (AP) -- The middle of winter is looking more like summer at gas stations nationwide. That's as fuel prices surge past two dollars a gallon in some places and motorists grumble about being gouged.

Political instability in Venezuela and the prospect of war in Iraq are triggering price hikes that normally don't kick in until the peak driving season. And experts warn prices could shoot up even more as the political situations and the weather heat up.

The average retail price for a gallon of regular unleaded has risen 22 cents since the beginning of the year. But because wholesale gas prices have increased just 14 cents over the same period, some consumers suspect oil companies are trying to cash in.

Democratic Senator Charles Schumer of New York is calling on the Federal Trade Commission to investigate industry practices.

In a letter, Schumer wrote: "It appears as if price gouging is taking place across the country."

AAA supports Schumer's request, but stops short of using the word "gouging."

www.smh.com.au By Owain Johnson in Caracas February 22 2003

Venezuela's opposition has accused President Hugo Chavez of beginning a witch-hunt for his critics, after a leading opposition figure was arrested in a dramatic raid and another fled into hiding.

The president of the opposition party, Democratic Action, Henry Ramos Allup, said he had information that the Government was planning to arrest a further 25 leading opponents.

Mr Ramos Allup said politicians, businesspeople, union leaders, representatives of striking oil workers and media bosses were on a list.

The claim came after the arrest of Carlos Fernandez, the leader of the business association Fedecamaras, in a swoop on a Caracas restaurant by masked and armed police shortly after midnight on Wednesday.

Mr Fernandez was one of the leaders of a two-month general strike which forced Venezuela to suspend crucial oil exports and damaged its fragile economy.    advertisement       advertisement

The United States criticised Venezuelan authorities on Thursday over the arrest, which it said was "a very worrisome development that can only add to Venezuela's continuing political difficulties".

The country is bracing for more upheaval and renewed protests. The arrest will almost certainly reinvigorate the opposition, which had been exhausted by the costly and bruising strike.

"It seems politically inspired and filled with vengeance and completely miscalculated," said Julia Sweig, a Latin American expert with the Council on Foreign Relations, a think tank.

Mr Chavez told a trade forum that after the arrest, "I went to bed with a smile. One of the coup plotters was arrested last night. It was about time, and see how the others are running to hide."

Another leader of the general strike, Carlos Ortega, the president of the Confederation of Venezuelan Workers, is in hiding with a warrant out for his arrest. He said he did not trust Venezuelan justice and warned that the Government wanted "to kidnap me and eliminate me".

A pro-government deputy, Luis Velasquez, later confirmed that 100 people could expect to be questioned about their roles in promoting the strike. "This shouldn't be a source of alarm," Mr Velasquez said. "They simply have to answer to the courts."

The Government had asked the public prosecutor's office to charge Mr Fernandez and Mr Ortega with rebellion, treason, instigation to commit criminal acts, conspiracy and sabotage.

Mr Fernandez's arrest took place just days after the discovery of the bodies of three dissident soldiers and a young woman, who had disappeared over the weekend.

A senior opposition figure, Andres Velasquez, the leader of the Radical Cause party, has urged his colleagues to call another one-day strike to protest at the arrest of Mr Fernandez.

The Guardian, Los Angeles Times and agencies

www.smh.com.au By Michael Dobbs February 22 2003

Enough oil is stored in the deep salt caverns along the Gulf of Mexico for the United States to replace a year's worth of its imports from Saudi Arabia.

Originally conceived as a response to the oil crises of the 1970s, the Strategic Petroleum Reserve has become as much a part of the US's strategic arsenal as the aircraft carriers, airborne divisions and spy planes converging on the Persian Gulf.

According to the Department of Energy, the 599-million barrel reserve constitutes the US's "first line of defence" against disruptions in energy supplies.

As President George Bush prepares for war with Iraq, he has come under pressure to use the reserve to calm an increasingly jittery market.

In addition to the uncertainty caused by the Iraqi crisis, a general strike in Venezuela has helped push oil prices to new highs, and slashed inventories in many parts of the world.

If the past is a guide and Mr Bush follows the precedent set by his father in the Gulf War in 1991, he probably will resist the temptation to tap into the underground sites in Texas and Louisiana until the onset of any hostilities.

Once an attack on Iraq begins, he will order the release of some of the oil to signal the US's ability to ride out any temporary panic over the oil market.

If the war went badly, and Iraqi President Saddam Hussein succeeded in torching Iraqi oilfields or hitting oil facilities in neighbouring Kuwait or Saudi Arabia, the reserves would assume huge strategic importance.

The 50 or so caverns contain enough oil to replace 53 days of lost imports. In practice, officials say, supplies should last considerably longer, as the US buys much of its oil from Canada and Mexico, whose supplies would be unlikely to be interrupted by a crisis in the Middle East.

An economist at the American Petroleum Institute, Edward Porter, said that because of the tightness of the international oil market, the Strategic Petroleum Reserve might end up playing "a much more central role" in a war than it did in 1991.

Today, it is much more difficult to offset a likely loss of Middle Eastern oil, if the region became embroiled in war.

How much oil should be released from the reserve, and under what circumstances, is the subject of great debate among energy specialists.

Oil industry executives oppose releasing any, except in a national emergency.

The Bush Administration is keeping its options open. The Energy Secretary, Spencer Abraham, said last week that the reserve should be used only in the event of severe supply disruptions, and not to bring down prices.

The Washington Post