boston.com By H. Josef Hebert, Associated Press, 2/25/2003 18:16

WASHINGTON (AP) The government's emergency oil stocks will not be used to dampen soaring energy prices, Energy Secretary Spencer Abraham told senators Tuesday, but the Bush administration will move quickly to draw on the reserves if severe supply shortages appear.

The emergency stocks ''should not be used to address price fluctuations,'' Abraham told senators, worried about soaring fuel costs.

''We will and we can act quickly to use the Strategic Petroleum Reserve ... to offset any severe disruptions if it's needed,'' Abraham told a Senate hearing. He said, however, the 600 million barrels held in the reserve on the Louisiana-Texas coast would be used only ''to provide energy security.''

''We do not believe it should be used to address price fluctuations,'' Abraham said.

Appeals for government intervention grew louder Tuesday as spot prices of natural gas briefly soared to nearly double the record high of two years ago, in the midst of the California energy crisis, and the price of gasoline lingered at over $2 a gallon in many parts of the country. Heating oil supplies remained tight and prices high.

''People are being pinched like never before'' by soaring gasoline and other energy prices, Sen. Ron Wyden, D-Ore., told Abraham. Wyden said consumers ''are getting hosed because they're not getting any protection.''

Likewise, Abraham dismissed a request by a group of New England heating oil companies that the government make available some of the 2 million barrels of heating oil kept in a Northeast reserve. ''Two million barrels is not a lot,'' he said, and it should be kept in place ''unless there's an emergency situation in terms of supply.''

Abraham said it may be two to three months before Venezuelan oil shipments to the United States return to normal levels, although he suggested the political crisis bedeviling oil production in the South American country has passed. Venezuela has been a leading source of U.S. imports, accounting last year for about 1.5 million barrels a day. Most analysts place part of the blame for the low supplies of crude and petroleum products on the loss of Venezuelan oil imports.

Abraham, appearing before the Senate Energy and Natural Resources Committee, said he understood that ''the crisis that has essentially shut down production (in Venezuela) has passed,'' but it would take 60 to 90 days before the country's imports would return to normal levels.

At a separate hearing later Tuesday, senators expressed dismay about the sudden spike in the price of natural gas, which is used widely across much of the country for heating and for producing electric power.

Natural gas prices have increased by nearly 40 percent since the first of the year and jumped dramatically this week. Contracts for gas delivery in March closed Tuesday at $9.58 per 1,000 cubic feet, an increase of almost $3 from last week.

Spot prices took an even sharper jump.

Guy Caruso, head of the Energy Information Administration, told senators the spot price of natural gas at the Henry Hub, a benchmark delivery point in Louisiana, soared briefly $18 and $20 Tuesday before dropping back to $12.20, the same as on Monday. The spot price two years ago, in the midst of California's energy crisis, reached a high of about $10 per thousand cubic feet.

Only a small fraction of the natural gas sold, between 5 percent and 10 percent, is bought on the spot market. Most gas is contracted in advance at lower rates. Still, the run-up caught energy analysts and industry executives by surprise.

''A lot of this is people speculating,'' Keith Rattie, president of Questar Corp., a natural gas producer based in Salt Lake City, told the senators. He added that much of the speculation is being triggered by higher than expected demand and low natural gas inventories in storage.

The EIA, the statistical arm of the Energy Department, reported last week only 1,168 billion cubic feet of natural gas were in storage as of mid-February, 27 percent lower than the five-year average at this time and 43 percent below what was in storage a year ago.

On the Net: Energy Information Administration: www.eia.doe.gov

www.time.com By TIMOTHY J. BURGER AND ELAINE SHANNON/WASHINGTON Tuesday, Feb. 25, 2003

Osama is still public enemy number one, but the feds are growing more concerned about Hizballah. Could the group be poised for an attack in the U.S.? 

At first blush, it sounds like a run of the mill smuggling case. On Friday in Charlotte, North Carolina, 29-year-old Lebanese national Mohamad Hammoud will be sentenced on charges of running cigarettes from North Carolina to Michigan. But Hammoud isn't some two-bit crook trying to make a little extra cash. He's considered by the feds to be a dangerous terrorist. Hammoud has been convicted of using his illicit income to help fuel Hizballah, the Lebanon-based, anti-Israel terrorist army. For his crime, he faces up to 155 years in prison. Federal prosecutors are convinced he was a young extremist militant before he gained entry to the U.S. through Venezuela in 1992 with a $200 fake visa. They maintain that he stayed in the U.S. by entering into first one, and then another, phony marriage to American women — all the while still engaged to another woman in Lebanon.

For most Americans, Osama bin Laden is the frightening face of international terrorism. But lately, Hizballah is almost as high on the feds' threat meter. "Al Qaeda has not been the only threat. Prior to September 11th, Hizballah had killed more Americans than any other terrorist group," FBI Director Robert Mueller said last year. Just three weeks ago, two alleged Hizballah soldiers were among several individuals indicted in Detroit — also in a cigarette smuggling scheme that the government said is linked to Hammoud's. Prosecutors allege that they, too, were raising money for Hizballah. And TIME has learned that the FBI is investigating the activities of hundreds of suspected Hizballah members or sympathizers in the U.S. — including several dozen émigrés believed to be hard-core Hizballah believers. The investigation is spread over many cities including New York, Los Angeles and Boston. "You could almost pick your city and you would probably have a presence," says one knowledgeable law enforcement official. The concern is that Hizballah — among other groups — may have U.S.-based sleepers in place not only to raise money, but also to pounce with an attack when the timing is right.

Hizballah is certainly a menacing terrorist group with a known track record of brutal attacks all over the world. The organization's American victims in Lebanon range from Navy diver Robert Stethem — his murdered body was thrown out the window of a TWA airliner in a 1985 hijacking in Beirut — and CIA station chief William Buckley the same year, to 241 killed in a 1983 bombing of the U.S. Marine headquarters that led Ronald Reagan to withdraw U.S. forces from Lebanon. The group was also blamed for lethal 1990s bombings of Jewish targets in Argentina — showing that its deadly reach extends far beyond the Mideast.

Attacks like these help account for a $25 million bounty the U.S. has placed on the head of Hizballah's Imad Mugniyeh, who is listed among America's 22 most wanted terrorists and is believed to be hiding out in Lebanon. "Hizballah may be the 'A team' of terrorists, and maybe al-Qaeda is actually the 'B team.' And they're on the list and their time will come," Deputy Secretary of State Richard Armitage said last September. "They have a blood debt to us,... and we're not going to forget it." Added an old counter-terrorism hand: "They're very good and very deadly. For whatever reason, they've stopped killing Americans." But if they decide to start again, U.S. officials dread their professionalism, training and discipline — and their penchant for particularly deadly suicide attacks. "They're military trained. They keep their military skills up," said Chris Swecker, the special agent in charge of the FBI's Charlotte office and a key player in the Hammoud case.

The Hammoud case is auspicious because it has been the first of its kind under a 1996 anti-terror law that outlawed giving material support to terror groups, such as an uncertain amount of smuggling profits that Hammoud was proved to have sent abroad. "The case was about fund-raising, but there was enough evidence seized in the course of the investigation to justify a legitimate concern about terrorism in general," U.S. attorney for Charlotte Bob Conrad tells TIME of the charges his office brought against Hammoud and two dozen or so others, including his brother and several Americans. "A group such as this is in place to do other things."

The Hammoud case began innocuously enough in 1995. Local sheriff's detective Bob Fromme, working off-duty as a security guard at JR Tobacco Warehouse in Statesville, N.C., grew suspicious when he saw a group of Middle Eastern men repeatedly buying hundreds of cartons of cigarettes apiece. Local prosecutors in tobacco-friendly North Carolina weren't interested, but Fromme persuaded the U.S. Bureau of Alcohol, Tobacco and Firearms to investigate. Just as they were poised to bring charges, the FBI swooped in and took over — linking the smuggling operation to the Hizballah cell that Hammoud allegedly headed.

The FBI is using fund-raising investigations like the one in Charlotte to nab operatives like Hammoud while trying to roll up any possible plans for violence. As FBI agent Swecker put it: "These fund-raising cases were good ways to get in and see what they were doing. And if we had to wait and see what they were doing — I mean that'd be way too late." So far, neither Hammoud's gang nor other Hizballah operatives are accused of planning specific attacks here. But Conrad noted that the government filed an affidavit citing a confidential source who said that "if Hizballah issued an authorization to execute a terrorist act in the United States, Mohamad Hammoud would not hesitate in carrying it out." And prosecutors may present evidence at Hammoud's sentencing from an inconclusive post-trial investigation of allegations that Hammoud sought a hit man to "put bullets into the skull" of Kenneth Bell, the lead prosecutor.

Evidence gathered in the case included photos of Hammoud handling guns and rocket launchers in Lebanon and taking target practice in the U.S., as well as brandishing an automatic rifle in Hizballah headquarters in Lebanon — at age 15. Seized from Hammoud's house was a videotape of Hizballah men with explosive belts around their waist "and the interpretation of the chanting is that 'We pledge to detonate ourselves to shake the ground under the feet of our enemies, America and Israel,'" Conrad says. "To me, that indicates a general intent to engage in violence on our soil." Canadian intelligence intercepts showed the Charlotte cell had been in close contact with Hizballah leaders in Lebanon, and the cell was found to have procured "dual-use" equipment for military use there.

Hammoud denied during his trial that he was a Hizballah militant. His lawyer could not be reached. Hizballah leaders in Lebanon also could not be reached for comment. Federal sources say the FBI has identified a small number of emigres who attended Hizballah training camps in Lebanon and now reside in the U.S. A few of these have even returned to Lebanon for more advanced training, sources say. Agents are monitoring them closely, along with a larger number of suspected Hizballah members, associates and sympathizers suspected of providing logistical support for the organization.

While authorities put the heat on Hizballah here, the U.S. has also moved to try to rein in the terror group abroad. In a private meeting in Damascus last April, Secretary of State Colin Powell asked Syrian President Bashar Assad to restrain Hizballah forces that had been firing rockets at Israel from the north. A diplomatic source critical of Iran's role in arming Hizballah tells TIME that the U.S. has at least twice asked Saudi Arabia to stop giving Iranian military supply planes overflight permission for loads of weaponry earmarked for Hizballah. "We continually raise this issue with diplomatic discussions and our views on overflight are well known throughout the region," a U.S. State Department official told TIME. "We don't tolerate illegal flow of weapons and that message has not changed." A Saudi spokesman had no immediate comment.

Meanwhile, the feds are watching closely to see if groups such as Hizballah use the Iraq crisis as a lynchpin for attacks. "If they sympathize and identify with Iraq and they decide this is just an affront to Muslims all over the world, then they could decide to get involved," said one law enforcement official. "We are certainly watching that--nationwide."

Whether Hizballah switches from quiet fund-raising to attack mode in the U.S. "is a big issue," agrees Rep. Jane Harman of California, ranking Democrat on the House Intelligence Committee. "They don't ask our permission."

Additional reporting by Viveca Novak and Adam Zagorin/Washington; Kim Ghattas/Beirut; Matt Rees/Jerusalem

www.zwire.com By Amanda Lee, Macomb Daily Staff Writer February 25, 2003

Macomb Daily photo by Ray SkowronekA Mount Clemens service station reflects a slightly lower price than the week's going rate. The inexplicable drop in gasoline prices this week is causing some analysts to scratch their heads while motorists scramble to fill up their tanks. "You don't know how long it's going to last so I'm going to take advantage of it," said Sid Hawking, 56, of Mount Clemens. "I kept expecting prices to go up and up so when I saw on the news last night they were down I knew now would be a good time to get a full tank. "I'm going to run home and get my wife's car after this and fill her up, too," he said. Michigan pump prices surprisingly dropped 5.1 cents this week, according to AAA Michigan, to a new level of $1.702 per gallon. The metropolitan Detroit average was down 4.4 cents to $1.673 per gallon. "We don't really know why they dropped," said Jim Rink, spokesman for AAA Michigan. "Usually there's plenty of reasons to say why gas goes up but the only time it goes down is when there's a drop in crude oil prices." Rink said he checked local market figures and crude oil prices Monday morning -- but prices had not fallen. "I really don't know why," he said. "It could just be a short term adjustment." Gasoline prices had jumped to their highest levels since the Sept. 11 terrorist attacks amid fears of a war with Iraq and concerns about an ongoing oil strike in Venezuela, a large world oil producer. In addition, a refinery fire in New York late last week was cause for additional concerns. "I did see an item that said that the (refinery fire) would not be a major disturbance," Rink said. "I don't know what to think." Despite the unexpected drop, however, the statewide average now stands at 55.6 cents more per gallon than at the same time in 2002. "It's still high, but it gives me hope that this is a sign that prices are going to go down again," Hawking said. "Everyone kept saying they were going to go above $2 (a gallon), but I think the powers-that-be have seen that we won't put up with that." Trilby Lundberg, a national gas analyst, expects the upward pressure on gasoline markets to yield soon due to increased production in Venezuela, the approach of warmer weather and the reopening of various U.S. refineries that had been idled for annual maintenance. "They have excuses for everything," Hawking said. "In the summer it's because the gas is more expensive to refine, now in the winter those refineries are closed, what I want to know is when does it all stop?" The decline in Michigan prices reflects the volatility of the market, said Ed Weglarz, executive director of the Service Station Dealers Association of Michigan. "Sometimes the gasoline pricing changes every day," Weglarz said. "The gasoline market tends to be like the stock market -- when in doubt, raise the price."

straitstimes.asia1.com.sg

CARACAS - A pact condemning political violence, signed last week by the government of Venezuela's President Hugo Chavez and opposition leaders, appeared to be breaking down on Monday as opponents threatened to withdraw from the accord.

Tens of thousands of President Chavez's opponents protesting against his government in Caracas. An opposition-led strike in December and January had failed to result in early elections and force Mr Chavez to resign. -- AFP

Opponents of Mr Chavez, grouped in the Democratic Coordinator, warned that they could rescind their side of the agreement unless the international community pressed the government into upholding the accord.

The warning follows the house arrest of Mr Carlos Fernandez, head of the Fedecamaras business federation, by armed security police in a heavy-handed midnight raid last week.

Mr Fernandez is facing charges of 'criminal instigation' and 'civil rebellion' for his role in co-leading a two-month strike in December and January aimed, unsuccessfully, at pressing for early elections and forcing Mr Chavez's resignation.

'If the international community does absolutely nothing and the government does not uphold its side of the agreement, we will withdraw,' said opposition negotiator Timoteo Zambrano, in talks facilitated by the Organisation of American States (OAS).

No outside sanctions were agreed as part of the accord, but opponents of Mr Chavez had hoped members of a six-nation Group of Friends would lend diplomatic weight to reinforce the OAS-sponsored agreement.

The group - consisting of Brazil, Mexico, Chile, Portugal, Spain and the United States - was formed last month to give fresh impetus to a four-month-old effort by the OAS to broker an electoral solution to the country's political deadlock.

However, in a sign that Mr Chavez is willing to put already cool diplomatic relations on the line to deflect outside pressure, he has bluntly warned both the OAS and the Group of Friends not to interfere in domestic affairs. --Financial Times

china.scmp.com Wednesday, February 26, 2003 MARK O'NEILL in Shanghai

Oil prices surged last month as China rushed to increase imports ahead of a likely US-led war on Iraq, according to figures released yesterday.

However, a top transport official said the country could diversify its sources of supply to cushion the impact of an invasion.

Figures published in the Shanghai Securities News showed that last month imports of crude oil rose 78 per cent to 8.36 million tonnes, with the average price up 51 per cent, resulting in a net increase in payments of US$1.11 billion (HK$8.6 billion) as buyers rushed to secure supplies before the start of any war.

Domestic crude prices in January rose 42.7 per cent from a year earlier, while those of oil products rose 25 per cent, the report showed.

But Cui Zhenchu, the deputy general manager of the transport division of China International Oil and Petrochemicals Company - a unit of Sinopec, which accounts for two thirds of China's crude imports - said that a war would not have a great impact on imports.

Last year, China imported nearly 70 million tonnes of oil, against domestic production of about 170 million tonnes, of which half came from the Middle East, including Saudi Arabia, Iran, Iraq, Kuwait, Oman and the United Arab Emirates.

"If supplies of oil from the Middle East were cut, it would be a huge disaster for the world economy," said Mr Cui. "The United States is the biggest buyer of Middle East oil and would certainly use its military might to keep the supply lines open.

"Iraq has a limited ability to threaten these supply lines, because the range of its missiles is not long. Once the war breaks out, China can take shipments from ports far from the Gulf, such as Yemen and Oman, or Saudi ports on the Red Sea."

He said his company had a long history of co-operation with the big shipping companies that carried most of China's imports. They had been through the Iran-Iraq war and the 1991 Gulf War together, which gave him confidence that the contracts that had been signed would be honoured.

In the worst-case scenario, if oil transport was cut from the Middle East, China would increase imports from other suppliers, such as Nigeria, Angola and Sudan in Africa, Venezuela, Britain and countries in Southeast Asia, he said.

"A war between Iraq and the US would bring some risks to the shipping lanes for China's oil, but overall we can guarantee the stability and safety of the country's imports," he said.

The impact of a war on China's aviation will be limited. From February 13, Air China suspended the Karachi-Kuwait stretch of its Beijing-Karachi-Kuwait flight because of the threat of war. But other routes, a three-weekly passenger service by China Southern Airlines from Beijing to Sharjah via Urumqi and a once-weekly cargo service by China Southern from Beijing to Sharjah, are still running.

During the Iran-Iraq war, flights between China and Europe and North Africa were diverted from Middle Eastern air space to Russian air space, an arrangement that still exists.