www.news-miner.com72521205844,00.html Article Published: Wednesday, February 26, 2003 - 3:03:45 AM AKST By DOUG REYNOLDS

A number of Europeans and Americans are saying that the United States wants to go to war with Iraq for cheap oil.

While that may or may not be the only justification for war, it could be one goal. Nevertheless, it is important to look more critically at the ramifications of war on the international oil market.

Since 1973, when the first oil shock hit the industrial world, no feasible oil substitutes have been developed. Electric power and space heating have oil alternatives, but fuel for cars, planes, boats and trains is derived mainly from oil.

We don't have economically feasible oil substitutes, even though plenty of research and development dollars have gone into these alternatives from government, big oil and many smaller firms. That is why in the 30 years since the first oil shock, oil substitutes technology has been relatively marginal, especially in comparison to information technology. We still depend on oil.

In fact, the proof of the pudding of our oil dependence can be seen by watching the world's economic performance every time the oil market changes radically. Three of the last five major world economic growth slowdowns have occurred after an oil market shock. (Four out of six if we include the economic collapse of the Soviet Union and Eastern Europe that occurred after an internal oil shortage.) And the biggest growth spurts occurred during times of very low oil prices. Even the current world slowdown is being exasperated by higher oil prices. Thus, economic growth and oil price volatility are highly correlated.

Even if we are instrumental in creating a nascent democracy in Iraq (a big "if" considering the complexity of the nation and region), it does not mean that oil production will be put under a competitive oil leasing regime similar to what the United States and Canada have. Mexico, Venezuela, ostensibly Iran and even Norway are all democracies and still oil production is completely government controlled. Likewise, Iraq probably will have a government-controlled oil company after a war.

Iraq likely won't produce much more oil than it did before 1991, when Iraq was free to produce as much oil as it could and only got up to 3 million barrels per day, which is only a half million barrels per day higher than its current average output. That only adds a half a percent to world output. Plus, repair and development of the infrastructure will likely be as slow as it would be in any of the major underdeveloped oil producing countries. So if our country's goal is fast, cheap oil, victory in Iraq will not soon provide us with that end.

Another danger, however, is Iraq's potential for wreaking havoc in the Persian Gulf, where 65 percent of the world's proven reserves of oil reside. While it is possible that within the Middle East, Israel and Iran already posses nuclear weapons, Iraq's possession of a nuclear capability is more troubling.

Unlike other potential nuclear powers, Iraq could try a quick strike with conventional arms in order to take Kuwait again, and even go on to Saudi Arabia, the United Arab Emirates and Qatar in order to control over 20 percent of the world's petroleum exporting supply potential. Then they can sit back and threaten nuclear explosions on the oil fields if they are attacked. The fields would be ruined and radioactive if that happened. It would be blackmail.

There are four solutions: continue to contain Saddam Hussein with devastating economic embargoes while the Iraqi people suffer; try to increase United Nations weapons inspections and possibly insert United Nations peacekeepers; let Iraq free of embargoes so that it can rebuild its military for another attack on Kuwait with the addition of nuclear threats; or engage in a regime change intervention.

The costs in terms of money, military buildups, human suffering and oil supply stability in the long run are hard to determine for each of the options. Interestingly enough, the only way that the United Nations has been able to keep up an economic embargo at all and be able to put weapons inspectors on the ground in Iraq is when the United States threatens a credible military intervention. Unfortunately, with higher oil prices and the ability of Iraq to smuggle oil out and trade for arms, the regime change option could become harder in five or 10 years. The war is troubling, so are the other options.

Doug Reynolds is an associate professor of oil and energy economics at the University of Alaska Fairbanks. He can be contacted at ffdbr@uaf.edu.

www.miami.com Posted on Wed, Feb. 26, 2003 BY KEVIN BAXTER kbaxter@herald.com

KEY YEAR: Alex González, whose 2002 season ended when he injured his shoulder in May, wants to prove he's up to the demands of playing shortstop: "This year is very much a key year for me," he said.

JUPITER - No matter what happens during the next nine months, Alex González can take comfort in knowing it can't possibly be worse than the past nine.

Since May, González has seen a potential Gold Glove-winning season wiped out by an injury, then watched first-hand as his native Venezuela became engulfed in deadly political violence.

So when he takes the field this afternoon for the Marlins' first exhibition game of the spring, he'll be thinking of the future, not the past.

''This year is very much a key year for me,'' González said Tuesday.

And not only because his $1.7 million contract runs out this fall; after all, every Marlin but center fielder Juan Pierre will see his contract end when the season does. But only González has the added burden of proving he's strong enough -- physically and mentally -- to be an everyday player at shortstop, one of the most demanding positions.

''He knows he has a tough season to face,'' said former shortstop and fellow Venezuelan Ozzie Guillén, now the Marlins' third-base coach. ``This season can be the biggest for him in his career. He can't go two years without playing the way he should be playing.''

González got off to a great start last season and was hitting .261, 40 points above his career average, after a month. He was also dazzling in the field, committing just one error in 22 games.

''The way he played before he got hurt, he was a Gold Glove winner without question,'' Guillen said.

But then in the third inning of a mid-May game against the Giants, González dislocated his left shoulder diving for a ball hit by Barry Bonds. It was the same shoulder he hurt in 1996, during his third professional season. Only this time González had a partially torn labrum as well. So after suffering through five painful rehab starts in the low minors, González ended his season early and was operated on by Dr. James Andrews.

For the next four months, González didn't touch a ball and aimed for a mid-January return in the Venezuelan winter league. But when widespread discontent with the government of President Hugo Chávez led to a general strike and riots in the streets, the league shut down, sidelining González another two months.

''I practiced with the team. I did some rehabilitation exercises on my arm. I did everything I could to . . . prepare myself for spring training. But it affected me,'' González said of his canceled winter season.

And it might continue to affect him. Although González's girlfriend, Johanna Josely, and the couple's 3-year-old son, Alexander, will be coming to South Florida in April, the rest of his family will remain in Venezuela, amid violence and uncertainty.

Guillén said González will have to put those worries aside when he takes the field, just as Guillén did in 1995 when his best friend, former Marlin Gus Polidor, was fatally shot by robbers at his home in Venezuela.

González, who is promising to play cautiously during the exhibition season, said he feels great and his arm is ''about 80 percent'' healed. Guillén and manager Jeff Torborg said González looks better than that, although the real test will come later in spring training.

''The worst thing about it is swinging the bat,'' Guillén said. ``The next day after swinging the bat, your body will be sore. I think he's ready to play. He's got one thing in his favor: The manager loves him.''

PROBABLE LINEUP

Torborg will debut his probable opening day lineup against the University of Miami today in the first exhibition, at 3:05 p.m. at Roger Dean Stadium.

Second baseman Luis Castillo will lead off, followed by Pierre, catcher Ivan Rodríguez, first baseman Derrek Lee, third baseman Mike Lowell, right fielder Juan Encarnacíon, left fielder Todd Hollandsworth and González. Nonroster invitee Dontrelle Willis will start on the mound.

www.canada.com JAMES STEVENSON Wednesday, February 26, 2003

Canadians enjoy some of the lowest gasoline prices in the world and if blame is to be assessed for rising prices they should look at government taxes at the pumps, Imperial Oil president Tim Hearn said yesterday.

Hearn said Canadian pump prices - which averaged 82 cents a litre last week - can be directly connected to international events such as the continuing troubles in major oil producer Venezuela and prolonged war clouds over Iraq. A particularly cold winter on North America's east coast has also boosted demand and kept crude prices sky high.

"Just take the tax out and take a look at how Canada compares to the U.S. today," Hearn said in an interview. "And everybody says the U.S. has the lowest prices in the world."

Taxes account for almost 40 per cent of the cost of gasoline at Canadian retail stations. Imperial is Canada's largest oil producer, operates the national Esso brand of 2,500 service stations and is 70 per cent owned by global energy giant ExxonMobil.

Hearn said the real price of gasoline has gone down in the past two or three decades, while provincial and federal taxes have risen by more than twice the rate of inflation.

"I guess you can never avoid the politics of mischief."

Last week the federal industry committee demanded to hear from Canada's top oil executives on the recent surge in oil prices, which hit Canadians both at the pumps and through home heating oil.

The high price of fuel prompted MPs from all political parties to accuse Canada's big energy companies of collusion and price-gouging. But Hearn said the energy market in Canada is "as efficient" as any country in the world.

www.neponsetvalleydailynews.com By Erin Walsh Wednesday, February 26, 2003

Where do you buy your gas?

That is a question posed by an e-mail making its way around urging consumers to boycott imported oil from the Middle East by having consumers steer away from filling their tanks at stations notorious for purchasing crude oil from the Middle East.

The e-mail reads "The Saudis are boycotting American goods. We should return the favor." It goes on to claim gas stations like Citgo, Sunoco, Conoco, Sinclair and Hess don't import Middle Eastern oil, while counterparts Shell, Exxon, Texaco and Mobil do.

The talk of war with Iraq and the ongoing strike in Venezuela have spiked gasoline prices over the past few months.

Venezuela rates among the world's top 10 crude oil producers, while Iraq holds the second largest proven reserves, with more than 112 billion barrels of oil.

Energy officials familiar with the e-mail claim it's a hoax and that it's impossible to determine which stations use Saudi oil.

"I'm familiar with it. Every time (gas) prices go up the same e-mail goes around," said Stephen Dodge, associate director for the Massachusetts Petroleum Council in Boston.

Dodge says the United States receives 60 percent of its crude oil from overseas, with a good portion coming from Persian Gulf countries.

"Overall, as far as product like gas and home heating oil goes, (individual stations) get a mix from overseas and domestic production," said Dodge. "It's hard to say one company gets all its finished product from Saudi Arabia. So I really wouldn't venture to say (boycotting) would be a symbolic gesture because it's only a meaningless gesture."

Art Kinsman, director of government affairs for AAA New England, says a boycott of Middle Eastern oil is a "silly" notion and one that would only hurt station owners.

"How you could know for a fact a retailer is using only non-imported oil seems ludicrous to me," said Kinsman. "I would hate to see anyone penalize the local Shell guy because someone says his oil comes from Saudi Arabia."

Jonathan Cogan, spokesman for the Energy Information Administration, says the administration has no way to track where all oil comes from at the retail level.

"The only thing we can look at is a mandatory survey importers have to file that looks at the volume and type of oil imported," said Cogan.

"A dealer that owns a local gas station buys from a refiner or a bulk storage terminal that has oil coming from several pipelines."

Kinsman has closely followed gas price jumps in Massachusetts and says consumers can still feel empowered when it comes to the pending War with Iraq and its oil consequences.

"Reward the retailers charging less for gas by shopping around at the pumps," said Kinsman. "The main reason the prices are so high right now is jitter in the market over (threatened) war with Iraq."

Kinsman said this week's survey saw self-serve regular prices averaging from $1.57 to $1.80, with the highest full-serve price coming in at $2.10 per gallon.

"We're paying a war premium now for a war that hasn't happened," added Kinsman, whose not fully convinced individual retailers are making more of a profit when the prices spike.

"In some cases where a little local battle over customers ensues among retailers, some may be making less profit even though overall price is higher," said Kinsman.

Reporter Erin Walsh can be reached at 781-433-8337 or ewalsh@cnc.com.

www.iht.com Dulue Mbachu Associated Press February 26, 2003   LAGOS, Nigeria Cars and buses ground to a halt Tuesday in Africa’s leading oil-producing nation, gripped by its worst fuel shortage since military rule ended four years ago. In the commercial capital, Lagos, hundreds of thousands of commuters were stranded and most buses — the main means of transport in this overcrowded city of 12 million people — were off the streets for lack of fuel. The West African country is the world’s six-largest exporter of crude but it doesn’t have the refinery capacity to meet its gasoline needs. Lines first formed at gas stations on Feb. 17 during a strike by government employees overseeing loading at export terminals and fuel distribution depots, but shortages continued even after the strike ended Feb. 20. The state-owned Nigeria National Petroleum Corp. initially blamed the crisis on motorists who engaged in panic-buying but later acknowledged a serious shortfall in supply. Lagos is sub-Saharan Africa’s largest city. The crisis hit at one of the key claims of President Olusegun Obasanjo’s civilian government — that it had eased the chronic gas crunches of preceding decades of corrupt military rule. Jackson Gaius-Obaseki, head of the petroleum corporation, said late Monday that the country’s strategic reserves had dropped from enough stocks to last 24 days to enough for 11 days. He said efforts to replenish supplies were being hampered by rising global oil prices caused by the threat of war in Iraq and a prolonged strike that hit the industry in Venezuela. Of 11 shipments of fuel ordered by Nigeria in January, less than 30 percent arrived. Motorist Daniel Abegun, who waited Tuesday for more than five hours at a Lagos gasoline station, accused station managers of selling fuel to black-marketeers and smugglers. Nigeria, with a population of 120 million people, consumes 300,000 barrels of crude oil daily. The country’s four poorly maintained refineries usually account for less than half of that. The rest is imported. Half of the country’s crude output goes to the United States. The shortages come at a politically sensitive time for Obasanjo, who was elected in 1999, is running for re-election in April. Under a succession of military rulers since independence in 1960, Nigeria suffered nearly constant shortages as a result of endemic corruption, mismanagement and smuggling of fuel to neighboring states.