www.click10.com Posted: 8:07 a.m. EST February 27, 2003

WASHINGTON -- Some State Department officials say Venezuela needs to rebuild its status and reliability as an oil supplier.

Top officials told a Venezuelan delegation in Washington that the South American nation's political disruptions have created serious doubts about its standing in the oil world.

They were told the way to restore the reputation was for the government and opposition to work out their differences.

The Venezuelan delegation passed on that word to officials in their nation.

Venezuela has been a leading source of U.S. oil imports. But a general strike in Venezuela paralyzed the oil industry for a time -- and many analysts chalk that up for part of the low supply of oil in the United States.

www.miami.com Posted on Wed, Feb. 26, 2003 By GORDON WITTENMYER Saint Paul Pioneer Press

FORT MYERS, Fla. - Gasoline was so scarce that Johan Santana once traded shifts with relatives for eight days waiting in line at a gas station that had no gas but told customers the tanker truck was due any day.

The fuel was so valuable that once he decided to buy some on the black market and paid 30 times the government rate, he sped home as quickly as possible with his 195 liters out of fear he would be robbed, or worse.

"Just carrying gas in your car is dangerous," the Minnesota Twins pitcher said. "I knew I was in danger the whole time. But you have no choice."

That kind of danger became a way of life this winter for the major leaguers and minor leaguers who make their year-round homes in their native Venezuela - the South American political hot spot, where anti-government protesters have been killed and a nearly 3-month-old general strike by business owners threatens to destroy the economy.

"It's scary," said Twins second baseman Luis Rivas, whose hometown of LaGuaira is just outside the Venezuelan capital, and epicenter of unrest, Caracas. He now lives several hours away but has friends and family near the capital.

"We couldn't do nothing," Rivas said. "You never know what's going to happen_something bad. You have to be in your home."

Santana, Rivas and pitcher Juan Rincon, who lives in the oil-rich region around Lake Maracaibo, spent much of their offseasons as virtual shut-ins, avoiding the streets except as necessary to make discreet purchases of gasoline or to drive to Caracas for visa applications or to get to the airport to fly to Florida for spring training.

"It's a nightmare," Rivas said.

The cause of the upheaval is strong-arm President Hugo Chavez, an ally of Cuba's Fidel Castro who is trying to take greater control of what has been a representative government. As anger among the private business powers grew in the tropical nation made prosperous by oil, nationwide business shutdowns began - a one-day strike in November and then another on Dec. 2 that has yet to be lifted.

JOBLESS AND DESPERATE

The strike has put people across the country out of work, resulted in countless protests, most visibly_and deadly_in Caracas, and filled the streets of Venezuela with growing numbers of people, many with growing desperation.

"Every time you step out of your home, you're in danger," Rincon said. "People aren't working. A lot of people were fired from the petroleum plants. The malls have been closed for almost a month.

"People in the streets might think you have money. I'm lucky in my hometown (of 4 million people); not too many people know me."

Many banks are open for only a few hours daily and no longer operate a currency exchange program because of the wildly fluctuating value of the Bolivar, Venezuela's currency. The players protect their U.S. wages and bonuses with base accounts in this country, transferring funds to Venezuelan accounts as needed.

Other businesses also operate within strictly limited hours and are starting to suffer supply shortages, Rincon said. Makers of soft drinks, beer and other products have shut down.

And with the gas shortage, police cars are becoming an increasingly rare sight, along with other emergency vehicles such as ambulances.

"We've never been through this before," Rincon said.

And the Twins thought contraction was tough to survive.

"There was a lot of concern," Minnesota manager Ron Gardenhire said. "You throw the baseball stuff out the window. It comes down to their lives. You have guys getting robbed for gas, people getting taken out of their cars and beaten."

As recently as 1991, economic reforms in Venezuela after oil prices dropped resulted in widespread protests, with hundreds killed. And the government endured two attempted coups in 1992.

But no political or economic crisis in the lifetimes of these early-20-something Twins has lasted this long or affected their lives so personally_and never has it canceled their winter baseball season.

BASEBALL SEASON CANCELED

With the start of the Dec. 2 strike came the end of the Venezuelan winter league. Santana was due to start pitching for his team Dec. 4. Rivas managed to play one game before the strike. And Rincon started early because he anticipated a possible strike but still got in only 11 innings before the shutdown.

Rincon, who had access to workout facilities and players to throw to near his home, has appeared strong in the early part of camp. Santana, who didn't throw all winter, brought a lingering hamstring pull from a late-December attempt at conditioning. Rivas didn't practice much and put on five to 10 pounds during the forced break.

"I'm glad I took some rest," Santana said. "But now I've got to start all over again."

Said Rivas: "You can tell the difference. It's going to be hard. But I got here early (by about a week) to start, and I don't think it's going to be a problem."

If anything, the biggest problem for the Venezuelan players, once Major League Baseball intervened to make special arrangements for teams to obtain their players' visas, also was the source of their biggest relief: Leaving behind their country_and their loved ones.

"I still worry," Santana said. "I'm glad I'm here, because I need to play. But I'm still worried because my family and friends are there. It's not easy to be here and think about friends there and the whole situation going on right now."

Rivas has a sister and grandmother living near Caracas.

"I wanted to leave, but sometimes I wanted to stay with my family," he said.

For whatever might have been lost in conditioning and practice time, the Twins were fortunate. None of their players from Venezuela, nor the handful of U.S. coaches and players sent there for winter league ball, was directly involved in any of the violence. No one was robbed or hurt.

And, so far, the harrowing offseason hasn't made them start house hunting in the United States.

"Still, I love my country," Santana said. "That's where I'm from. My family's all there. As long as I can, I'll stay there, and we'll see how it goes.

"Hopefully, everything will change, and it will get back to normal."

money.cnn.com February 27, 2003: 8:59 AM EST

VIENNA (Reuters) - OPEC said Thursday it can cover any stoppage of Iraqi oil during war without the need for consumer countries to release emergency reserves even as crude prices hit a 12-year high.

Speaking as U.S. oil prices set a post-Gulf war high of $38.66 a barrel, cartel Secretary-General Alvaro Silva said: "This is not a problem of oil in the market, it is a problem of speculation."

"Yes, we are confident we can manage the situation given the level of production in Iraq," he said. "OPEC has been managing the case of Iraq for more than 10 years. We will try to alleviate the situation in the normal way and meet our commitment to stabilize the market," he told reporters at OPEC headquarters

U.S. light crude spiked $1.04 to $38.74 a barrel, the highest oil price since Iraq's invasion of Kuwait in 1990 when crude peaked at over $41. London Brent gained 66 cents to $33.52, near a two-year high.

A frigid winter in the U.S. also boosted demand for oil products, particularly heating oil.

"It's all down to a shortage of heating oil and natural gas in the United States, backed up by the prospect of war," said Christopher Bellew of brokers Prudential Bache in London.

OPEC's Silva said the producer group was already pumping beyond official output limits but could not stop speculators driving oil prices higher.

"We put 2.8 million barrels a day more in the market in December and January and you can see the result," he said of extra OPEC output.

Industrialized consumer nations, including the United States, have yet to decide whether or not they will release crude from emergency stockpiles, should the U.S. launch an attack against Baghdad. Spare cushion

Producers are hoping they can convince the Paris-based International Energy Agency, which controls the reserves, that a repeat of its 1991 Gulf War emergency drawdown will not be required.

The group says it has the capacity to fill any shortage from Iraq, as well as compensate for shortfalls from Venezuela, where a strike is in its 12th week.

It will want to avoid the IEA triggering sales from the huge reserves held among 26 member countries that include the U.S., Germany and Japan for fear the extra oil will cause a slump in prices after any war.

Silva said producers had another four million barrels a day of spare supply ready to call on, easily enough to cover Baghdad's 1.7 million bpd of exports.

Saudi Arabia already thought to be pumping nine million of its available 10.5 million bpd, independent experts put spare supply in the cartel at little more than two million.

OPEC meets March 11 and is expected to leave official supply quotas unchanged.

"Until now 24.5 million is enough, " said Silva of the official limit for 10 member countries.

Delegates have said OPEC may suspend quotas altogether during the period of any war, although Silva played down that possibility.

"It is not an issue of suspending quotas. The quotas have been functioning well," he said. "But of course in the case of catastrophe that's another question. Nobody knows the result of a war."  

www.smh.com.au By Matt Wade February 28 2003

Businesses shrugged off the threat of war, drought and global economic gloom and spent up on investment last quarter, but the relentless rise in oil prices continues to haunt the economy.

Capital expenditure rose 13.8 per cent in the December quarter to be up 24 per cent in 2002, the Bureau of Statistics said.

"Corporate Australia is taking advantage of solid profit growth and healthy consumer demand to both upgrade and update its assets," CommSec senior analyst Craig James said.

There was no sign that global uncertainties have taken much of a toll on future investment plans, with local firms reporting solid investment intentions.

"Australia is two years into a business investment upturn and [this] data points to it extending into 2003-04," Deutsche Bank senior economist Tony Meer said.    advertisement       advertisement

Investment in plant and equipment was up a strong 17.1 per cent in the December quarter and is expected to lead the way in the months ahead, analysts said.

Investment in buildings and structures was up 3.6 per cent in the quarter.

Investment by miners and manufacturers stood out and transport was boosted by spending by Qantas and Virgin Blue.

Official economic forecasts have been counting on business investment contributing significantly to economic growth this year, and yesterday's figures confirmed these expectations.

HSBC senior economist Anthony Thompson said the capital expenditure figures were stronger than expected considering the confidence-sapping global backdrop.

"Considering the survey was taken during January-February, when business confidence fell back under the weight of geopolitical concerns, investment plans for both 2002-03 and 2003-04 are very strong," he said.

The investment strength made an imminent interest rate cut even less likely.

"The Reserve Bank's confidence in the economic outlook has been reinforced by the solid investment result," CommSec's Mr James said.

"With unemployment low, business and consumer spending healthy and construction activity booming, the Reserve Bank has no domestic justification to cut interest rates."

But with world oil prices reaching a post-Gulf War high just under $US38 a barrel on Wednesday night, developments overseas still pose a significant risk to the local economy.

Fears that war in the Persian Gulf will affect oil supplies and reduced supplies from major oil producer Venezuela have triggered a sharp rise in fuel prices.

Many oil market analysts believe the price of crude could soon move above $US40 barrel, pushing petrol prices higher.

Higher fuel costs could cause local businesses to review investment and employment plans and force consumers to cut spending, with negative consequences for the economy.

The Merrill Lynch Leading Indicator, released yesterday, rose marginally in December but points to slower economic growth in Australia.

"We expect the leading indicator will continue to point to a slowing economy over coming months. However ... the slowdown in the Australian economy over the next six to nine months is not expected to be severe," Merrill Lynch Australian economist Trent Barnett said.

DEIRDRE MCMURDY Freelance Thursday, February 27, 2003

TORONTO - There was jubilation in Whistler, B.C., on Sept. 30, 2002. While the rest of Canada was still easing gently from summer into autumn, the resort town two hours north of Vancouver embraced the first snowstorm of the season - and the eight centimetres of powder it deposited in the surrounding mountains.

For local residents, that premature blast of winter ensured a strong start to a seasonal tourism industry that represents millions of dollars in annual revenue for multinational corporations like resort-owner Intrawest and Fairmont Hotels - as well as the thousands of people they employ and scores of small, independent businesses that serve the market.

Weather has become much more than the subject for stilted small talk in awkward social encounters. In an intensely competitive global economy, it's a variable that affects the performance of almost $3 trillion U.S. in North American economic activity.

In fact, it's now considered such an important determinant of business success or failure that Environment Canada's quarterly seasonal outlook is carefully guarded until its release. At the annual meeting of the American Meteorological Society earlier this month, some experts argued that the federal government must start treating its weather data like insider information.

"Details about the weather can move commodity prices - especially when it comes to trading futures contracts," explained David Phillips, senior climatologist with Environment Canada. "We treat that seriously."

Weather is now taken so seriously, that even the Central Intelligence Agency has started tracking weather patterns based on the rationale that they directly affect economic conditions, which in turn influence political trends.

"Weather is no longer seen as a random act of fate. It's very much part of the long-term decision-making process for business now," Phillips said.

Last year's mild winter in the United States is credited with staving off a full-blown recession by some economists. They claimed that lower heating costs, reduced snow removal bills, higher construction income, reduced transportation costs, fewer insurance losses and stronger retail sales combined to generate about $21 billion U.S. in economic activity - all because of the balmy temperatures. Housing starts, for example, jumped 6.3 per cent in January 2002, the highest level in two years.

That's not about to happen this year, however. Record cold spells - along with geopolitical turbulence in the Middle East and Venezuela - have created an imbalance in the supply and demand for heating fuel and gasoline. Normally at this time of year, refiners begin to build their inventories of gasoline in anticipation of increased driving volumes in the spring. This year, they're still struggling to meet the demand for heating-grade fuel - which could create a gasoline supply shortage later this year.

Natural gas prices have spiked by as much as 40 per cent - again, a function of robust demand outstripping easily-available supply.

Many electric power utilities have also faced a crunch, especially in light of their recent deregulation. Previously, when they encountered sharp increases in demand and soaring costs, regulators would allow them to pass along expenses directly to consumers. Now that they must compete in an open market, it has become tougher to pass along the costs to consumers.

Technology has played a critical role in the business sector's effort to get a grip on variables like weather. Intricate computer models fed by satellite data can now map out where high pressure ridges and storm systems will form weeks in advance. As a result, a three-day forecast is now about as accurate as a 24-hour forecast was 20 years ago.

This technology has also allowed weather to morph into a sophisticated financial product that has even begun trading on the Chicago Mercantile Exchange. The weather derivative market emerged around 1997, and less than three years later, it was valued at $8 billion U.S.

Weather derivatives let a corporation limit its weather-related losses by transferring a portion of the risk to an investor.

Given the heightened emphasis on forecasting weather and its economic effects, a growing number of companies are hiring in-house meteorologists. Transportation companies, oil and gas producers, utilities - even large brokerage firms now have them on staff to track conditions for futures traders and their clients.

Despite its formidable scientific and economic force, however, weather will never cede its place in our social interaction. After all, there's no subject quite as relevant anywhere in Canada: So is it cold enough for you?

Deirdre McMurdy is host of Moneywise, Monday to Friday at 12:30 p.m. on Global Television.