www.washingtonpost.com By Warren Brown Washington Post Staff Writer Friday, February 28, 2003; 12:54 PM

The threat of war in the Middle East is boosting gasoline prices in the United States. So is political instability in oil-producing Venezuela.

An unusually harsh winter in the Mid-Atlantic and Northeast isn't helping. Some analysts in the oil and auto industries say pump prices could rise as high as $2.50 a gallon for self-serve regular unleaded gasoline.

Nationally, today's average pump price for self-serve regular unleaded is $1.67 a gallon, a few fractions of a cent higher than it was Thursday, according to the American Automobile Association's "Daily Fuel Gauge Report."

But $1.67 is 54 cents higher than the per gallon average a year ago, the AAA says. District of Columbia consumers are paying an average $1.75 for regular unleaded gasoline, compared with an average pump price of $1.15 a gallon a year ago.

Prices are lower in Maryland and Virginia. But consumers in those places still are paying more money for a gallon of gasoline today than they did last year. For example, Maryland residents in the Washington metropolitan area are spending an average $1.70 per gallon of self-serve regular unleaded, compared with $1.15 a year ago.

Virginians are having a better time. For example, consumers in Richmond are paying an average $1.58 a gallon for self-serve regular unleaded, compared with $1.04 a gallon last year.

Media reports indicate that car shoppers are edgy over the gasoline price increases. That suggests that the nation's car manufacturers might be biting their nails, too.

They're not.

That doesn't mean the car companies are sanguine. All of them literally have war plans. But none of them seems close to pushing the panic button.

"The issue isn't how high gasoline prices go. It's how long they stay high," said Michael Morrissey, public policy spokesman for General Motors Corp.

"Consumers have gotten used to cyclical changes in gasoline prices. A family of four is not likely to go out today and buy a subcompact car just because gasoline prices are high," Morrissey said. "Most consumers don't buy cars on a whim. They make it a part of long-term family financial planning. That planning is affected by high gasoline prices only if those prices stay high," he said.

Auto manufacturers don't act on a whim, either, said George Pippas, chief sales and marketing forecaster for Ford Motor Co.

"Product planning is done many years in advance of demographic changes or other [factors], such as fluctuations in gasoline prices," said Pippas. A case in point, he said, are the new gasoline-electric hybrid vehicles that use fuel more economically than conventional cars.

Ford in mid-2004 will introduce a gasoline-electric version of its compact Ford Escape SUV. The 2003, four-wheel-drive version of that model, equipped with an automatic transmission, averages 23 miles per gallon in highway driving. The Escape Hybrid will get up to 40 miles per gallon, according to Ford officials.

"But we didn't start working on the Escape Hybrid because of the current spike in gasoline prices. We began developing that one three or so years ago," Pippas said.

"You can't just respond to a crisis. You have to be committed to providing more fuel-efficient vehicles because you believe that those are what the market will be demanding over the next decade or two," Pippas said.

At the moment, the U.S. market is awfully confusing. There is much ranting and raving against sport-utility vehicles. Yet, SUVs and other light trucks constitute 50.6 percent of current new-vehicle sales while car companies are having a hard time giving away cars that are more fuel efficient.

Honda Motor Co. and Toyota Motor Corp. are beating their breasts in self-praise because they were the first to market gas-electric hybrids-the Civic Hybrid and two-seat Insight for Honda and the Prius sedan for Toyota. Yet, both of those self-avowed environmentally friendly companies are raking in the cash by selling SUVs such as the full-size Toyota Sequoia, the Honda Pilot and the Acura MDX.

And look at GM. It grabbed lots of attention in January at the North American International Auto Show in Detroit by announcing that it will offer gas-electric hybrids across most of its vehicle lines between now and 2007. Yet, it also shocked environmental senses by bringing forth a conceptual super car-the 16-cylinder, 1,000-horsepower Cadillac 16.

Now, GM officials are suggesting that the Cadillac 16 was just an idea that will remain an idea. But they still are preparing a phalanx of new pickup trucks and SUVs to do battle with the Japan-based companies that are introducing new full-size pickup trucks and truck-based SUVs, such as the proposed Toyota Harrier SUV and the ready-for-market Nissan Titan pickup truck.

"The years in which truck sales far outpace demand for cars eventually will come to an end," said Pippas. "But I don't think that's going to happen over the next 10 years, and it certainly is not likely to happen because of current increases in gasoline prices," he said.

It will happen because baby boomers, currently the biggest buyers of SUVs, are getting older, Pippas said.

"Think about it," he said. "Can you see yourself climbing up into an SUV or pickup truck at 65? I can't. I want to get into something lower to the ground. So do a lot of people. That's why car-based SUVs are all the rage," he said.

www.vheadline.com Posted: Friday, February 28, 2003 By: David Coleman

Venezuela's Supreme Tribunal of Justice (TSJ) Constitutional Chamber has declared inadmissible one of three shelters introduced by Mineras Las Cristinas, C.A. (Minca) against an unavoidable execution of a November 6 (2001) administrative act which declared the rescinding of Minca's 1992 work contract at the Las Cristinas 4, 5, 6 and 7 goldmines.

TSJ file 02318 has now been irrevocably sealed by the decision of the court following a similar ruling of inadmissibility by the First Administrative Court of Appeals. A further ruling to close file 03138 referring to a constitutional shelter lodged by Minca is now deemed without merit since Minca had not lodged any appeal.

According to the files, the shelters had been aimed at trying to neutralize the administrative process by which the Venezuelan Guayana Corporation (CVG) had terminated Minca's work contract because of a string of breaches of contract.  CVG president, Major General (ret.) Francisco Rangel Gomez says that the corporation will continue to act in defense of the interests of the Republic of Venezuela inasmuch as here is valid legal reason why the contract was terminated after more than 10 years without fulfilling contracted investment and operational agreements.

www.forbes.com Reuters, 02.28.03, 12:29 PM ET

CARACAS, Venezuela, Feb 28 (Reuters) - Venezuela's four foreign-financed extra heavy oil upgrading projects from the Orinoco region are back online following the restart of the Petrozuata joint venture on Friday. The projects, which partner state oil firm Petroleos de Venezuela PDVSA with international firms such as U.S. ExxonMobil (nyse: XOM - news - people) and French TotalFinaElf <TOTF.PA>, had been pumping over 400,000 barrels of extra heavy oil before shutting down due to an oil strike started Dec. 2. The Cerro Negro and Sincor projects resumed output this week after PDVSA restarted natural gas supplies needed as feedstock for processing units that upgrade the ultra heavy oil into synthetic crude for export. Ratings agency Standard & Poor's said on Friday Petrozuata's field production "is ramping up as upgrader charge rates rise." Petrozuata officials were not immediately available to give further details. A fourth project, Hamaca, has resumed limited output of the tar-like Orinoco oil mixed with lighter crude to create an exportable blend. Hamaca's synthetic crude upgrader has not been completed. Initial output from all four projects will increase as gas supplies improve. Venezuela's government has been battling to restore the strike-hit oil sector, which provides half of state revenue. President Hugo Chavez fired over 15,000 PDVSA workers who took part in the strike, hiring replacement workers and the military to staff abandoned posts. The OPEC nation, normally the world's No. 5 crude exporter, was pumping nearly 3.1 million bpd of oil including output from the Orinoco region before the strike. On Thursday, oil minister Rafael Ramirez said total oil production had been restored to 2.08 million bpd. But PDVSA employees and rebel oil workers said that output temporarily fell by 450,000 bpd to 500,000 bpd on Friday. The rebel workers say output is now 1.13 million bpd.

reuters.com Fri February 28, 2003 12:32 PM ET By Susan Schneider

NEW YORK, Feb 28 (Reuters) - Brazilian sovereign bonds surfed nearly 1 percent higher on Friday, extending their recent rally, as a string of solid economic numbers and optimism for the newgovernment's fiscal policies eclipsed lingering jitters about a potential U.S.-led attack on Iraq.

Brazil's share of J.P. Morgan's Emerging Market Bond Index Plus notched up a return of 0.86 percent on the day, underpinned by a 0.25 point gain in the nation's benchmark C bond BRAZILC=RR to 74.5 bid. The broader EMBI-Plus gained 0.21 percent on the day.

The gains came on the back of robust January budget surplus figures and a 2002 growth rate running slightly above the previous year. The figures added to the ongoing cheer for Lula's efforts to stitch together a consensus in Congress for the overhaul of the social security and tax systems, said traders and analysts.

"Everything coming in is pretty much what the market wants to hear. We've had the primary budget surplus number and we've had the GDP number" and Lula's team is meeting its promises so far, said an emerging debt trader.

This week Brazil's government said the public sector posted a primary budget surplus of 8.46 billion reais ($2.4 billion), a sharp jump from the 5.44 billion surplus reported in the same year-earlier month. The gross domestic product, buoyed by a thriving agriculture sector, expanded 1.52 percent in 2002 compared with revised 2001 growth of 1.42 percent.

Brazil's bonds have also enjoyed a solid showing since Lula and 27 Brazilian governors pledged to work together to reform the bloated public pension and tax regimes last weekend.

"We had good news over the weekend and local investors had plenty of cash to spend. They started pushing the market up, a few guys tried to destroy it but they basically had to cover and that pushes it up higher," said another trader.

"Then guys who are underweight or at high cash levels are forced into the market because they feel they're going to miss it. It just feeds on itself," the trader said.

The strong day for Brazil came as investment bank Goldman Sachs raised its allocation of the bonds in its model portfolio to overweight. In a report, Goldman said it lifted Brazil to 1.0 percent overweight from 1.0 percent underweight thanks to the new government's push for austere fiscal policies and structural reforms.

As Brazil heads into the Carnival holiday, which starts on Saturday and runs through midday next Wednesday, traders said they were expecting volumes to be light in coming sessions.

Brazil's bonds rewarded investors with a 6.4 percent return for the month as of Thursday and a solid 12 percent on the year to date, according to the EMBI-Plus.

MEXICO STEADY IN WAKE OF BOND

Mexico also lent a positive tone to the market as its bonds moved a touch higher. The nation's share of the EMBI-Plus added 0.15 percent return on the day, a move that comes two days after the nation sold $1 billion in 12-year global bonds containing much-discussed clauses aimed at smoothing the road of a possible restructuring.

The bond included so-called action clauses, which allow for changes to a bond's terms with less than 100 percent approval from bondholders. In Mexico's case, the threshold for approval is 75 percent.

The provisos theoretically provide borrower nations with breathing room in the event of a restructuring by preventing a few holdout investors from tying up the process in court. But they had generated some worries on Wall Street as investors feared their bargaining position would be undercut.

The flap over the clauses appeared to have abated on Friday.

"It was pretty much well received," the first trader said of the bond. "They're pretty much done with their 2003 financing needs so they're using it to buy back Brady debt, so I think that's given a pretty good tone to the market."

Among other emerging economies, the debt of Venezuela, where the economy is reeling from the effects of a two-month opposition strike and the charged standoff between President Hugo Chavez and his foes, added 0.87 percent on the day.

($1=3.57 reais) (Reporting by Susan Schneider; editing by Phil Berlowitz; Reuters Messaging: susan.schneider.reuters.com@reuters.net, tel: +1 646 223 6319)

www.voanews.com Melanie Sully Vienna 28 Feb 2003, 16:29 UTC

OPEC headquarters, ViennaThe Organization of Petroleum Exporting Countries (OPEC) says it has spare capacity of four million barrels of oil per day that could be released to make up a shortfall, in the event of a U.S.-led attack on Iraq. The comments come as oil prices surged to nearly $40 a barrel in New York.

OPEC has up to four million barrels per day spare capacity, if there is a need for extra crude oil. An official with the cartel said in Vienna that, beyond that, there would be limitations. But a petroleum expert in Vienna familiar with OPEC's operations says the reserve capacity would not compensate for a shortfall, if Iraqi sabotage troops were to torch oil fields in Kuwait or Saudi Arabia.

In addition, any extra long-haul crude would take weeks to get to the U.S. market.

The expert also doubts that the non-OPEC oil producing countries, such as Russia, Norway and Oman would be able to increase their oil production to meet any shortfall. But a spokesman for the Oman Embassy in Vienna said his country would not have a problem increasing supplies.

OPEC Secretary-General Alvaro Silva Calderon said in Vienna on Thursday that no guarantees could be given on oil prices. He said the current increase in prices has more to do with speculation on a possible war than with the market supply.

In January, an emergency meeting of OPEC ministers agreed to boost oil production by 6.5 percent to 24.5 million barrels per day, to meet the shortfall in oil exports from Venezuela, where domestic strife has hurt production.

The OPEC ministers will meet for a regular session in Vienna on March 11, which will be attended by non-OPEC oil producing countries, such as Russia and Oman.

Mr. Silva Calderon says the cartel does not intend to raise quotas for the second quarter of 2003, if there is no war.