www.tribnet.com Roy Gallop | THE News Tribune BARBARA CLEMENTS; The News Tribune

Andy Green looked up at the reader board and sighed.

The price for premium gasoline at this Fife Chevron station had just inched over the $2-a-gallon mark.

"I can't believe this," Green grumbled as he filled his tank with $1.95 medium grade fuel.

"I used to shop around, but now I don't," Green said. "Every sign is beginning to look like the ones around here."

Down the street at a Texaco station, gas cost $2.12 for premium, stair-stepping down to a "low" of $1.92 for regular unleaded - ranking the outlet among the highest-priced gas stations in the South Sound.

Local and national experts in the gasoline and crude oil industry disagree over whether the relentless price climb at the pump has leveled off - or is just catching its breath before spiking upward once again.

Some believe prices will fall once war starts with Iraq and commodities traders are assured the oil supply will continue to flow. Others fear that a war will mean $3 a gallon gas at the pump.

They also disagree on the cause of this winter's price spikes. Is it just war jitters? Some say so. Others point to oil exporter Venezuela's political instability or the East Coast's heating-oil demands.

But since Washington state refineries get more than 90 percent of their crude oil from Alaska and Canada, why should a labor strike in Venezuela affect us? Or a war in Iraq or the deep freeze in New York, for that matter.

Conversations at pumps around the South Sound last week eventually turn to the question: Who is profiting from this?

Spokesmen from the oil companies, refineries and gas stations each say it's not them.

Refinery and oil representatives say they aren't making a big profit on the recent price increase, which hit all-time highs in the Seattle area last week at $1.82 a gallon for regular unleaded. That broke a record set in October 2000.

On Friday, Tacoma's gas prices set a new record at $1.73 per gallon for unleaded regular, according to AAA, formerly known as the American Automobile Association, which tracks pump prices nationally.

"In many parts of the country, prices are beginning to level out," said Janet Ray of AAA. "But we're going up (in this region), while others are coming down."

What pushes prices Oil company representatives say that they are feeling the pinch at the pump like everyone else, and no, their companies are not gouging the U.S. consumer under the guise of pending war.

"The price of crude is simply higher," said Bill Hickman of the American Petroleum Institute in Washington, D.C.

Institute reports show that crude oil prices on the worldwide market are 70 percent higher than a year ago. This last week, crude oil prices tickled the $40 a barrel mark, the highest level in 12 years.

"The price of crude has just been skyrocketing," concurred Marcia Nielsen, spokeswoman for U.S. Oil and Refining Co. in Tacoma, the only refinery in the state south of Anacortes.

A small refinery which produces about 30,000 barrels of product a day, U.S. Oil does not set the price of gasoline in this state, Nielsen said.

That's established by crude oil prices and by the four larger refineries located in Skagit and Whatcom counties, near the Canadian border.

"We're not a price leader, but a price follower," Nielsen said.

Gasoline and crude supplies in the United States also are at record lows, according to the Energy Department and the petroleum institute.

While about 98 percent of this state's oil comes from either Alaska or Canada, for the nation as a whole there's a different scenario in play, the petroleum institute's Hickman said.

About 60 percent of U.S. crude comes from overseas - from countries such as Canada, Saudi Arabia and Venezuela.

The oil flow from Venezuela, which provides the United States with 8 percent of its crude, stopped in early December due to a labor strike, which was finally settled late last month. But it may take months for the crude oil shipments to return to their normal levels, said Energy Secretary Spencer Abraham.

Even with the crude delivery from Venezuela on line again, there is fear of war interrupting supplies from the Gulf states, Hickman said.

Although the United States receives only 2 percent of its oil from Iraq, about 33 percent of the U.S. oil supply comes from OPEC and countries in the Persian Gulf, according to the Department of Energy.

"The oil market is really a worldwide market now," said Frank Holmes of the Western States Petroleum Association. "Things happen anywhere in the world, the market reacts instantly."

International worries aside, a cold snap along the eastern U.S. seaboard also has refineries producing more heating oil than gasoline, thus reducing the overall supply of gasoline in the nation, Hickman said.

Still, he acknowledges that his friends and family give him the hairy eyeball over gas prices at the pump. "I even get it from my kids," he said.

Hickman adds there have been dozens of congressional probes into price gouging by oil companies, but not one investigation has resulted in an actual criminal charge.

But two years ago, an investigation by The Oregonian newspaper in Portland found that BP Amoco bumped up West Coast oil prices by exporting its Alaskan crude to Asia for less than it could have sold it in U.S. refineries.

Gas dealer skepticism Tim Hamilton said there's no doubt in his mind that oil companies are making huge profits from the recent price bumps.

Hamilton is an energy consultant and executive director of the Automotive United Trades Organization, an association representing 500 independent gas dealers in Washington.

Oil companies both pump the crude and refine the viscous liquid into gasoline at refineries they own, he said.

"It really doesn't cost any more to bring it out of the ground," Hamilton said.

The recent price hikes have nothing to do with the cold snaps back East, strikes in Venezuela or a pending fight with Iraq, he contended.

The oil companies are simply ramping down the production of gasoline to drive the price up, he said.

This comes at time when the oil industry is adopting "just-in-time" production schedules. While this practice, adopted about three years ago, saves the industry money, it creates an instant shortage if crude does not arrive as planned, industry experts said.

Given this, prices topping the $2 a gallon mark now - well before the summer driving season - worry Hamilton.

"If there is a single burp in the refinery system between now and then, we could see $2.50 to $3 a gallon at the pump in a matter of a week," he said.

Even if Saddam Hussein blows up his country's oil fields, as he did in the 1990 Persian Gulf War, it's doubtful that would have a direct effect on oil prices, he said.

"The Saudis replaced that production in a matter of hours," Hamilton said.

Once the gulf war started, prices at the pump dropped, Hamilton and other experts noted.

AAA figures back this up. In April 1990, the average price for unleaded gas in the United States was $1.06. When the gulf war began in late summer, the price jumped to $1.42. But it dropped back to $1.06 in March 2001, after the war ended.

Hamilton stressed that the station owners aren't getting rich off the almost hourly price increases drivers have seen over the last 12 weeks.

Most owners have been losing $4,000 a month because price increases have gobbled up any profit margin they receive on the gasoline.

"Typically, station owners don't make any money on gasoline," Hamilton said. "They hope you'll fill up, and then go and buy that higher-priced Twinkie.

"The station owners are the people taking the heat for these increases by the customers, not the oil executives."

If there is any solace for beleaguered station owners or consumers such as Green, it may be that other states are feeling the bite worse than Washington.

Last week, California posted the highest average price for unleaded regular gasoline in the nation, at $1.99 a gallon. The average price for premium: $2.15.

The Associated Press contributed to this report Barbara Clements: 253-597-8652 barbara.clements@mail.tribnet.com

State and local gas prices reach record levels Over the last 12 weeks, gas prices rose to record levels in the United States as well as in Washington state and the Seattle-Tacoma area. Seattle's gas prices hit record levels in mid-week.

On Friday, the price for regular unleaded gasoline set records in the state and in Tacoma.

The state's prices came in at $1.77 on Friday. In Tacoma, the price at the pump for regular unleaded was $1.73, which also broke the record set in 2000, according to AAA, which tracks gas pump prices nationally. (Published 12:30AM, March 2nd, 2003)

www.kinston.com Story ran : 03/02/2003 By Sandy Wall Staff Writer

With the price of regular gasoline hitting $1.60 per gallon and higher, most Eastern North Carolina motorists are looking for easy ways to conserve the near-precious commodity.

Mechanics and automobile experts say the best ways to save gasoline is to follow the maintenance schedule in your vehicle's owner's manual, to keep your car's engine in good shape and to drive sensibly.

Following that simple advice can save up to four or five miles per gallons, mechanics say. But failing to follow those tips can cost money - both in wasted gasoline now and in more expensive repairs later.

"People just need to do the routine maintenance on their vehicles. That's the bottom line," said Kinston mechanic Jim Snader.

Uncertainty about a possible war with Iraq coupled with political strife in oil-rich Venezuela have caused a spike in the price of motor vehicle fuels in recent weeks.

Some in Lenoir County have resorted to extreme means to keep gas in their cars. According to law enforcement reports, Kinston police responded to at least six reports late last week of motorists driving away from gas stations without paying for fuel.

Mechanics say there are far less drastic things motorists can do to save fuel and money. A tune-up is a good start.

The first thing to look for? Make sure your car's spark plugs are functioning properly.

"If you got one that's missing on one or two cylinders, you're losing up to four or five miles per gallon," said John Mewborn, owner of Plaza Exxon in Kinston.

Most of today's automobile engines rely on computers to determine how the correct mix of fuel and air. The computer in turn rely on information gathered from various sensors.

If those sensors become clogged with carbon residue or are not functioning correctly, the computer can cause the engine to brun too much gas, mechanics say.

"If they're not working properly, it'll tell the engine to put in too much fuel," Mewborn said.

Tuning up an engine is a usually a sure way to improve your car's gas mileage.

But the days of simply replacing the plugs and points and setting the timing are over, said Greg Williamson, general manager of the Firestone Tire and Service Center in Kinston.

" Tune-up doesn't have the same meaning it did 25 years ago," he said.

Mechanics say today's tune-ups can be complex affairs, with computer diagnostics and high-priced emissions-control equipment to look after.

Full-service tune-ups and other repairs such as the replacement of oxygen sensors can cost upwards of $250 to $300, mechanics say.

But there are also some low-cost fixes you can try, such as replacing your car's air filter.

Williamson said it's important not to forget your car's tires. Properly inflating your tires and ensuring they have good tread can improve gas mileage, he said.

Driving sensibly is also a good way to increase your car's gas mileage. Automobile experts say you can improve your gas mileage about 15 percent by driving at 55 mph rather than 65 mph.

The U.S. Environmental Protection Agency has other tips drivers can use to save gas.

They include:

• Go easy on the brakes and gas pedal. Avoid quick starts by accelerating gradually whenever possible. Also, anticipate stops to avoid sudden braking.

• Avoid long idles. Turn off the engine if you anticipate a lengthy wait. Instead of idling at a drive-up window, park the car and go in. Idling burns more gas than restarting the engine. Limit car warmups in winter.

• Avoid carrying unneeded items in the trunk. Extra weight decreases gas mileage. Also, reduce drag by placing items inside the car or trunk rather than on roof racks.

• When warm weather arrives, use your air conditioning only when necessary.

Roll down the windows or open the air vents to keep your car comfortable on not-so-hot days.

Sandy Wall can be reached at (252) 527-3191, Ext. 251, or Sandy_Wall@link.freedom.com.

www.irna.com Tehran, March 2, IRNA -- "If concerns over the imminent US-led military attack on Iraq are not removed, oil prices will surge over and above dlrs 50 in the not too distant future," predicted `Iran
Daily' on Sunday.
Crude prices climbed close to dlrs 40 per barrel in America on Thursday, noted the Perspective column in the English-language daily. The surge in oil price started in December after Washington started to use psychologically pressure to forcefully dispose the Baghdad regime. This, along with the conflict in Venezuela and the cold weather contributed to the hike in oil prices, it added.
It must be noted that the Organization of Petroleum Exporting Countries' benchmark price in recent months has been rising, the daily wrote.
On Thursday, it exceeded dlrs 32 and oil traders expect the prices to go beyond dlrs 40 a barrel in view of US pressure, the daily further predicted.
It recalled that the prices of crude oil reached its peak of dlrs 41.50 a barrel in 1991 and before the outbreak of the Persian Gulf War.
It must be noted that an upsurge in oil price of over dlrs 40 a barrel will bring chaos and confusion in the global oil market,
predicted the paper.
"Maintaining the prices at this level will also lead to a recession in America and other industrialized nations," it added.
Based on latest international reports, the world market is not facing a crunch and the current rise in both prices and demand is more political oriented, it said.
Thus, any developments related to the imminent US-led war on Iraq will have dire consequences on the international price of the black gold.
Worse still, if Iraqi supplies are cut as well as the supply of regional countries become problematic, it will adversely affect the global oil markets, added the paper.
Considering that a long war in the region might lead to a rise in demand in the long run, the paper believes that OPEC could compensate the shortfall. But this cannot be done unless some of the OPEC members increase the output and whether this would be possible when the shooting starts, it added.
Another possible scenario, the daily further predicted is the fact that the strategic reserves of the International Energy Agency (IEA) might be used to confront a possible oil shock.
In this connection, the remarks of the IEA Director, Claude Mandil, in London that the "reserves of the IEA members are equivalent of 115 days of total imports needs," is noteworthy, wrote the paper.
Under the circumstances, OPEC is expected to play a more active role in controlling the market and prevent the dire consequences of a new and destructive war, it suggested.
The world fully knows that America is targeting Iraq as a pretext to take hold of that country's oil as well as that of the entire region.
Political experts maintain that the oil market will undergo major changes and America will try to regulate the market based on its own economic policies, the daily believes.
But the possibility that US might succeed to this end depends on several factors and it cannot be hopeful of full success, it added.
OPEC policies based on different and effective criteria can help prevent its weaknesses, the paper believes, highlighting the need of Iranian policy-makers to chart out contingency plans to avoid shocks that could harm the country's economy in the wake of oil price fluctuations.
"All plans should heed long-term goals and based on ground realities so that the national economy is prepared as best as possible for the post-war era," concluded the daily.
FH/AR
End

www.pittsburghlive.com By Gregory M. Drahuschak FOR THE TRIBUNE-REVIEW Sunday, March 2, 2003

Investment commentaries lately have focused on two points, Iraq and the limp-along pace of the United States economy. But while the U.S. frets over its economic growth and numerous political uncertainties, one nation is moving full steam ahead economically, which, depending upon how you assess the politics involved, could either be very good or very bad for U.S. investors.

China's economy is booming. Imports are up 21.2 percent year-over-year, and the government is targeting 7-8 percent real Gross Domestic Product growth for 2003. The nation's trade posture is strong, also, with a current-account surplus of 2.2 percent of its GDP.

China quickly is becoming a force in nearly every basic industry, either as a maker or user. China accounts for 14 percent to 25 percent of the global steel demand and 20 percent of production. Aluminum production in China has grown 13 percent a year since 1990 and made the nation a net exporter of aluminum. China represents 12 percent of global commodity chemical demand and 11 percent of global consumption. It has been estimated that Chinese demand for plastics could rise 10 percent or more each year for the foreseeable future.

But this growth does not come worry free. As with any industrialized nation, energy availability is a crucial issue. It is notable to recognize that until 1995, China was a net exporter of oil. In 2001, it imported more than 60 million tons. It has been estimated that China's need for imported oil will at least double over the next decade.

China may now be another example of the old cliché that warns to be careful about what you wish for because your wish might come true. As long as 20 years ago, a widely voiced hope was that China's vast economic growth potential could be realized. Now that this is moving closer to reality, the offshoot of this growth could complicate economic life significantly everywhere else.

So where does China plan to get all the imported oil it needs? Where else but the same places everyone else gets it: primarily, the Middle East.

A comment from OPEC last week should have sobered those who believe a halt to Mideast tensions automatically will drop the price of oil and allow the oil tap to run wide open. An article in the Wall Street Journal suggested that OPEC no longer can control the upside in prices and that there is not much more room to increase production.

Knowing that the engine for its growth will be fueled by energy availability, China has been trying to cut delivery deals with many nations and reportedly has done so already with Sudan, Venezuela, Iraq and Kazakhstan. Arms deals with the Saudis appear to have an energy connection to them, also.

Just shy of 30 years ago, the U.S. got what should have been a huge wake up call when OPEC cut production and placed an embargo on shipments of crude oil to Western countries. Six years later, a revolution in Iran prompted another pricing and supply jolt.

Despite what might be termed Johnson & Johnson Band-Aid attempts at resolving the problems — like coal gasification projects, windmills and other energy alternatives — we essentially did little to extricate ourselves from the shackles that bound us to imported energy. And we now are paying a literal price again for our lackadaisical approach to the problem, and that's before China is considered.

China's growth finally may offer investment opportunities, but China also may have provided us with another reason to seek energy alternatives that would not only remove our energy shackles, but also could remove the Middle East as a political issue.

The question now is one of resolve. Finding economically viable energy alternatives will not come easily or cheaply.

In 1960, President Kennedy set out to land a man on the moon and was chided soundly supposedly for wasting money on something that would benefit nearly no one. The benefits today, however, are abundantly evident in the billions of dollars of GDP related to technology. Without the demands of the space program, development of computers as we know them might have been delayed years beyond the current time.

Today, an all-out alternative energy search likewise might be expensive, but it not only might allow us to achieve our objective, it also could have a multitude of spin-off benefits — not the least of which is not having to listen to the droning comments in the news about world political events and a slumping equity market.

Gregory M. Drahuschak is first vice president of Janney Montgomery Scott Inc., Pittsburgh.

cgi.citizen-times.com By Asheville Citizen-Times March 1, 2003 6:04 p.m.

On paper, the plan looks good. Overthrow Saddam Hussein and allow democracy to bloom in Iraq and spread to the Muslim world.

If it works, the result will mean less oppression, more freedom and a much safer world. Thus, a much safer America. The size of that "if'' is gargantuan.

It's hard to overstate the number of eggs currently in the Iraq basket. The economy hinges on Iraq. The 2004 elections hinge on Iraq. The future of the United Nations and NATO are being shaped by Iraq.

To put the situation in terms of a poker game, President Bush has taken a solid but not spectacular hand - that Saddam Hussein is a brutal and dangerous leader who should be ousted - and is betting on it like it's a royal flush. The result is seriously frayed relations with the U.N. and NATO and a series of world hot spots from Venezuela to North Korea that aren't receiving the attention they deserve because of the single-minded focus on Saddam. Saddam was in a box.

We've crawled in with him.

The box is getting more uncomfortable by the day, as estimates of the cost of the war (now around $100 billion, not including billions to Turkey and the like) and the size of a U.S. occupation force (hundreds of thousands of troops) and the length of the mission (no end in sight) grow.

And this is the optimistic view.

On paper, Bush's vision of the outcome of the "battle for the future of the Muslim world'' foresees a region that is fundamentally changed to the favor of the U.S. The reality is far less clear-cut. A short comment from Youssef Ibrahim of the Council on Foreign Relations to the Washington Post frames that reality well: "I think Arabs almost without exception would welcome more democracy and more freedom of expression and to be liberated from the police states they all - in one form or another - live under. It does not follow that they would trust America to do this for them. The view over there is totally different from the view expressed here."

Indeed, the views expressed on these shores aren't exactly in lockstep. And that's not surprising, given the administration's continual raising of the stakes.

With the latest raise, we have rather casually gone from fighting terrorists to taking out Saddam with a pre-emptive strike and now to changing the face of the entire Middle East.

The president outlined this vision in a speech Wednesday at the American Enterprise Institute, a conservative think tank. It was probably the most inviting comfort zone possible for such a speech. But to his credit, unlike his father, the president has a vision for what happens after the war. If the first President Bush had had such a vision, we wouldn't be where we are now. But this plan goes beyond think tanks and far beyond comfort zones. It is a grand and wonderful vision. And it's worth remembering that the vision of a freer world should always be the vision of an American president and the American people.

Beyond vision is the matter of strategy, of how to get from Point A to Point B and on down the road. The president is looking at Point Z. A lot of cards are going to have to fall in our favor.

Even if things go perfectly, however, it sets a very hard road for this nation. Are we ready to see our sons and daughters deployed for years on end in foreign lands? Are we ready to pay the financial price, which almost certainly will be steeper than predicted? Are we ready to reinstate the draft to provide the manpower needed to fuel such a venture, if needed? Is this vision worth creating huge rifts with allies across the globe?

There is something of a sense that we are a nation at a precipice.

Are we sleepwalking right over that precipice?

Taking that step may be a wise move. It may not be. There's a lot that can go right with this grand vision. There's a lot - probably more - that can go wrong.

We're about to find out.

The last cards are being played.