www.sfgate.com H. JOSEF HEBERT, Associated Press Writer Thursday, March 6, 2003
(03-06) 16:35 PST WASHINGTON (AP) --

Gasoline prices are expected to continue their upward climb and reach a record national average of $1.76 a gallon in April, the Energy Department forecast Thursday.

It predicted gas prices will average about $1.70 a gallon for regular brands through the summer driving season.

Gasoline prices have soared during the past month because of high crude oil costs, heavy demand for heating oil and tight inventories of crude as well as most petroleum products.

Already many parts of the country have been paying $2 or more at the pump. This week prices soared on the West Coast, where refining problems added to the price spike.

Gasoline prices increased to an average of $1.68 a gallon nationally this week, a hike of nearly 3 cents from last week and 54 cents higher than a year ago. Prices on the West Coast took the biggest jump, increasing by 8.5 cents to $1.93 a gallon, according to the Energy Information Administration.

"With the driving season beginning next month, pump prices are expected to continue to rise," said the EIA in a short-term energy forecast released Thursday.

The EIA said gasoline inventories remained tight, close to the lower end of the five-year average. This "is one of the reasons current pump prices are high," said the EIA, the department's statistical agency.

The $1.76 a gallon forecast for April would be a nickel more per gallon than the record high of $1.71 set in May 2001, said the agency.

These prices would still be somewhat of a bargain compared to gasoline costs in 1981 if inflation were taken into account, the EIA noted. Using today's dollar, motorists were paying the equivalent of $2.90 a gallon in March 1981, said the EIA.

The EIA said crude oil prices in February "moved higher than expected pushed by fears of war in Iraq, lower inventories (and) slow recovery of Venezuela's exports." The price of West Texas Intermediary, a benchmark crude, averaged $36 a barrel, a level not seen since October 1990, just months before the start of the Gulf War, the agency said.

Alluding to possible fighting in Iraq, the report said that "even without additional disruptions to world (oil) supply in the near term, prices are likely to remain on the high side and subject to substantial volatility through 2003."

Cold weather and tight supplies of both natural gas and heating oil caused residential heating bills to soar this winter.

The government estimated that if normal temperatures prevail through the end of this month, residential heating bills, compared with last year's cost, will be up by 30 percent for homes using natural gas, 60 percent for homes using oil, and 25 percent for homes using propane.

The cost of heating oil climbed to $1.83 cents a gallon this week, or 68 cents higher than a year ago, the government said. Propane increased to $1.72 a gallon, 60 cents more than a year ago. Natural gas prices have receded somewhat, but remained high.

On the Net:

Energy Information Administration: www.eia.doe.gov/

sg.biz.yahoo.com Friday March 7, 6:21 AM

CARACAS (Dow Jones)--Venezuela would back any OPEC decision including a temporary suspension of the group's oil output quotas in the case a U.S.-led intervention in Iraq were to happen in the coming weeks, the nation's Oil Minister said Thursday.

"We will back any decision the group may take ... also if that means a temporary suspension of output quotas," Rafael Ramirez told reporters at the presidential palace Miraflores.

OPEC is meeting March 11 in Vienna and is expected to agree to suspend output restraints in the event of a war. But, in practice, due to rampant quota-busting in response to sky-high prices, OPEC already has dropped restraints and is essentially pumping at maximum levels.

Venezuela, however, is not likely to contribute above its official output quota level of 2.819 million b/d due to a crippling strike from which it is only recently recovering.

Earlier Thursday, Ramirez was quoted as saying production stands at 2.5 million b/d. "We're close to reaching our OPEC production ... by the end of this month," Ramirez was quoted as saying by state-run news agency Venpres.

The government's production level sharply contrasts with figures maintained by ex-staff of PdVSA (E.PVZ). They claim production stands only at 1.09 million b/d after PdVSA temporary shut in 500,000 b/d of crude production due to an export bottleneck in the east. The government, however, claims the 500,000 b/d have already been recovered.

A nationwide strike which started Dec. 2 and lasted for two months severely crippled exports and production, which stood at around 3 million b/d by the end of November.

The company is struggling to reach or go beyond the 2 million b/d production level, analysts have said. After focusing on easy oil fields that don't require much added pressure to get the oil flowing, PdVSA faces difficulties as mature oil fields are more labor and capital intensive and take more time to pump oil.

Experts have said they doubt PdVSA would reach 2.5 million b/d any time soon due to a lack of financial and human resources.

-By Fred Pals, Dow Jones Newswires; 58414-2887461; fred.palsdowjones.com

www.forbes.com Reuters, 03.06.03, 5:36 PM ET

CARACAS, Venezuela (Reuters) - Venezuela is lifting a force majeure on all of its crude and product exports, which had been severely disrupted by a two-month opposition strike, President Hugo Chavez said on Thursday. The announcement was the strongest signal yet that the world's No. 5 oil exporter was restoring its petroleum operations. The strike started on Dec. 2, but fizzled out in early February. "We have decided to suspend the force majeure on all of (state oil company) PDVSA's operational activities "... we guarantee operations to the entire world," Chavez said during a ceremony to swear a new PDVSA management board.

www.forbes.com Reuters, 03.06.03, 5:36 PM ET By Bernie Woodall

NEW YORK, March 6 (Reuters) - The biggest U.S. oil companies have backed away from buying Iraqi crude as looming war in the country makes purchases too much of a risk, government figures show.

The threat of a public backlash at firms buying Iraqi oil and concern that Iraqi supplies might be cut off by war are too great, analysts said.

ChevronTexaco (nyse: CVX - news - people), the biggest buyer of Iraqi crude in late 2002, has stopped taking shipments from Iraq as the Bush Administration closes in on war, a spokesman said.

"We've developed economic alternatives," said ChevronTexaco spokesman Chris Gidez. "This is a prudent, business-driven decision."

The top previous U.S. buyers of Iraq crude oil -- Exxon Mobil (nyse: XOM - news - people), Valero (nyse: XOM - news - people), privately held Koch and ChevronTexaco (nyse: XOM - news - people) -- have ceased or greatly slowed their purchases of Iraqi oil, the U.S. Department of Energy says.

"It's mom and apple pie here. Consumers are looking at the source of oil and people are very unhappy about doing business with companies that are buying from Iraq right now," said oil analyst Peter Beutel of Cameron Hanover of Connecticut.

While U.S. refiners take most of Iraq's exports, no U.S. companies purchase Iraqi crude directly from Baghdad. Rather, middleman trading firms usually buy Iraq's crude from Baghdad under U.N. supervision and then resell it to U.S. refiners.

According to European shipping sources, the last cargo of Iraqi crude that was sold to ChevronTexaco, was shipped in late January,

Exxon Mobil purchased 89,000 barrels per day (bpd) of Iraqi crude oil through the whole of 2001, but none at all in November and December, the latest U.S. government figures show.

Valero (nyse: VLO - news - people), one of the biggest U.S. refiners, has cut back from 152,000 bpd throughout 2001 to 49,000 bpd in the fourth quarter, the figures show. Koch which took 84,000 bpd over the year, took none in the fourth quarter. The companies declined comment.

FOREIGN FIRMS STILL BUYING

While Iraqi crude is still coming into the United States, it is foreign-owned oil companies such as France's TotalFinaElf <TOTF.PA> and Venezuela's U.S. affiliate Citgo that are bringing the oil into the country, according to government figures.

In the first two months of this year Iraq shipped just over 1 million barrels a day to the United States -- some 67 percent of the Iraqi crude sold officially in the U.N.-administered oil-for-food program, industry sources said.

Iraq has since December 1996 sold crude oil through the U.N. "oil-for-food" program, an exception to 1990-91 Gulf War sanctions that allows Iraq to export oil and use the revenue to buy food and humanitarian goods for its citizens.

ChevronTexaco usually likes to buy Iraq's sour crude for its refineries in California and Louisiana because its specifications closely match the needs of those refineries.

Iraq has a sustainable export rate of about 2.2 million barrels daily. But exports have lagged since late 2001 as an illegal surcharge outside the U.N. program that the Iraqi government demanded from its oil customers discouraged international firms from buying Iraqi oil.

INSECURE SUPPLY

After Baghdad dropped the surcharge last September, some U.S. companies, such as ChevronTexaco, initially stepped up purchases of Iraqi crude.

But the threat of imminent war as the Bush administration resolves to disarm Iraq using military force if necessary has made Iraqi crude too risky.

"It's the uncertainty. Companies are worried about the supply. They want to be sure they can lift and they can't be sure going into a war," said analyst Raad Alkadiri of The Petroleum Finance Co. in Washington.

Iraqi exports are widely expected to halt in the event of military action in Iraq and oil traders are wary of hefty cancellation charges that tanker owners impose to compensate losses if loadings cease

Many refiners -- now making their best profits in years as gasoline and heating oil prices rise -- are also nervous about relying too heavily on Iraqi oil.

"If you're loading early next week there's a good chance the oil will be there, but then you run the risk of waiting too long to try to sell," said one trader.

While ChevronTexaco has stopped buying Iraq's oil globally, Exxon Mobil continues to purchase Iraqi crude oil as long as it does not go to the United States, industry traders said.

www.vheadline.com Posted: Thursday, March 06, 2003 By: Patrick J. O'Donoghue

The Confederation of Trade Unions executive (without Carlos Ortega) is embarking on some damage control as it fights off criticism inside the trade union movement regarding its seemingly compliance to the wishes of Federation of Chambers of Industry & Commerce (Fedecamaras).

Executive secretary Pablo Castro says it’s time for reform and suggests pruning the top heavy federation and union affiliation structure. “We have a union structure as if we were a developed country … Germany has reduced unions to around 15 and has come out stronger.”

The structure the CTV in Venezuela, Castro says, must streamline itself to between 15 and 20 organizations according to economic sectors.

Castro admits that the proposal will have a stormy passage as old-style union bosses resist change and fear a loss of power.

The CTV has convened a Congress for April 8-9 and Castro’s proposal will figure high on the agenda. The CTV leader adds that Petroleos de Venezuela (PDVSA) union structure must change with the times and says he has the support of Froilan Barrios and Alfredo Ramos.