www.mlive.com Thursday, March 6, 2003 BY ROBERT HARRISON KALAMAZOO GAZETTE

Residents calling gas stations to shop around for the lowest gas prices may have been told by store managers that it is against the law for the gas prices to be given over the phone.

A state official said those managers are mistaken.

"There is nothing that says they're forbidden from giving the prices over the phone," said Sage Eastman, spokeswoman for Attorney General Mike Cox.

Edward Weglarz, executive director of the Service Station Dealers Association, said he understands managers may be frustrated with getting up to 30 calls a day, but they should answer people's questions.

"It is bad customer service -- and a bad business practice -- for them not to give customers that information," Weglarz said.

Last week, Gov. Jennifer Granholm issued an executive order on the monitoring of gas prices that will require the Michigan Department of Agriculture and the Michigan Public Service Commission to work together in that effort, said Sara Linsmeier-Wurfel, spokeswoman for the agriculture department.

The order is intended to protect consumers from price-gouging tied to the slowdown in oil imports from Venezuela and the uncertainty of possible war in Iraq.

"We will be putting together some kind of tool or mechanism to offer customers easy, convenient access to gas prices in their area," she said.

She said the mechanism may be a Web site or a hotline.

Brian Panter of Kalamazoo recently filled his gas tank at a local service station for $1.75 per gallon.

He said he would definitely use a hotline or Web site to find the lowest price in the area.

"Hopefully, it would be an incentive to the gas company to keep the prices down," Panter said.

Eastman said service station managers may be reluctant to give prices over the phone because they suspect other gas station owners may be calling around trying to fix their prices below their competitors.

But he urges customers to contact the attorney general's office if they suspect gas price gouging.

www.easterneronline.com By Brian Triplett March 06, 2003

In the wake of mounting tensions in North Korea and a possible war with Iraq, gas prices have skyrocketed across the nation. By this summer, unleaded gas could cost $2 or more per gallon.

The managers of the local gas stations in Cheney cite a number of reasons for the high prices including, but not limited to, the possibility of going to war, an oil production shortage in Venezuela and being competitive with businesses in Spokane.

Chris Ray of Ray’s Gull pointed out that because of production problems and a country-wide strike, it will take Venezuela about three months “to get up to capacity to what they were shipping.”

The United States is the number one importer of oil from Venezuela, so this creates a problem for car owners.

The Conoco A-n-D and Cheney Station (formerly Gary’s Chevron) may charge more for their gas, but they receive the most business from students and university employees due to their locations.

A-n-D Manager Don Moravec chalks this up to “supply and demand.” According to local A-n-D statistics, Conoco doesn’t purchase any oil from the Middle East, but their wholesale prices are affected by the current production problems in South America because approximately 30 percent of their supply comes from Venezuela.

Moravec said the rest of their oil supply comes from the U.S. and Canada. According to Moravec, A-n-D is part of a five-store chain operating in Washington and Idaho. The chain’s owner sets the prices, which are based on what other competing stations are charging. When asked how gas purchases at his location have been affected by the price increases, Moravec said sales are “about 25-30 percent less. It’s hard to compare to last year because we were selling it [regular unleaded gas] at $.99 this time last year.”

Charlie Fulbright, manager of Cheney Station, explained the Cheney Station has to set prices “a certain margin above our cost.”

“We made special arrangements with Chevron to keep the same price as Spokane,” Fulbright said. “So many people come out of Spokane that we wanted our price to be the same as Spokane.”

Although their gas costs eight to 10 cents more than what some of their competitors are charging, Fulbright emphasizes that what students get in exchange is better variety and service.

Cheney Station is open 24 hours and features auto repair, a car wash, and U-Haul rental services in addition to a selection of products comparable to “a lot of grocery stores.”

While selection is important, some customers just hunt for the best price. Ray’s and the recently opened Xllent Gas & Grocery have the lowest gas prices in Cheney.

Chris and Christy Ray of Ray’s have been in business for almost 12 years. Two years ago, Gull bought their station, but they lease the property from the corporation. Ray’s is currently the oldest operating gas station in Cheney and a favorite among local residents.

The Rays said more people from Eastern have been going to their station ever since they lowered prices to compete with Xllent Gas & Grocery. “Xllent Gas has been good for our business,” Ray said.

In addition to being more competitive, the Rays have seen the benefits for their customers. According to Christy Ray, they have been receiving fewer bad checks and customers can afford to buy more things when they stop in. When it can cost as much as $70 to fill up a Chevy Suburban, anything that helps save customers money is good for inside sales, which can be vital to a station’s success.

Ray believes gas prices are going to continue to rise for at least three months. He sees a direct relationship between wartime conditions and the U.S. economy.

“After every war, there is a huge change in the Stock Market and gas prices drop considerably. Right now, the same thing is happening. If we do go to war, that will probably help the economy. After the war, within three weeks prices will start dropping,” Ray said.

According to Ray, there has been some justifiable fear among consumers. He sees similarities between concerns in the farming community about increases in operating expenses and the public’s reluctance to buy as much gas as they used to. He wanted to stress he believes in being fair to customers. He also wanted to allay any concerns the public might have that gas stations are being unethical in their pricing strategies.

“People think that you can buy a lot of gas when it’s cheap and then overcharge them when prices go up… but we don’t do that. You’re not going to load up on fuel to gouge the public.”

Owner Dave Singh of Xllent Gas & Grocery has seen no significant changes in his sales since everyone else’s prices went up.

“College students don’t come around this side of town,” Singh said. This makes no sense to Singh because of their low “all around prices” on everything from milk, bread and eggs to beer and cigarettes. The Xllent Gas & Grocery is part of a small family-owned chain based out of Spokane. Singh said that Xllent Gas & Grocery tries “to be good friends to the neighborhood.”

Singh said his store is able to offer lower gas prices partly because they sell unbranded gasoline instead of having a franchise from one of the major corporations.

The other reason he cited is “being family-owned. If you’re paying somebody else $9 an hour to manage your store, there is no way you can afford to keep prices so low.”

Both Ray and Singh think that more people from Eastern would shop at their stores if they were closer to Betz Road. College students tend to prefer convenience and being on the route they take to school over hunting for the best prices. Ray also suggested some students probably use gas cards where their parents foot the bill.

With no hope of economic relief in sight at least until the situation in Iraq is resolved, students may be forced to forego convenience and personal preferences and start going where their money goes the farthest. If this happens, eventually small locally owned businesses such as Ray’s, Xllent Gas & Grocery and the Cheney Trading Company will triumph over the major chain stores. 

www.forbes.com Reuters, 03.06.03, 11:50 AM ET

NEW YORK, March 6 (Reuters) - Columbian Chemicals Co., a unit of the world's largest publicly traded copper producer Phelps Dodge Corp. (nyse: PD - news - people), said Thursday it raised prices of rubber carbon black grades sold in Asia by 15 percent, effective April 1, due to raw material cost increases. Columbian Chemicals said that, despite its efforts to reduce costs and enhance productivity, raw material costs had risen to the point where the marketplace had to share the burden. "Feedstock costs, which already were near historic highs at the end of 2002, have continued to rise during the first quarter of 2003, as reaction to the ongoing oil workers' strike in Venezuela and speculation over a possible war with Iraq," a Columbian Chemicals statement said. Carbon black, which makes up more than 20 percent of the weight of a car tire, is used to reinforce and protect tires, as well as to turn them black. It is also used in inks, paints, plastics and coatings. Columbian Chemicals is based in Marietta, Georgia, and owns and operates 12 carbon black facilities in Brazil, Canada, England, Germany, Hungary, Italy, South Korea, Spain and the United States. In Nov. 2002, Phoenix, Arizona-based Phelps Dodge said that Columbian Chemicals had been contacted by U.S. and European antitrust authorities jointly probing alleged price-fixing for carbon black. European authorities were reviewing documents at several Columbian Chemicals facilities in Europe and U.S. authorities have contacted Columbian Chemicals' headquarters in Marietta, Phelps Dodge said at the time. Phelps Dodge added that it and Columbian Chemicals will cooperate fully with the joint investigation. No charges of wrongdoing have been filed against the company or any of its employees, it said.

www.economist.com Mar 6th 2003 | BOGOTA, LA PAZ AND LIMA From The Economist print edition

The “success” of Plan Colombia in cutting coca production has started to undermine governments farther south

“A TURNING point” is how John Walters, the director of the United States' office for drug control, jubilantly described figures released by his government last week, which claimed a 15% fall in 2002 in Colombia's crop of coca, the plant used to make cocaine. This follows eight years of steady increases in the amount of land under coca in Colombia, the source of three-quarters of the world's cocaine.

For American officials, last year's fall is evidence that “Plan Colombia”, a programme of mainly military aid begun by Bill Clinton and continued by George Bush, is starting to pay off. Under this plan, the United States has provided Colombia with extra helicopters and crop-dusting planes to spray coca with herbicides. Most of these have finally arrived, and Álvaro Uribe, who became Colombia's president last August, has been happy to use them: he has unleashed a massive spraying campaign which officials say is at last outpacing the ability of coca farmers to replant.

Yet there is a hollow quality to this victory. Over the past three decades, rich-country demand for cocaine has created a monster in the Andean countries. The illegal-drug industry has corrupted institutions, distorted economies, wrecked forests, and financed armed groups such as Colombia's FARC guerrillas and right-wing paramilitaries. But the “drug war” has imposed its own costs. One is known as the “balloon effect”: local squeezes simply move the industry elsewhere, spreading violence and corruption with it.

Thus, in a reversal of a trend begun a decade ago, drug production is rising in Bolivia and Peru, and this year coca farmers there have mounted new challenges to governments; this “politicisation” of the coca industry is “most troubling” admitted Mr Walters. This shift comes at a delicate juncture: weak economies, weak governments in several countries, political conflict in Venezuela and Bolivia, and Colombia's intensifying wars have all aroused fears about the Andean region's stability.

A second worry concerns the figures themselves. Mapping the coca crop is difficult, and not everyone trusts the American figures. But the trend is clear enough. The UN will next week publish its annual coca census, which is more comprehensive than America's sampling. Having reported an 11% fall in Colombia's coca area in 2001 to 145,000 hectares (358,000 acres), the UN is expected to reveal an even steeper fall for 2002. But its estimate for Peru (46,700 hectares in 2001, with a small increase last year) is higher than America's. The UN also reports that more productive coca varieties are being used in both countries; in Peru it reckons that fields may be producing 10% more coca than a year ago.

Nevertheless, the shrinking of coca land in Colombia will comfort the United States' Congress. It is anxious to see some return from aid to Colombia of around $500m a year. That is especially true after FARC last month shot down an American spy plane apparently on an anti-drug mission, killing one American and taking three hostage. Even so, American officials believe this year will be better still: Mr Uribe has pledged to spray 200,000 hectares. If that happens, Mr Walters thinks, coca farmers will despair of profit and give up. He told Congress that America had “an unprecedented opportunity to seriously reduce the availability of illegal drugs”. Klaus Nyholm, the UN's drugs man in Colombia, says better prices for legal crops are helping: excluding drug crops, the country's farm output expanded by 3.5% last year, double the growth of GDP.

The results are a fillip, too, for Mr Uribe, who faces mounting urban terrorism by the FARC. Some of Colombia's most drug-infested areas are close to giving up coca. Putumayo, where the UN reported 66,000 hectares in 2000, can eliminate the crop by December, says a local official. But the UN reckons it is spreading to smaller plots (to evade spraying) and that output is rising in other areas, such as Guaviare. Mr Nyholm says coca will not be eradicated until Colombia's wars end. Fears of retreat

The guarded optimism in Colombia is mirrored by increasing problems farther south. In recent years, Bolivia was the drug warriors' success story. Between 1997 and 2001, its government eradicated 40,000 hectares of coca in the Chapare, the main growing area; aid money trickled in for alternatives, such as bananas. But American officials are now nervous about a retreat. In the past two years, new planting has outstripped eradication. And increasing amounts of Peruvian semi-processed cocaine-base are now being smuggled through Bolivia to Brazil and thence to Europe. Cobija, a poor northern outpost, has acquired sudden wealth; locals report an influx of heavily-laden, armed “backpackers” from Peru on the logging trails in the surrounding forest.

This year, Bolivia's powerful coca growers' movement has drawn blood against a weak government. Evo Morales, the movement's leader, was emboldened by winning 21% of the vote in last year's presidential election. To head off protests, President Gonzalo Sánchez de Lozada offered to expand the area in which coca can be legally grown for traditional uses (such as chewing and tea) if a study of demand showed this to be justified. To no avail: in January, protests by coca farmers brought much of the country to a standstill for two weeks. Mr Morales played no direct role in violence last month, in which 33 people were killed in riots and clashes between striking police and the army. But these events have left Mr Sánchez (who claims there was a plot to kill him) in no position to take the offensive against coca.

In Peru, too, the politics of coca has become more confrontational. Until the mid-1990s, Peru was the world's main source of the shrub. But the price of coca has been climbing again since 1998, and production rising. Worried about the backflow from Plan Colombia, American officials have stepped up aid to Peru, while also pressing for a tougher policy. In September, the government said it would begin forcible eradication in hard-core coca areas, a policy Peru eschewed in the late-1980s, after Shining Path terrorists exploited discontent over it.

The response was a wave of violent unrest in traditional coca-growing areas. More than 70 people were injured in an 11-day “strike” last month; in Aguaytía, protestors smashed up the government's anti-drug office, burning equipment. For the first time, the coca growers may have a political leader, albeit not with the clout of Mr Morales in Bolivia: Nelson Palomino, who was recently arrested on charges of supporting the (much weakened) Shining Path, something he denies. His arrest was greeted by a protest by thousands of coca farmers in Ayacucho, the Shining Path's birthplace. Such protests are a novelty for Peru. The farmers have now called a three-week “truce”: they want the government to agree to an end to forced eradication and more money for development schemes.

Further afield, there are other worrying signs. This week, Rio de Janeiro's carnival took place under the eye of the army: on its eve, the city's leading drug gang bombed buses and buildings, its second such show of strength against an ineffective state government in five months. And following tougher action by Mexico, more drugs now flow to the United States through Caribbean islands, as they did in the 1980s. The drug industry has an unerring eye for institutional weaknesses. As long as cocaine is demanded, victories over it involve defeats elsewhere.

www.townonline.com By Erin Walsh / Staff Writer Wednesday, March 5, 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.