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As the USA moves closer to war with oil-rich Iraq (news - web sites), gas prices are on the rise. So are concerns about terrorist attacks that might involve radiological materials available from widespread sources. In addition to tackling these pressing concerns, the Bush administration has proposed spending $1.7 billion over five years to start developing hydrogen fuel cells that could power cars, eventually eliminating U.S. dependence on foreign oil. Energy Secretary Spencer Abraham (news - web sites), the administration's point man on these issues, met this week with USA TODAY's editorial board. His comments were edited for space and clarity:

Question: A USA TODAY poll found that 66% of Americans believe oil companies are overcharging. What is your view?

Answer: The average price of gasoline is about 10 cents higher this winter than the winter two years ago. The strike in Venezuela has constrained supply. The economy in comparison to last year is stronger, so demand is greater than it was a year ago. The reduction in production from OPEC (news - web sites) on several occasions in recent years has affected supply. And uncertainties about what is going to happen in Iraq have fueled a lot of speculation in terms of price in the energy markets. All that having been said, we do not want to see people exploited. The Energy Department has a hot line available to anyone who wants to report evidence of price gouging. The Federal Trade Commission and others are monitoring. We should always be vigilant. These high prices hurt average working families, and we are concerned about them.

Q: How do you fend off charges that a war with Iraq would be an oil grab?

A: That is blatantly untrue. Our concerns have nothing to do with oil. We believe the oil in Iraq belongs to the people of Iraq. They should decide how much of it is sold and what the proceeds should go for.

Q: There is increasing concern about terrorists getting a nuclear or radiological weapon. What is being done to prevent that?

A: One reason we focus so much attention on Iraq is the concern that a nuclear weapon or radiological material could be used by Saddam Hussein (news - web sites) or conveyed to terrorists for their use. We also have worked with Russia for a long time -- very intensely since 9/11 -- to secure such materials in the former Soviet Union. We've reduced by about two years the time frame for securing the materials our department works on. The other challenge, radiological dispersal devices, is a big one because the material that could be employed in that type of a weapon is available in almost every country. I've been concerned about this for quite some time. Next week, there's a conference in Vienna of about 600 representatives from about 100 countries that will focus on this threat and give people a better understanding of ways to account for and secure these materials.

Q: What is the long-term solution to our energy challenges?

A: Because of his background in the world of energy, the president has a pretty strong understanding of the challenges ahead. He asked us for game-changing technologies and approaches, and we took that seriously. Our idea is a hydrogen-fuel-cell powered vehicle. Instead of trying to design the vehicle itself, our focus will be on operating systems that can be applied to the kinds of vehicles that Americans desire to drive, rather than what Washington might think consumers should have. At the same time, we faced a chicken-egg sort of challenge: What comes first, the operating system -- the vehicle -- or the infrastructure to support it? We concluded you have to do these concurrently, not consecutively. If you don't, it'll always be 30 years before we have a hydrogen-fuel-cell motor-vehicle fleet. If we move them together, we believe a commercialization decision would be made as early as 2015 that would translate into mass-market penetration in showrooms by the year 2020. We are very serious about this commitment.

Q: What are the advantages?

With a hydrogen-fuel-cell powered fleet, we wouldn't have to import oil. We would produce the fuel from a variety of sources here at home. There would be a lot of other applications. And the great thing is that the only byproduct is water. If we can get to that point, we will surmount both how we deal with our growing dependency on energy and how we can continue to allow consumers to have choice and continue to grow the economy in a way that is consistent with environmental concerns.

Q: How do you respond to critics on the right who see this as a misguided policy?

A: This has managed to create some unusual coalitions in opposition. The role we project for the government is perfectly legitimate, given the stakes and the potential payoff. First, we will fund the high-risk research the private sector cannot justify because it's so long-term. The other thing that makes the federal role so indispensable is the real need for coordination to bring everybody to the table. But we're not going to mandate and dictate, we're not going to pick the cars, we're not going to do the sorts of things that are within the venue of the private sector.

Q: Does this put all your eggs in one very expensive basket?

A: No. Hybrid-technology, clean-diesel, hydrogen-powered internal combustion engines all have a role to play here. But they all require oil to work, and our goal is to transcend that debate at some point. Where the game could be changed is in moving beyond oil-based operating systems, or oil-focused ones, to ones in which the source is hydrogen. And we think we've got an approach that can make that happen. But we by no means put all our eggs in that basket.

www.bayarea.com Posted on Thu, Mar. 06, 2003 By Peter Behr WASHINGTON POST

WASHINGTON - The Bush administration's decision to buy oil for the nation's strategic petroleum reserve last year, as oil prices were climbing, raised U.S. energy costs without significantly improving the nation's energy security, a report by Senate Democrats said Wednesday.

Although the administration added 41 million barrels of oil last year to the reserve, kept in salt domes along the Gulf of Mexico, U.S. energy companies cut back comparably on their own inventories, resulting in no net increase in nationwide oil supplies, said the report by the Democratic staff of the Senate Permanent Subcommittee on Investigations.

The strategy "appears to have backfired," said Sen. Carl Levin, D-Mich., the subcommittee's top-ranking Democrat. His staff's 268-page report on the strategic oil reserve follows a year-long inquiry, most of it done while Levin was the subcommittee's chairman.

Energy Secretary Spencer Abraham rejected the report's conclusions, saying he did not believe the U.S. strategy affected prices.

Some industry analysts challenged the report's conclusion, saying the escalating tensions over Iraq created a strong reason for increasing the oil stockpile.

"If things go horribly wrong in the (Persian) Gulf, it means they have a bit more of an insurance policy," said George Beranek, manager of market analysis with PFC Energy in Washington, D.C.

"With the current Iraqi situation, the value of the strategic petroleum reserve is priceless," said Adam Sieminski, an energy analyst with Deutsche Bank in London. Once a decision has been made to buy oil for the reserve, it's hard to know what is the "right" price, he said.

The administration's error is in failing to use the oil stockpiles now, he said, to increase supplies and lower current oil prices, which have risen by more than 60 percent over the past year. "They keep waiting for some sign from heaven," he said.

In November 2001, President Bush set a goal of increasing the reserve from about 550 million barrels to its full capacity of 700 million barrels, about a 45-day supply. Before that, the Energy Department had deferred purchases for the reserve when prices were moving higher.

Abraham said Wednesday the administration is monitoring the oil supply situation "very closely" but does not intend to use the reserve to restrain price increases. It would be used if a war with Iraq cut seriously into oil supplies.

The administration has been postponing purchases for the reserve since mid-December, a move that Levin's staff said supports its claim that the old Energy Department policy was correct.

Beranek said the report was wrong in concluding that oil companies refrained from increasing their crude oil inventories because the administration was filling the petroleum reserve.

As oil prices rose in 2002, energy company executives were feeling pressure to cut operating costs, and that led to their shrinking inventories, he said.

The committee's analysis also underestimates the impact on inventories of production cutbacks early in 2002 by the Organization of Petroleum Exporting Countries, and the sharp drop in oil imports late last year when Venezuela's oil fields were closed by a national strike, he added.

"I don't think somebody at Exxon is saying, 'DOE has more oil, so we need less,'" Beranek said.

Levin's report also said it looked into the possibility that prices of North Sea oil bought for the reserve were manipulated, but could not prove it, because of the large volumes of oil traded on unregulated over-the-counter energy markets.

The risk was disputed by Neal Wolkoff, executive vice president of the New York Mercantile Exchange, the primary regulated market for energy trades.

"I'm not saying that a market absolutely can't be manipulated," Wolkoff said. "But if anyone does try to manipulate the (oil) market, we have the power to investigate and punish it." The exchange "takes that responsibility seriously."

Wolkoff said that despite the oil market's volatility there are many competing traders. "I don't see anything unusual. I don't see any dominant positions."

www.vheadline.com Posted: Thursday, March 06, 2003 By: Robert Rudnicki

According to IRS/Seniat superintendent Trino Alcides Diaz the government is considering implementing a Tobin Tax to cut down on currency speculation, as and when the current currency controls are lifted.

The IRS chief went on to say that he expected the current controls to be the shortest in Venezuelan history, and that the Tobin Tax would be imposed on any foreign currency purchases made for any other purpose than imports and production of goods.

Alcides Diaz also said that the government would consider suspending the foreign exchange controls currently in place if a potential war on Iraq caused significant increases in the international price of oil.

www.vheadline.com Posted: Thursday, March 06, 2003 By: Robert Rudnicki

Lawyer Oscar Arnal has lodged a complaint with the Attorney General's Office accusing President Hugo Chavez Frias of inciting people to commit acts of violence such as state terrorism. 

Arnal alleges that it is the  "fiery, unacceptable, violent and aggressive rhetoric used by the government " that is the main cause of violence currently occurring in Venezuela. 

The lawyer claims that when the President slams the Venezuelan media his supporters then attack journalists and cameramen, and when he criticized the Friends of Venezuela group two bombs exploded. 

The allegation has also been forwarded to United Nations secretary general Kofi Annan and the Organization of American States (OAS) inter-American commission on human rights.

Posted: Thursday, March 06, 2003 By: Robert Rudnicki

Rebel Petroleos de Venezuela (PDVSA) executive and strike leader Juan Fernandez claims that he and his fellow strike leaders are being politically persecuted by the government for their role in bringing the petroleum sector to its knees in December and January.

For this reason, Fernandez says he will not be turning himself in, despite an arrest warrant having been issued, because he has no faith in a judicial system "that violates fundamental human rights."

Fernandez also criticized the government for trying to turn PDVSA into a tool of the revolution and for firing over 13,000 workers who supported the strike action.

The rebel executive also called on the Venezuelan public to remain in the streets and to continue protesting and demonstrating against the government.