www.zwire.com By: GREG JUNEK, Business Editor March 05, 2003

East Texans can expect gasoline prices to remain higher than they were several months ago - even if a war campaign in Iraq is successful, a college department chairman who follows the energy market said Wednesday.

Ashton Oravetz III, Tyler Junior College chairman of business administration, said the strike in Venezuela and resulting shutdown of its wells probably permanently hurt that country's oil production.

Also, not much crude is in storage, so changes in crude oil prices are reflected quickly in gasoline prices.

"It all comes down to Venezuela," Oravetz said. "We're probably going to hit Iraq next week or the week after. There's no gouging that I can see; (the price at the pump) is just based on crude oil prices."

West Texas Intermediate Crude and IPE Brent Crude have been running around $33-$34 per barrel, and Oravetz said he does not believe crude prices will be lower than $25-$28 a barrel for a long time.

"I don't think we're going to have a big dropoff. We're going to get rid of the war premium in there," he said. "Right now, gasoline prices could go up 10 cents next week on the war premium."

But in the near term, a person should not look for gasoline prices less than about $1.30 per gallon, even if the Iraq situation ends well, Oravetz said.

Tyler stations on Wednesday said they had seen some increases and some decreases in the price per gallon of their gasoline grades.

A clerk at Food-Fast Convenience Store No. 55, 5502 Old Bullard Road, said the price of unleaded plus dropped two cents, to $1.61 per gallon, and premium unleaded dropped from $1.71 per gallon to $1.67 per gallon in the last couple of days. Unleaded gasoline stayed the same at $1.55 per gallon.

All prices exclude the nine-tenths of a cent tacked onto every gallon.

Kirby Food No. 2, 4833 Troup Highway, reported no change in the last couple of days, with unleaded at $1.55 per gallon, unleaded plus $1.65 per gallon and premium unleaded at $1.75 per gallon.

Kidd Jones, 11421 Texas Highway 64 West, was selling regular unleaded gasoline Wednesday for $1.51 per gallon. The clerk said the price on that grade dropped two cents Tuesday morning. Super unleaded, however, rose two cents to $1.67 per gallon.

Oravetz said he doubts Venezuelan production will get back to where it was prior to the strike. Wells were turned off and many wells in Venezuela are older wells that produce heavy oil, and one cannot just turn a well on and off.

"They have to be taken care of, they have to have treatments to keep them producing, and when you shut them in you do permanent damage to the well bore and the reservoir," he said. "I think there could be a permanent reduction in Venezuela, which affects the world supply of oil."

Also, some wells in Iraq are not in good condition. Even if the Iraqis do not destroy their wells in war time, it will take a lot of investment to improve their production, Oravetz said.

He added China is a country that has, in the last few years, begun importing its own oil, which taps into the supplies other countries have been using.

Greg Junek is Business editor. He can be reached at 903.596.6280. e-mail: business@tylerpaper.com

www.canoe.ca By KEITH BRADFORD, EDMONTON SUN

Gas prices were pumped up to a new record high of 79.9 cents per litre in Edmonton yesterday - and analysts warn it could cost even more to fuel up. Blaming uncertainty over a possible war with Iraq, low stocks, and the high price of crude oil, most city stations yesterday hiked prices by up to four cents a litre. "People noticed and they are not happy about it at all," said Krystal Triplett, a cashier at Petro-Canada, 5661 23 Ave., where prices jumped from 75.9 to 79.9 yesterday. "People say it's ridiculous they are paying that much." Gale Desmoulin, a cashier at Shell, 3518 118 Ave., said customers rushed to fill up yesterday afternoon before the pump price jumped from 76 cents per litre to 79.9. "They are gassing up right now before it changes." Michael Ervin of Calgary-based MJ Ervin & Associates, which monitors pump prices across Canada, said 79.9 is a new record in Edmonton - beating the previous high of 75.3 set Feb. 11. "We have seen costs going up pretty substantially as a result of higher crude costs and relatively low inventories of gas across North America," said Ervin. "I really think that in most markets we are seeing prices pretty much topped out. But it could possibly get worse if a ground engagement starts in Iraq." Ervin said his company tracks prices at the start of each week - so mid-week and weekend price hikes are not recorded. While the average price at the pumps in Edmonton was about 73.7 earlier this week, it was only 67.1 in Calgary, said Ervin. But it could be worse - drivers in Whitehorse were paying 94.9. "The supplies are very tight on the east part of North America and it's starting to back up across the country," said Ted Stoner, spokesman for Canadian Petroleum Products Institute - which represents refining companies including Petro-Canada, Shell and Imperial Oil. "I don't know of any problems in the Edmonton refineries. The only thing I could put (the price hike) to is the world reaction to what's going on in Iraq." Stoner said "civil disruption" in Venezuela had contributed to increases, but the situation has since improved and now has a minimal impact on prices. "The main driver for gasoline prices is the price of oil," said Vincent Lauerman, global energy analyst with the Canadian Energy Research Institute in Calgary. "Our expectation is that by the mid-year, prices should be quite a lot lower - assuming a war is relatively short." Action Against High Gas Prices spokesman Chris Spearman said he can't understand why prices are so high in Edmonton. "How can they charge 65 cents in Calgary and Medicine Hat and this in Edmonton? We can never figure that out," he said. "I think we are being exploited by world circumstances. Profit is not a bad word, but greed is."

www.ohio.com Posted on Thu, Mar. 06, 2003

Last time I checked, the highest gasoline price in the country was in Kailua Kona, Hawaii.

The lowest price was in Tacoma, Wash.

The average across the United States was $1.71.

Our local price is hovering around a buck-sixty, and this is one instance when I'm perfectly fine with Akron being slightly below average.

Now, I have never been to Kailua Kona, but I imagine it is a very sunny place.

I have been to Tacoma and Akron, and both are very cloudy places.

So, based on this admittedly incomplete research, I'm proposing a trend: You live in a place with nice weather, you pay more for gas. You live in a place with lousy weather, you pay less.

I would like to prove this theory, but my request for a fact-finding mission to Kailua Kona was denied.

And of course I realize it doesn't hold any water. Logic says that the quality of the weather has nothing at all to do with the price of a gallon of regular.

But when you're talking about gas prices, logic doesn't seem to be part of the equation.

Depending on whom you ask, the spike is the result of the political unrest in Venezuela. Or it's the prospect of war with Iraq. Or it's the unusually harsh winter. Or it's good old-fashioned gouging.

If it were summer, they'd say it's the vacation driving season. When it's winter, they blame the cold.

The fact that there are so many different answers suggests that there is no real answer. Gasoline is a mystery to most of us, falling into that category of Mysteries We Can't Control that also includes long- distance rates, telemarketers and the kid in second grade who ate paste.

I don't know how to fight back, but I also know I don't have the stomach to pay $30 for a tank of gas. So I just keep buying half tanks twice as often, on the theory that some other mystery will sweep in and bring the prices back down before my next fill-up.

This theory has thus far proved unsatisfying.

I keep getting the little orange gas pump-shaped light on the instrument panel, taunting me like the Venus flytrap in Little Shop of Horrors: ``Feed me.''

So I pull into the station, swipe my card and stand there in that oily slush, my collar turned up against the cold, watching the dollar numbers on the pump run laps around the gallons numbers. When I get to half a tank, I quit, fooling myself that I have beaten the system.

It's an old story that we are victims of our own progress. Automobiles have made vast improvements in our lives, but they also have made themselves indispensable. Same goes for the Internet, cell phones and premium cable channels.

Every month we get bills for these things, reminding us that we are in a vicious cycle. We have to work harder to pay for all the things that were supposed to give us easier lives.

Slowly, they whittle away at us. Collectively, they're like the tiny orange gas pump on the dashboard. We try to ignore them, but at some point, we have to cave in and pay the price or we're not going anywhere.

I have heard people say that the minute we start dropping bombs on Iraq, gasoline prices will fall. I have heard others say just the opposite. Neither prospect makes me feel very good about dropping bombs on Iraq.

But something will happen, and the world will settle down. And when it does, gasoline prices will follow.

Then we'll be left with a new set of questions:

Do we quit worrying and go back about our business?

Or do we realize for once that we have gotten too comfortable with lives that are dangerously complicated by ``mysteries''?

I'm not sure I want to know the answer. But I wouldn't mind a few weeks in Kailua Kona to figure it out.

David Giffels' column appears Tuesday, Thursday and Sunday. He can be reached at 330-996-3572 or at dgiffels@thebeaconjournal.com.

www.globeandmail.com By MICHAEL DEN TANDT Thursday, March 6, 2003 - Page B2 Closing Markets Thursday, Mar. 6

     S&P/TSX 	-61.27	6328.6
     DJIA 	-101.61	7673.99
     S&P500 	-7.75	822.1
     Nasdaq 	-11.51	1302.89
     Venture 	-6.6	1093.06
     DJUK 	-.34	144.66
     Nikkei 	-103.47	8369.15
     HSeng 	-146.92	8962.26
     DJ Net 	-.13	38.54
     Gold (NY) 	+3.70	356.90
     Oil (NY) 	+0.31	37.00
     CRB Index 	+0.34	245.38
     30 yr Can. 	+0.02	5.40
     30 yr U.S. 	+0.03	4.69
     CDN$ buys
     US$ 	+0.0006	0.6798
     Yen 	+0.0300	79.6900
     Euro 	-0.0012	0.6181
     US$ buys
     CDN$ 	-0.0012	1.4711
     Yen 	-0.0500	117.2300
     Euro 	-0.0025	0.9093

By rights, Jean Chrétien should have left politics years ago. The fact that he's still ensconced at 24 Sussex Dr., midwife to an era of renewed spending on a grab-bag of tangential "legacy" projects, is proof positive that Canada desperately needs a credible opposition.

Having said that, only the willfully blind could fail to notice that the Prime Minister is doing a good job these days at managing -- saints have mercy -- the critically important Canada-U.S. relationship.

Yes, that's right: He of the intemperate press aide, the yankee-bashing MP, the sclerotic military, and the frankly critical foreign policy speeches.

On this particular file, the man is doing a good job -- possibly even a great job. If he keeps it up, he may even manage to be remembered for this, rather than craven power-seeking.

How can this be? It's very simple. U.S. President George W. Bush's manic determination to invade Iraq, alone if necessary, regardless of costs or consequences, is demonstrably reckless and dangerous.

It has the potential to destabilize the world and torpedo its fragile economy.

The Prime Minister has opposed that policy, repeatedly and publicly, with very little ambiguity. Furthermore, his so-called "Canada compromise" is the closest thing that's emerged to a solution to the diplomatic impasse that threatens to destroy the United Nations and the Atlantic alliance.

In working toward a realistic, peaceful resolution of the Iraq crisis, however slim and dwindling the chances of success may be, he is in agreement with the majority of Canadians, and Americans too for that matter.

But, with Canada's particular economic and strategic interests in mind -- $2-billion a day in cross-border trade -- he's tended to frame his opposition in the language of a deeply concerned friend, as opposed to a fierce or resentful critic.

Mr. Chrétien's speech to the Chicago Council on Foreign Relations last month was a case in point.

"I am convinced that working through the United Nations," he said, "if at all possible, as difficult and as frustrating as it sometimes can be, will not only immeasurably strengthen the hand of the United States but also of those around the world who want to support it."

Whatever the Prime Minister may feel in his heart, that's not the language of an anti-American. Neither is it the language of a lapdog.

For the most part, Mr. Chrétien's strategy has worked. Mr. Bush is still talking to him. So is French President Jacques Chirac, Mr. Bush's nemesis at the UN. And 84 per cent of Canada's exports, including $10-billion or so a year in lumber, are still flowing south. The sky has not fallen.

To hear the Prime Minister's domestic critics tell it, his Iraq policy is both shameful and impossibly oblique, as well as a grave threat to Canada's interests.

Andrew Coyne fumes in the National Post that Mr. Chrétien has "taken no position that might be mistaken for a policy." Don Martin, writing in the same publication, frets that the Prime Minister has cross-scheduled a Calgary speech on May 8 with one at the same time, in the same city, by Barbara Bush, the First Mother. Heavens. Might this not draw the President's ire? And Mr. Martin is only half joking.

Underlying all this handwringing is the assumption, sometimes voiced, sometimes not, that a wrathful United States might crush Canada's booming economy, anytime it chose, simply by locking down the border.

That assumption is misguided. It ignores a plethora of facts -- most of which Mr. Chrétien pointed out in his Chicago speech, but almost none of which were reported in Canadian press accounts of it. For example, Canada is the largest foreign market for 38 U.S. states; buys more U.S. products than all 15 European Union countries combined; and supplies 17 per cent of U.S. crude imports, more than either Saudi Arabia or Venezuela.

In other words, a healthy American economy absolutely requires an open Canada-U.S. border. To be sure, security trumps the economy, to an extent. But if it ever came to turning down the heat and turning off the lights in Syracuse, N.Y., the definition of security would change, and quickly.

To his credit, Mr. Chrétien knows this. He mentions Canada's energy stats in every U.S. speech, and has done so for months. That may be one reason why he hasn't shied away from pressing Mr. Bush, and strongly at that, to avoid unilateralism. He knows a pre-emptive U.S. conquest of Iraq is not in Canada's interests, or anyone else's. And he likewise knows that, should Mr. Bush ever wish to punish Canada economically for its pacifist stance, he can't. He'd be crippling his own country as well.

Is it crass, disloyal, to speak in such blunt terms about Canada's greatest friend? One could as easily ask whether it's disloyal for Mr. Bush to brush aside the legitimate concerns of every important U.S. ally of the past 50 years. He's playing hardball, in the service of what he sees as U.S. needs. Mr. Chrétien, in remarkably subtle fashion, is doing the same for Canada. Good for him.

sg.biz.yahoo.com Thursday March 6, 3:39 PM By David Bird Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Saudi Arabia has told Western government and oil officials that the kingdom's crude oil output has reached its limit at around 9.2 million barrels a day and won't rise further, even with a war looming in Iraq, Dow Jones Newswires has learned.

According to Western officials who have spoken with Saudi officials in recent days, there is an understanding that because Saudi output can't rise further, a release of oil from consumer governments' emergency stockpiles is inevitable, if and when, a U.S.-led war is launched on Iraq.

One Saudi Arabian oil ministry official refused to comment on what the Western sources said, and others were unavailable for comment.

Saudi Arabia has maintained that it has about 10.5 million b/d of oil production capacity and that output could be raised to that level within weeks or months, after considerable investment. But the Saudis haven't pumped at that level in more than a decade.

However, top Saudi officials have let it be known in recent days that they don't intend to take steps to push output to that level, because they don't think the oil will be needed.

The Western officials said the Saudis have expressed the view that the release of oil from consumer stockpiles held by member nations of the International Energy Agency, and already high output from other OPEC members, will be sufficient to cool soaring oil prices, to meet demand and to top-up low global inventories.

The Saudis also have expressed the view that any U.S.-led war on Iraq would be relatively brief and isn't expected to disrupt operations in neighboring oil exporting countries.

Prices Now Hyper-Inflated

The Saudis, and others in OPEC, have said that current oil prices, which soared to $39.99 a barrel last week in the U.S. - the highest level since autumn 1990 - are hyper-inflated by war fears.

They say prices will return to more normal levels once the Iraqi situation becomes clear.

Still, a brief price spike into the mid-$40 level, topping the 1990-91 Gulf Crisis high of $41.15 is expected if war breaks out.

In January 1991, when the IEA offered 2.5 million b/d of oil from strategic stocks, crude oil futures prices on the New York Mercantile Exchange fell by one-third, or more than $10.50 a barrel, in the biggest-ever single-day price decline.

OPEC is set to meet On March 11 in Vienna to review output policy. It 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.

Saudi Arabian Oil Minister Ali Naimi has repeatedly pledged in recent weeks that the kingdom, and other OPEC members, will ensure adequate supply to the market and produce at the group's 24.5 million b/d output ceiling, despite strike-related output problems in Venezuela.

The 24.5 million b/d level, matches on average, the expected demand for oil from OPEC and movements from stocks in the first half of 2003.

Industry surveys have put February output by OPEC's 10 members, excluding Iraq, at above the 24.5 million b/d level in the month, even with Saudi output estimated below 9 million b/d.

Dow Jones Newswires' survey, published Tuesday, put OPEC-10 February output at 24.701 million b/d, with the Saudis estimated at 8.733 million b/d in the month. The Kingdom's official quota now stands at just below 8 million b/d.

Venezuelan officials maintain that the country's crippled oil production is back over 2 million b/d and rising, while independent estimates and those from dissident workers who led the strike at the state oil company, put the figure at below 1.7 million b/d.

In any case, the recovery in the past several weeks in Venezuela's output is helping offset the need for more oil from others in OPEC.

Western officials note that standard industry practice requires producers to keep about 10% of output capacity idle to ensure operational flexibility, and on this basis, too, the Saudis don't find it possible to go beyond output of about 9.2 million b/d.

The Saudis also don't want to make the investment to maintain output readiness at 10.5 million b/d only to have to keep output well below that level, the Western officials said.

No Significant OPEC Output Hike

Apart from a potential uptick from Venezuela and a slight gain of no more than 200,000 b/d from the UAE, OPEC's output won't rise much with the start of a war, the Western officials said.

Kuwait has said that, as a precaution, it will shut in about one-third of its output, or around 700,000 b/d with the start of a war. But the officials said this is expected to be off-line only briefly during the first days or weeks of a war.

The Western officials said that while Saudi Arabia has expressed strong support for reining-in runaway oil prices, there is also concern about a considerable drop-off in oil demand in the second quarter 2003.

The IEA, in its February oil report, forecasts that demand for OPEC oil and required movements from inventories will fall by 2 million b/d with the end of the high-demand winter season in the Northern Hemisphere.

As reported, Naimi met Wednesday in Riyadh with the new head of the IEA, Claude Mandil, and pledged to keep oil markets supplied in the event of war in Iraq.

In the meeting, Mandil welcomed the commitment from OPEC to meet "any further loss of supplies to oil markets in a swift and timely manner," IEA said in a statement.

The IEA, which holds huge reserves of oil in emergency stockpiles, is committed and prepared "to respond convincingly to any loss of oil supplies by making additional oil available to the market when needed," Mandil said.

According to the official Saudi Press Agency, Naimi said the two discussed "the importance and the role of OPEC, in general, and Saudi Arabia, in particular, to make up any shortage in the oil supply as a result of discontinuation of oil production of any country for any reasons."

"In this situation, IEA agreed with OPEC opinion that the producers should utilize their spare capacity before resorting to the oil available in the strategic reserves by consumers," the SPA report said.

The IEA statement doesn't refer to any agreement or understanding that OPEC would use its spare capacity before consumer countries would open their reserves.

The agency said after a Feb. 20 Paris meeting of its governing board that it would open its reserves to supplement OPEC's efforts if needed.

IEA Can Provide Near 13M B/D

Member countries of the IEA, which is the oil-market watchdog of the Organization for Economic Cooperation and Development, hold about 4 billion barrels worth of crude and petroleum products in government and industry stockpiles.

This is enough to cover 115 days of their total net imports.

In the January 1991 Gulf War, the IEA activated a plan to release 2.5 million b/d of oil into the market, with 45% of that coming from the U.S.

IEA countries can release about 13 million b/d of stocks from strategic reserves, hugely in excess of Iraq's current output of around 2.4 million b/d.

The U.S. Strategic Petroleum Reserve, at a record level of just under 600 million barrels, is the single biggest chunk of this reserve inventory.

-By David Bird, Dow Jones Newswires; 201-938-4423; david.bird@dowjones.com

-Edited by Simon Hall