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ABUJA - Nigeria's parliament has approved a spending plan of 976.254 billion naira (7.68 billion dollars) for the west African country this year, officials say.

The appropriation committees of both the Senate and House of Representatives on Wednesday raised by 28% the estimates President Olusegun Obasanjo sent to the National Assembly last November.

Officials said the rise was necessitated by the need to beef up security amid growing political violence in Africa's most populous country ahead of general elections in April.

Dozens of people have been killed in politically motivated violence in the run-up to the polls, the first since May 1999 when Nigeria returned to democracy after 15 years of military rule.

A prominent opposition leader, Marshall Harry, was  shot dead by unknown gunmen in his home in the country's capital Abuja after returning from a late night political meeting.

The parliament allocated 593.9 billion naira (4.6 billion dollars) to recurrent expenditure while capital spending will account for 382.3 billion naira (around 3 billion dollars).

The budget is expected to be financed by earnings from oil, the mainstay of the country's economy.

The budget is based on an oil price of 22 dollars per barrel, as  against 18 dollars proposed by the president, with parliament citing the improved fortunes of oil on the international market.

Oil prices have risen significantly in recent months owing to apprehension over a possible US-led war against Iraq and the political crisis in Venezuela.

Nigeria is the world's fifth largest oil producer. Oil is the west African country's prime resource and accounts for 90 percent of its exports by value.

www.sfgate.com Edward Epstein, Chronicle Washington Bureau Thursday, March 6, 2003

Washington -- Two Bay Area members of Congress are calling for federal action to drive down the sky-high price of gasoline, but their odds of success seem slim.

Rep. Mike Thompson, D-St. Helena, a longtime critic of oil companies' practices, has introduced legislation that would force refiners to stop discrimination against independent stations and halt what he says is the practice of manipulating prices by zones to keep pump prices high or undercut competitors.

And Sen. Barbara Boxer, D-Calif., on Thursday asked the General Accounting Office, Congress' investigating arm, for an inquiry of gasoline prices in California, which are the highest in the nation.

Boxer, in a letter to the GAO, said she particularly wanted to know whether there had been an unusual cluster of refinery shutdowns that could result in tighter supplies and higher prices. Boxer also wrote the seven biggest refinery operators in California, asking for a list of the number of hours their refineries have been shut in recent months.

Thompson's legislation, which he had introduced in the previous session of Congress, has quickly drawn 20 House co-sponsors, all Democrats. It will be furiously opposed by oil companies, who deny price gouging. The oil companies argue that the recent spike in costs to motorists has been brought on by a looming war in Iraq, turmoil in Venezuela and a cold winter on the East Coast, all of which had driven the world price of oil to $37 a barrel Thursday.

The federal government warned Thursday that nationwide gasoline prices could hit record levels in April, with the average pump price topping the record $1.71 a gallon reached in May 2001. California's prices already are at record levels, with the statewide average for a gallon of regular unleaded hitting $2.04 on Tuesday, and prices reaching an average of $2.19 in San Francisco.

Thompson, who introduced similar "divorcement" legislation when he was a state senator, said prospects for his bill were "slim to none, and none just left town."

"I don't have any expectation this will become law, but the motoring public needs to know that the companies are doing this to them," he said.

According to Thompson and Dennis DeCota, executive director of the California Service Station and Automotive Repair Association, regional zone pricing involves the use of demographics -- income levels, local competition -- to manipulate the price for gasoline in a specific neighborhood. They say it amounts to oil-industry redlining.

But at ChevronTexaco, the San Ramon-based multinational that is the second-largest gasoline retailer in California, the explanation is much more benign.

"Zone pricing refers simply to the practice of pricing competitively in localized markets," ChevronTexaco executive David C. Reeves told a Senate investigating committee in April 2002. "It means identifying an area where we believe there are competitors to Chevron-branded stations and pricing our gasoline to allow our stations to compete for the business in that area."

"We are confident that it results in lower, not higher, prices for consumers," Reeves added.

Of the 8,500 gas stations in California, 6,500 are independently owned, although most have exclusive agreements to carry one brand and buy their gas at the zoned price. Thompson wants to free them to pay the "terminal price," meaning they could buy their gas on the wholesale market from middlemen or "jobbers" who pick up gas at terminals in Richmond, San Jose, San Bruno and Sacramento.

"The basic California situation is that there are only six or seven suppliers who control 90 percent of the production. They act in unison. It's an oil-igopoly," said DeCota, who owns a Union 76 station in San Anselmo. He was selling unleaded regular for $2.22 a gallon on Thursday.

In her letter to the refiners, Boxer alleged that their behavior raised echoes of the state's energy crisis.

"This is reminiscent of the electricity crisis when generators took their plants off-line for 'routine maintenance' at a rate higher than normal," Boxer wrote. "We now know that these generators were holding back electricity to artificially increase the price."

Nicole Hodgson, a ChevronTexaco spokeswoman, said that more than two dozen state and federal investigations over the past two decades had uncovered no evidence of wrongdoing.

Those investigations, Hodgson said, "have reached the same conclusion: that there has been no wrongdoing on the part of industry and that refiners have not engaged in illegal conduct."

www.businessweek.com MARCH 7, 2003 NEWS ANALYSIS

More than the impending conflict with Iraq is driving up prices. A quick victory might bring them down, but a lot could go wrong   Oil shock. That's the worry of executives, consumers, and world political leaders alike as the Bush Administration prepares to launch a military campaign to depose Iraqi President Saddam Hussein. For the moment, the energy markets show every sign of giving in to such dread. With global inventories reaching dangerously low levels, crude oil approached the feared $40-per-barrel mark in the trading week of Feb. 24-28, while futures markets gyrated in some of the wildest action traders had ever seen. Heating-oil, gasoline, and natural-gas prices in the U.S. also hit near-record highs before falling back a bit. "There has been genuine chaos," says Peter A. Gignoux, head of the oil desk at Citigroup (C ) in London.

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Is the chaos justified? Not if you believe this optimistic scenario: After the U.S. delivers a quick knockout blow to Saddam, prices decline swiftly and uncertainty evaporates. A U.S. victory in Iraq would instantly wipe away a war premium of at least $5 per barrel, analysts figure, and prices would drift down further not long after that. "I personally feel that the price is going to fall," says Leo P. Drollas, deputy executive director and chief economist of the Center for Global Energy Studies, a London think tank. "The war is going to be short and won't have much impact in terms of the oil market unless Saddam goes for some outrageously bizarre self-sacrificial act." "A LOT OF IFS."  There's more roiling the oil markets and driving up prices than the prospect of war, however, which is why the outcome may not unfold quite as smoothly or swiftly as the optimists hope. Supplies are tight, and may get tighter still, for a host of reasons investors may only be dimly aware of. Claude Mandil, director of the International Energy Agency in Paris, which is responsible for making sure consuming countries have adequate energy supplies, ticks them off. First is Venezuela. After a devastating strike, it's still producing far below its previous output, and it may not come back for months or years, if ever. No. 2 is Nigeria. It's facing turbulent elections, and violence could spread to the oil fields. Then there's Japan. The country has shut down some reactors for safety checks and may soon need a lot more oil. "There are a lot of ifs," says Mandil. O.K., but what about the Saudis and Russians? Aren't they pumping as fast as they can? They are -- but the OPEC members in particular have only been at full speed for about two months, and it's going to take a while for the crude to work its way through the system. That's especially true in the U.S., because inventories of crude oil as well as refined products such as heating oil and gasoline are near historic lows. A devastating two-month strike by oil workers in Venezuela and a fiercely cold winter in the U.S. have drained American crude stocks to 270 million bbl. -- the lowest level since 1975. Refineries in the U.S. are operating at just 89% of capacity, below seasonal averages. LITTLE EXCESS.  Even in the best circumstances, with the world's big producers in high gear, it will take months to replenish stocks. And in less-than-ideal circumstances? Well, the global system can't take too many more shocks. If the war lasts more than a few days, Iraq's current 2.4 million bbl. per day in oil production is likely to evaporate. "There is spare capacity but not much more than Iraqi production," says Mandil. Edward L. Morse, executive adviser at Hess Energy Trading Co. LLC, a New York-based energy-trading firm, is more pessimistic. He estimates that the OPEC cartel can only produce 1.1 million bbl. more per day than it is already, outside of Iraq and Venezuela. In contrast, OPEC's spare capacity in July, 1990, before the Iraqis invaded Kuwait, was 5.2 million bbl. per day. "Systems with limited capacity have reduced levels of cushion in case of emergency," says Morse. Because of the tight supply conditions, prices are unlikely to fall as precipitously as they did in January, 1991, when they sank to $18 shortly after the U.S. attacked Iraq. If the war takes unexpected turns, prices could rocket. No wonder the recent market gyrations have commanded attention from Washington to Riyadh. On Feb. 25, Energy Secretary Spencer Abraham announced that the U.S. "can act quickly" to use the Strategic Petroleum Reserve (SPR) of 599 million bbl. "to offset any severe disruptions if it's needed." Some analysts expect President Bush to tap the SPR in the early days of a war. "My guess is that when the order comes for the tanks to move, the order will also come to start the oil flowing," says W. David Montgomery, an energy expert at Charles River Associates Inc. in Washington. But even that may not happen if the war is over quickly and there's no major supply disruption. Abraham has refused to speculate on the timing of any release. "NOT JUST PROPAGANDA."  The Saudis are doing practically all they can to boost supply. They have long railed about the dangers of an attack on Iraq but are now resigned to Saddam's removal. They are positioning themselves to limit the political damage of a war: That includes a big shift in their approach to oil. For three years, Saudi Petroleum & Minerals Minister Ali Al Naimi cajoled producers inside and outside OPEC to stick to production discipline to keep prices at $25 per barrel. No longer. "We're contributing a lot, and this is not just propaganda," says a senior OPEC official in the gulf. "We're using our production capacity, and we're pushing OPEC to increase." Industry sources say the Saudis are producing from 9 million to 9.5 million bbl. per day -- the highest level since the Gulf War. Engineers for Saudi Aramco, the world's largest oil producer, are busily opening up mothballed wells and testing out Saudi oil fields so that the kingdom will be able to sustain output of 10.5 million bbl. per day in the event of a war. Oil-company executives say that while the Saudis are trying to preserve a bit of ammunition for later emergencies, they are willing to sell almost all the oil their customers want. "Anybody who goes and asks for extra barrels will get it," says one crude buyer. All the big producers welcome the opportunity to fill their coffers. The Saudis are raking in $250 million in oil revenues a day. PIPELINES NEEDED.  The Saudis are also loading an estimated 30 million bbl. of crude onto their own fleet of tankers and steaming toward Asia and the Caribbean as a buffer against disruption in their fields. Across the rest of the oil world, from Russia to Norway to Mexico, production is also humming. Outside the kingdom, only a few countries -- chiefly Kuwait and the United Arab Emirates -- have any spare capacity left. Russia could pump more, but a lack of pipelines and other facilities is limiting its exports to just 4 million bbl. per day out of total current production of 7.75 million. "It's important to build new infrastructure -- the more the better," says Eugene Shvidler, president of Russian oil major Sibneft. Venezuela remains a wild card. State-owned oil company Petróleos de Venezuela (PDVSA) is still reeling from the effects of the recent national strike aimed at forcing Venezuelan President Hugo Chávez to resign. PDVSA managers supported the strike, as did many of the company's 38,000 workers. Chávez recently fired over a third of them and split the company into two parts to weaken its clout. Some analysts say the outfit has permanently lost some 400,000 bbl. per day in capacity because of damage to facilities and mature wells. It's now pumping an estimated 1.55 million bbl. per day, vs. 2.66 million before the work stoppage -- and Venezuela's turmoil may not be over. As a result, Caracas might not be able to supply the U.S. with oil in an emergency. " Venezuela is going from being a part of the solution to being a part of the problem," says José Toro Hardy, an ex-director of PDVSA who is now an independent oil analyst in Caracas. EXTENDED CONFUSION.  How the markets play out in the short-to-medium term may depend on the release of oil from the SPR and similar stocks in Japan, South Korea, and Germany. Oil-industry sources say the U.S. and other countries could tap worldwide reserves to the tune of 8 million bbl. a day -- close to all U.S. imports -- for three months. But there may be delays in actually marketing the SPR oil, and refineries may have difficulty matching substituted crude to what it is replacing. Lee R. Raymond, chairman and CEO of Exxon Mobil Corp. (XOM ), told analysts on Mar. 5 that he expects a period of extended confusion in the oil markets after fighting starts, no matter what happens with the SPR. "I wouldn't suspect there will be clarity on this at all," he says. "There'll be a lot of what-ifs and whens." Then there's the danger that war poses to the fields of the Persian Gulf. Alarmists say Kuwait and Saudi Arabia are exposed to an attack from Saddam. Not likely. Anthony H. Cordesman, a gulf military analyst at the Center for Strategic & International Studies in Washington, notes that there are built-in redundancies in the oil installations of the gulf countries. PANIC ATTACK?  If the Iraqis or Osama bin Laden sympathizers, for instance, managed to damage the Saudi Gulf terminal of Ras Tanura, the kingdom could shift oil exports to the safer Red Sea. "Unless Iraq tried a concerted terror attack using virtually all of its remaining missiles and advanced attack aircraft plus large amounts of persistent nerve gas or biological weapons, and had great success, it could not produce a serious cut in oil exports in another gulf state," says Cordesman. Still, smaller disruptions are possible. Some tankers may steer clear of the gulf, creating bottlenecks. Or a hit in Kuwait and Saudi Arabia might panic the markets even though no oil is affected. And there's the chance that Saddam could destroy the Iraqi oil patch himself. If so, it could take years and billions in investment to bring the fields back to what they were. The effects of war may linger for a long time.

By Stanley Reed in London, with Anthony Bianco in New York, John Carey in Washington, Christopher Palmeri in Los Angeles, and bureau reports

www.businessweek.com COMMENTARY By Peter Coy

Economists predicting a new recession based on historical trends are overlooking the extent to which the U.S. has become less oil-dependent Is the U.S. economy heading for another recession? The latest surge in energy prices has plenty of smart economists worried. And they have the weight of history on their side: Since the first Arab oil embargo in 1973, nearly every oil spike in the U.S. has been followed by a recession. Writes Stephen S. Roach, Morgan Stanley's chief economist: "Inasmuch as America has yet to withstand an oil shock without tumbling back into recession, I am hard-pressed to believe that this will be the sole exception." The latest spike is a doozy -- the price of crude has doubled to about $37 a barrel. Natural gas has more than tripled. Gasoline at the pump is up 50 cents. And there's little doubt high energy prices are hampering the recovery of an economy that's already battered by slow business investment, a huge trade deficit, weak consumer confidence, and a depressed stock market. Yet even with all the short-term pain the energy spike is causing, if the Iraq conflict doesn't boil over into a regionwide war, there's a good chance the effect of the oil shock won't be severe. The history of oil spikes is a poor guide, in part because the country is less dependent on oil than it used to be. The U.S. uses only about half as much oil per dollar of inflation-adjusted output as it did in the early 1970s. Even since the last Gulf War, the economy's energy dependence has shrunk. THE BIG IF.  For energy prices to do real damage, they must remain high. It's only since December that crude has been firmly above its long-term average of the mid-$20s. And the factors propping up prices are mostly temporary, from a cold winter in parts of the U.S. to a Venezuelan oil strike to war fears. Winter is almost over and Venezuela has partially restored production. If the conflict with Iraq is resolved within a few months -- a big if, to be sure -- oil prices are likely to drop below $30 a barrel by summer. Some experts even think an oil glut is possible. Oil-company analyst Frederick P. Leuffer of Bear, Stearns & Co. predicts oil will average $18 a barrel in the second half of 2003. Traders in the futures markets aren't so sure, but even they predict price declines. Oil on the New York Mercantile Exchange for August delivery is going for $31 a barrel, vs. $37 for April delivery. August natural gas is $5.50 per million Btus, down from more than $10 for the recently expired March contract. Things look worse for summer gasoline prices because supplies will be tight. Analysts see retail prices averaging from $1.65 to $2 a gallon. HISTORY LESSON.  While none of that is good news, a recession looks unlikely. Leading forecasters such as Waltham (Mass.)-based Global Insight and St. Louis-based Macroeconomic Advisers predict that costlier energy will knock roughly half a percentage point off the first-half growth rate, but cease to be a factor in the second half. That's if per-barrel oil prices get back to the mid-$20s. If they stick at current highs, growth could be suppressed by half a percentage point -- or a bit more -- for the entire year. Those who warn of an oil-induced recession may be misreading history. Merrill Lynch & Co. calculates that when oil prices have moved up 60% over a yearlong period in the postwar era, in all but one instance, 1987, the economy has fallen into a recession. But triggering most past recessions was the Federal Reserve's efforts to stop inflation by raising rates, says James Glassman, an economist at J.P. Morgan Chase & Co. This time, inflation is tame: Consumer prices rose only 2.6% in the year ended in January. Of course, much will depend on how consumers, who buy two-thirds of total output, react to costlier energy. Certainly, higher prices add to the tentativeness many already feel in the face of a sluggish economy and high joblessness. The growth rate of consumer spending slowed sharply in the fourth quarter of last year to 1.5%, from 4.2% in the third quarter. And in January, spending actually fell by 0.3%, according to Macroeconomics Advisers. Global Insight forecasters believe that higher energy costs will notch consumer spending growth in the first quarter down to 1.5%, vs. the 2.2% it would have hit had oil prices remained stable. HARDEST HIT.  Still, presuming energy prices do head down quickly, the hit to consumers should be short-lived. A recent Gallup poll found that 62% of people thought today's high prices were a "temporary fluctuation." So, they may save less or borrow more to preserve their spending patterns. Says Oscar Rivera, 30, an inventory manager at a Texas trucking company: "What are you going to do? Not go out? Not heat your home?" None of which is to say that some sectors aren't getting whacked. Because of high natural-gas prices, 45% of the nation's production of ammonia, a fertilizer ingredient, is shut down. Behlen Manufacturing of Columbus, Neb., says its energy costs have risen 30% recently, but it can't pass them along because retailers won't pay more for its fabricated steel products. Expensive jet fuel is further weakening the airlines. Yet the economy as a whole remains resilient. Although Fed Chairman Alan Greenspan has warned that economists often underestimate the effects of oil shocks, he thinks the economy can withstand this one. As he once said, "forecasts of crises ... more often than not fail to develop, or at least not with the frequency and intensity proclaimed by headline writers." Let's hope the headlines are wrong again.

With Stephanie Anderson Forest in Dallas, Michael Arndt in Chicago, Christine Tierney in Detroit, and bureau reports

www.canada.com Canadian Press Thursday, March 06, 2003

CARACAS (AP) - Venezuela's state oil monopoly is no longer in an emergency situation and is now able to fulfil its business contracts after output reached 2.6 million barrels a day Thursday, President Hugo Chavez announced.

Petroleos de Venezuela S.A. declared a "force majeure" in December, meaning a force out of the company's control made it impossible to fulfil contracts to supply oil. The force majeure had been in place since Dec. 5, three days after thousands of oil workers joined a failed general strike to demand early elections.

The strike ended last month and Venezuela began gradually restoring production. Last month, PDVSA lifted a force majeure of on three types of crude oil produced in eastern Venezuela. Chavez said the force majeure on the rest of the types had been lifted Thursday.

The South American country was the world's fifth-largest oil exporter before the strike, producing 3.2 million barrels a day.

Output plunged to 200,000 barrels a day at the height of the walkout, depriving the country of the source of one-half of the government's income and 80 per cent of export revenue. Venezuela still has to import gasoline because of difficulties in bringing refineries back online.

"It was a great battle," Chavez said at the inauguration of PDVSA's new board of directors.

"I announce to the world and our clients that...we have decided to fully lift the force majeure."

On Thursday, Energy and Mines Minister Rafael Ramirez told state news agency Venpres that Venezuela would reach its OPEC output quota of 2.8 million barrels a day in "the next hours."

Chavez has fired 15,000 of PDVSA's 35,000 employees for joining the strike.

International industry experts have warned Venezuela lacks the manpower and funds to fully restore production in older fields, where oil is harder to extract. Experts expressed doubt Venezuelan output could surpass two million barrels a day.

In a report Thursday, fired executives insisted production was only 1.09 million barrels a day. The executives said the government has not recovered the 500,000 barrels a day it was forced to cut last week due to a slowdown in exports and build up in storage tanks.

PDVSA port officials said Wednesday the 500,000 barrels a day had been recovered.

Later Thursday, Ramirez said Venezuela would support a decision by the Organization of Petroleum Exporting Countries to suspend its quota system during a war in Iraq.

Speaking before the inauguration of PDVSA's new board of directors, Ramirez wouldn't comment on Venezuela's individual position on the matter, however. Chavez would not comment on the matter after the inauguration ceremony.

The 11-member OPEC is meeting March 11 in Vienna to re-evaluate its production quotas.