www.forbes.com Reuters, 03.07.03, 9:10 AM ET By Alistair Scrutton CARACAS, Venezuela, March 7 (Reuters) - To gauge how much business travel to tropical Venezuela has fallen amid political and economic chaos, just walk into a hotel lobby and take the temperature. It can be chillingly cold. "I visit two or three lobbies a day in Caracas' main hotels and mostly there's a frightful chill," said Hugo Arriojas, president of Venezuela's national hotel federation. "The air-conditioning is on but the lobbies are empty of visitors, there's too few human bodies to warm these places up," he said. "And hotel porters complain about the cold because they've nothing to do but wait." Caracas' hotel occupancy rates -- a barometer of investor interest in this oil-rich nation -- have plummeted to record lows of 15 percent in the last month, according to the federation. That is half from a year ago and compares with average rates of about 60 percent in 1999. Visitors are so few that many guests praise quick room service. "When an ordered sandwich arrives in five minutes you know you're one of the few guests," said one U.S. businessman. It is the latest sign of how foreign firms are shunning Venezuela, once known as the Saudi Arabia of Latin America. In the 1990s, the oil-rich country was a magnet of investment not only in the energy sector -- when oil fields were opened up to foreigners -- but also in telecommunications and manufacturing. Over the last year Venezuela has suffered crisis upon crisis as Chavez, an ex-paratrooper turned fiery "revolutionary," survived an April coup and a recent strike which slashed output in the world's No. 5 oil exporter. Even after the strike, foreigners are not flocking back. "In 32 years in the hotel business I've never seen so few businessmen coming to Caracas," said Arriojas. Hotel occupancy rates are at 5 percent in the country's Caribbean resorts. One of the few big foreign investment deals in the last six months was in the energy sector where U.S. oil major ChevronTexaco (nyse: CVX - news - people) and Norway's Statoil <STL.OL> signed a deal to develop natural gas in the offshore Deltana region. HARD GOING EVEN FOR THE TOUGH Most investment by foreign oil firms, which account for about a fifth of the country's oil output, have stagnated since Chavez introduced a nationalistic oil law two years ago. "The oil sector is used to difficult conditions (like Central Asia) but even these guys are worried about business conditions here," said Jose Gregorio Pineda, chief economist at the Venezuelan-American Chamber of Commerce. It is not just oil. When the Venezuelan-American Chamber held its annual meeting this year, the number of members who attended was about 300, about half a year ago. Even before the two-month strike that ended last month, new foreign investments had tumbled. According to the latest data available, investments totaled $246 million in January to September last year, down 58 percent from the previous year. And way below the $1.5 billion before Chavez came to power in late 1998. Returning executives are few in numbers and cautious. Having survived the strike, foreign executives are now angry at new state currency controls in which dollar purchases will need special government permission. The new mechanism's details have still not been ironed out, meaning most businesses have been unable to buy new imports for over six weeks. "Most businessmen tell me they've battened down the hatches in a wait-and-see mode," said one diplomat. "These currency controls have just paralyzed them with uncertainty." For example, the UK faces losing its biggest export market in Venezuela -- $120 million in annual whiskey sales -- after Chavez railed against the imported spirit, implying he would not grant permission for it to be imported under new controls. Unpredictable policies have generated rumors that have added to a fearful investment climate. Executives speculate officials may confiscate dollars when travelers leave the airport or that foreign trips may be limited to three a year. Many executives have sent families home. At one top English-language school, enrolment has fallen by a third. Embassy cocktails, the traditional hub of potential business deals and intelligence-gathering, are now rare events. "Business has become almost impossible. It's basically a matter of keeping our company's brand name in the country. But business? Just about zero," said one foreign executive of a medical equipment supplier, who asked not to be named. "We're doing more business these days in Central America (one of the poorest regions in the continent). I'm even thinking of moving there," the executive added. Outside one major hotel in Caracas, its taxi drivers had given up the ghost and gone to play dominoes rather than wait for a possible client. The lobby was empty. "The world has forgotten about us," said Miguel, a porter.

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www.sfgate.com Edward Epstein, Chronicle Washington Bureau Friday, March 7, 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 into 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 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 offline 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."

E-mail Edward Epstein at eepstein@sfchronicle.com.

www.forbes.com Reuters, 03.07.03, 7:54 AM ET  By Tom Ashy LONDON, March 7 (Reuters) - The United States may not be the only country seeking to banish the ghosts of 9/11 in a war on Iraq. Saudi Arabia, whose citizens dominated the list of suicide plane hijackers, also has a chance to dispel any doubts about its allegiance using OPEC oil policy as its sword, oil analysts said. After 18 months of souring relations with its main Western ally in Washington, the world's top oil supplier is leading a move in the cartel ahead of a meeting on Tuesday to crank up exports to cover for an expected halt from Iraq. The extra oil, mostly from Saudi Arabia, would ease Washington's path to Baghdad by preventing oil prices rising much further, and strengthen Riyadh's role as central banker to the world oil market. "For Saudi Arabia the meeting is a golden opportunity to emphasize to the United States and other allies its role as a reliable supplier after an intense period of frought relations with Washington," said Raad Alkadiri of Petroleum Finance Corp. "For Riyadh it is a chance to shine, particularly in the eyes of Washington," he added. U.S. oil prices last week hit their highest level since the 1990 Gulf crisis at $40 per barrel and economists fear further rises will seriously dent world economic growth.

RESISTANCE Riyadh is pushing fellow members of the Organisation of the Petroleum Exporting Countries to agree a plan to suspend output restrictions when bombs start falling on their Gulf neighbour, delegates say. But it could meet resistance from other members of the group, such as Iran, which have little unused capacity and even less desire to help Washington's war plans. "The Saudis are keen to mend fences with Washington, but don't want to be seen doing so by the Arab street," said Leo Drollas of the Centre for Global Energy Studies. "They are choosing to do it via OPEC and not overtly, by preventing the oil market from exploding and being a reliable supplier of oil," he added. OPEC Secretary-General Alvaro Silva has said he does not envisage any suspension of quotas yet, but he conceded that the 11-member group has already set its output limits to one side to cover for an unexpectedly long strike in Venezuela. "The contingency plan depends on those few countries with spare capacity. If you have the barrels, you will be allowed to produce them," said an OPEC delegate, asking not to be named. Any contingency plan may not be adopted formally, delegates said, but Saudi Arabia wants to put the issue at the top of the agenda at Tuesday's meeting, which is otherwise expected to maintain the current group limit of 24.5 million barrels per day (bpd).

CONTROL As in 1990 when Iraq invaded fellow OPEC-member Kuwait, Saudi Arabia has the vast majority of spare global capacity and could once again see its control over the world oil market strengthened. In August 1990, when OPEC last suspended quotas, Saudi Arabia lifted output by more than two million bpd to 7.7 million. This time Saudi could hike output by another two million to 10 million, putting the Arab kingdom in sole control of almost a quarter of global oil exports. "This could reinforce the strategic value of Saudi Arabia to the United States," said Alkadiri. "At the same time as increasing production significantly it will stand to gain financially from $37 oil," he added. Independent observers say output has already advanced by a million bpd over its quota of eight million, in anticipation of war, and Riyadh has already seen an unexpected windfall from an Iraq-fuelled price spike. Drollas estimated that Saudi oil revenues will rise by $4.5 billion this year to $60.4 billion. The 1990 agreement was explicitly temporary, but the world's oil kingpin never looked back. Its output has not fallen below seven million since. "You can't argue with capacity. If you have it, you can use it," said an OPEC official. Alkadiri said the analogy with the previous Gulf crisis should not be taken too far, however. In 1990, both Iraqi and Kuwaiti exports were halted and retreating Iraqi troops torched Kuwait's oilfields. This time, many analysts expect only Iraqi flows to stop, possibly for a shorter period. "A lot depends on the spillover from the Iraq war and how long it lasts," Alkadiri said. "Longer-term issues of overcapacity will come back to haunt OPEC eventually."

www.vheadline.com Posted: Friday, March 07, 2003 By: Justin Delacour

International media commentarist Justin Delacour writes: In my view, Patrick J. O'Donoghue is an excellent reporter, probably the best English-language reporter in Venezuela. His principled independence as a reporter is second-to-none, demonstrated by the fact that he does not hesitate to present facts and viewpoints that are highly critical of both the opposition and the Chavez government.

That said, I sometimes get the sense that Patrick portrays people like Domingo Alberto Rangel and Douglas Bravo in a more positive light than they deserve, as if the two men were the holy saints of the Venezuelan left.

Personally, all that I see in Rangel's comments is a bunch of petty little sectarian diatribes against the Venezuelan government, combined with a lack of political sense that may partly explain why Rangel has nothing to show for himself politically.

In Patrick's recent article, Rangel is quoted as saying that the FARC should have "an internationalist policy that would eliminate current nations and create one unit consisting of Colombia, Ecuador and Venezuela… if Bolivar talked disparagingly about 'mini-countries,' why shouldn't 21st century Marxists not assume the standard of a single entity from the Orinoco to Guayas?"

• Well, gee, maybe Colombia's guerrillas figure that it's not for them to decide what the Venezuelan and Ecuadorian people want.

Like it or not, Mr. Rangel, nationalism and national sovereignty have always been a fundamental element of Latin American guerrilla movements; guerrillas that have flagrantly disregarded such considerations ... such as Che Guevara's group of mostly Cuban insurgents in Bolivia ... have failed miserably.

That's not to say that Guevara or his guerrilla compañeros were not honorable figures, nor that the concept of internationalism is ignoble; it's simply to say that people -- whether we like it or not -- do not simply eschew their nationalism in favor of Rangel's lofty notions of "internationalism."

Reality is not always to be found in the dusty old texts of "internationalist" Marxism, nor in the writings of Simon Bolivar.

O'Donoghue paraphrases Rangel as saying that the FARC and ELN "seem to ignore the fact that they are the vanguard of a revolutionary movement destined to change not only Colombia but also the whole of meridian America…"

Well, I hope folks don't mind if I express my belief that "revolutionary vanguards" are a thing of the past, and that's where they should stay. Revolutions are not to be carried out by specialized classes of "revolutionaries."

• True revolutions can only be brought to fruition by mass organizations, under the direct democratic control of unprivileged majorities.

I believe that, in Venezuela, such promising mass organizations are now in the process of development… in the form of Bolivarian Circles, community media, and a new politically independent trade union federation.

Vanguardism represents some of the most elitist and undemocratic features of traditional Marxism.

From my perspective, Rangel -- with all his lofty advice for others to follow -- is the ultimate "armchair leftist": I find it pretty audacious on his part to accuse Chavez of "opportunistic" efforts to appeal to both the "armchair left" and the political right.

From where I sit, it doesn't seem like many rightists are jumping on board with Chavez, nor that Chavez is doing much of anything that would induce them to do so. 

In fact, I think it is Rangel who is guilty of opportunism; to speciously accuse Chavez of associations with the political right for the purpose of furthering his own sectarian and Quixotic causes is about as a rank a form of opportunism as I can imagine. 

Rangel's remark that the Colombian guerrillas operating in Venezuela have "forced the big landowners and ranchers to recognize social benefits and a decent salary for Colombian laborers" is about the only interesting piece of information that I've seen from him.

Until I see any other worthwhile insights from Rangel, I'll continue wondering what is so newsworthy about his commentary.

Justin Delacour jdelac@unm.edu