news.bbc.co.uk Andrew Walker BBC economics correspondent

Iraq supplies only 3% of the world's oil

As energy ministers and officials from the 11 member states of the oil producers' organisation OPEC gather in Vienna on Tuesday, uppermost in their minds will be the prospect of a war against one of their number - Iraq.

Many of them hope it won't happen, but if it does, the question for OPEC will be how to respond to the inevitable disruptions to the global oil market.

But the mere prospect of disruption to deliveries is already making its mark.

The current level of oil prices - at well over $30 a barrel - owes a great deal to the war talk.

Interrupted

The assumption in the markets is that at a minimum, if and when the fighting starts, Iraqi exports will cease completely for the duration, taking about 2 million barrels - about 2.5% of world daily consumption - straight off the market.

It's also likely that some production in neighbouring Kuwait would be stopped as a safety precaution - perhaps another 500-700,000 barrels a day, according to Julian Lee, a senior analyst at the Centre for Global Energy Studies in London.

On top of that come the fears that there might conceivably be missiles fired by the Iraqi military at oilfields in other Gulf states, or terrorist attacks on tankers in the Straits of Hormuz, the only shipping route out of the Gulf.

Most observers don't think it at all likely; but the risk can't be discounted altogether.

Keep pumping

But if some degree of disruption is a near-certainty, and wider disturbances at least worth planning for, what will OPEC do?

Mahathir says oil should once again be a weapon

The days of oil being used as a political weapon - as it was in the mid-1970s - seem to be well and truly gone, and attempts by Mahathir Mohammed, Prime Minister of small producer and non-Opec member Malaysia, to resuscitate the mood of the Oil Shocks foundered.

Just the opposite: officials from leading OPEC countries have repeatedly said they will respond to real shortages in supply, whatever the reason.

The current President of OPEC, Abdullah al Attiyah, who is also the Energy Minster of Qatar, said in a recent BBC interview that the organisation would try to keep supply and demand in balance.

OPEC countries have already this year boosted output in response to the problems of one of their own members - Venezuela, where production was severely affected by a strike.

And it seems likely they will do what they can to compensate for any disruptions caused by a war. Indeed some analysts, including Raad Alkadiri of the Washington consultants PFC Energy, say that OPEC members have already started.

Spike

Whether they can offset the losses fully is another question.

Much depends on Venezuela, whose production levels - if the government's version of events can be relied upon - should allow Opec to cope, says Julian Lee.

Assuming that disruption is limited to Iraq and part of Kuwait, the price of oil would probably spike upwards at the start of a conflict, perhaps to over $40, but would come down soon if an early US victory seemed assured.

But if the disruption is much wider and if Venezuelan output remains low, then Julian Lee says Opec could not fill the gap - and it would be hard to see an upper limit to prices.

Some observers have warned that a level as high as $80-100 is possible: a level similar in real terms to the highs of the early 1980s, reached in the wake of the Islamic Revolution in Iran and the start of the Iran/Iraq war.

The one voice of dissent has been Iran, whose Petroleum Minister Bijan Zanganeh has been reported as saying that Iran will back politically motivated decisions and that Opec should not adopt any policy that implies support for a US military assault against an Opec member state.

The picture is confused further by the Petroleum Minister of the United Arab Emirates, Obaid bin Saif al-Nasseri who is reported to have said that there is very little spare capacity.

Reserves

What OPEC won't do, though, is respond to price rises caused by what Mr al Attiyah calls speculation.

Opec sees problems keeping tanks full if war spreads

Even now, the price now includes an element called a war premium which reflects the possibility of supply disruptions and, according to Raad Alkadiri, is in the region of $5 a barrel.

The rich oil consuming countries have another safety net - government controlled reserves of crude oil, available for emergencies.

Julian Lee says they have around 1.2 billion barrels that they could use at 12 million a day for a month in the event of any disruption, which is almost as much as comes out of the entire Gulf region.

The economic stakes are high, however.

Oil prices were a key factor in the global recessions of 1975, 1981 and 1991.

2001 was also a very weak year for the global economy - some economists count it as a recession - and again oil prices were part of the story.

Already the prospect of a war has done economic damage through its effects on business and consumer confidence, on stock markets and the oil price.

Most economists think the crisis probably won't cause another world recession, as long as it ends reasonably quickly. But the risk, they warn, undoubtedly remains.

www.alertnet.org 10 Mar 2003 19:50 (Adds more quotes, details) By Hassan Hafidh

BAGHDAD, March 10 (Reuters) - Iraq denied on Monday that it has placed explosives at the Kirkuk oilfields in northern Iraq to prevent them from being taken over in the event of a U.S. invasion of the country.

"Iraq is keen to defend its oil wealth and it is illogical that we burn our oil wealth with our own hands," Iraq's Oil Undersecretary Hussein Suleiman Al-Hadithi told Reuters.

A U.S official told Reuters on Monday Iraq had placed the explosives.

"There are indications that has taken place," the official said, adding that the movement had occurred "recently".

CNN quoted unnamed U.S sources as saying there was also activity in the southern oil fields with troops moving through them.

"These American statements are hostile and provocative," Hadithi said.

He said that Iraq had taken steps to guarantee oil production in case of war.

"Our oil production installations are working normally. If an aggression takes place against us, we have plans to continue production," he said.

The United States and Britain has massed tens of thousands of troops in the Gulf for a possible invasion of Iraq to punish its alleged non-compliance with U.N. weapons inspectors.

U.S. President George W. Bush has said he will push the United Nations Security Council to endorse a resolution this week giving authority for immediate military action.

Hadithi had said in an earlier statement that military defences had been set up at oil installations. He also warned that the loss of Baghdad's two million barrels of daily exports could plunge markets into turmoil.

World oil prices have already risen 50 percent since November because of the threat of U.S.-led military action against Iraq and shortfalls caused by a general strike in oil producer Venezuela. (Reporting by Hassan Hafidh, editing by Duncan Shiels +44 20 7542 7630)

www.tryondailybulletin.com Web posted: 3/7/03 by Bretta Smith

Record high gasoline prices hit Polk County and North and South Carolina in general during the month of February, and prices are expected to continue rising.

On Feb. 27, local self-serve regular unleaded gasoline ranged in price from $1.49 in Landrum to $1.63 in Tryon.

North Carolina’s average price per gallon of regular self-serve gasoline reached $1.591 on Feb. 12, the highest recorded average for the state in 20 years, according to AAA Carolinas.

This breaks the state’s record of $1.589, set on May 8, 2001, and is an increase of almost 50 cents from a year earlier in 2002.

Also on Feb. 12, South Carolina came close to breaking its old record. During February, South Carolina’s average reached $1.589, less than a cent from the record set in 2001.

Like those in the state of South Carolina, gas prices in the Asheville area in February reached one cent less than the record set in May 2001.

However, in February, the Greenville-Spartanburg-Anderson area broke its previous record of $1.518 per gallon. The average price for gas in the market reached $1.531 on Feb. 12.

“We expect prices to continue to increase and to set new records,” said David E. Parsons, president and chief executive officer of AAA Carolinas. “We urge everyone to search your area for the lowest pump price, look for ways to cut down on fuel consumption and keep your vehicle properly maintained to increase its fuel economy.”

Heating oil has also been affected by the price increase. Pack’s Quality Fuel in Campobello has seen a steady rise in oil price. The price of heating oil was $1.099 in December and $1.219 in January, according to Ronnie Pack.

On Feb. 27, Pack said that he had to raise the price to $1.499 because of the rising price of fuel. “It’s been jumping like crazy,” he said.

Prince Oil Company in Landrum was priced at $1.599 at the end of February.

The February gas price increase in North Carolina follows another in January.

On January 1, 2003, North Carolina implemented a legislative-mandated 1.3 cent sales tax increase to fund highway improvement, maintenance, and construction.

The record high price of gasoline is not just a local problem. Nationally, the price of gasoline has also risen rapidly.

Between mid-January and mid-February, the national average of a gallon of self-serve regular gasoline increased 14.7 cents to $1.618, according to AAA Carolinas.

The continuing loss of oil and gasoline exports from Venezuela and recent cold weather in much of the country has affected fuel inventories, but this does not justify the rapid increase in fuel prices, according to AAA Carolinas.

“The fuel industry is simply unsure of what is going to happen in the future,” Parsons said.

www.vheadline.com Posted: Monday, March 10, 2003 By: Patrick J. O'Donoghue

Historian Jorge Olavarria compares a last ditch battle fought by Cipriano Castro (1899-1902, 1902-1904, 1904-1908) 100 years ago to those fought and won by President Hugo Chavez Frias (1998-).

“The biggest and bloodiest battle in Venezuelan history took place 100 years ago in La Victoria (Aragua) between 8,000 poorly-equipped men defending Castro and 14,000 well-armed men belonging to the Liberating Revolution.” Castro won because of a serious mistake on the part of government forces that lost the advantage of superior numbers by fighting the battle in a place where they could not make full use of their troops.

• Until that moment, Castro had been on the run and it was just a matter of finishing him off.

Instead of heeding a proposal to take Caracas and attack Castro later from a more advantageous position, the arrogant warlord Luciano Mendoza insisted on attacking Castro holed up in La Victoria boasting that Castro would not last three hours … the astute soldier, Castro outfoxed his adversaries.

“Today the same is happening … the organized forces of the opposition grouped in the Coordinadora Democratica (CD) are far superior to those of the government … but they have lost the battle of the national stoppage.”

After losing the battle of La Victoria in 1903, the demoralized warlords returned home and General Juan Vicente Gomez mopped up by defeating Nicolas Rolando, last of the 19th century warlords, in Ciudad Bolivar in July 1903.

Olavarria traces two battles between April 2002 and February 2003 and says Chavez Frias has won both because of serious errors in the opposition camp, even there were minor gains.

Battle 1: The first battle wasn’t programmed but its preparation was a brilliant piece of political strategy. As a reaction to the 48 fast track decree in November 2001, the opposition organized a very successful 24-hour national stoppage on December 10 … the January 23, 2002 march ratified the size, enthusiasm and combativeness of the opposition. Next came the Federation of Chambers of Commerce & Industry (Fedecamaras), and Confederation of Trade Unions (CTV) document drawn up with the aid of the Church. Petroleos de Venezuela (PDVSA) executives reacted against the dismissal of General Guaicaipuro Lameda and against the appointment of Gaston Parra as PDVSA president … protests were spontaneous ... the middle classes had lost their fear.

On April 11, the scaled stoppage was declared indefinite and the ensuing march surprised everyone by its size and enthusiasm … “even though we don’t know the truth of half of what happened, we do know that Chavez Frias resigned but the battle was lost.”

Battle 2 on December 2: The same leaders repeated the April 11 scheme … this time, however, the military that could have asked for Chavez Frias’ resignation were acting the fool in Altamira Plaza or boycotting the decisions of Coordinadora Democratica (CD). Daily TV messages from the triad stoppage leadership were repetitive and boring. Despite enthusiastic crowds, the second battle was lost.

Commenting the signature campaign, Olavarria calls it a third loss, which started well. There was no agreement on the tickets after the consultative referendum was dropped due to legal grounds.

The recall referendum was not even considered as a viable option at first. The discussion whether to include a signature campaign for a Constituent Assembly, Olavarria recalls, was beneficial because it eliminated an insensible and shortsighted opposition element.

• It was Chavez Frias himself that proposed the recall referendum and it was only included in the opposition ticket at the last moment.

Olavarria criticizes NGO Sumate’s announcement of signature statistics, claiming that it turned out to be the launching of Enrique Mendoza’s bid to become the single presidential candidate. Julio Borges, Henrique Salas Romer weren’t invited.

People who had marched for two months felt cheated.

Worse still, after the announcement of signature statistics, Fedecamaras president, Carlos Fernandez retired with friends to a restaurant for a juicy steak … it was there where he was scandalously arrested.

www.vheadline.com Posted: Monday, March 10, 2003 By: Patrick J. O'Donoghue

UK Ambassador to Venezuela John Hughes has thanked the Venezuelan government for its collaboration in the case of a Venezuelan citizen arrested in London on terrorist charges.

Speaking after meeting Executive Vice president Jose Vicente Rangel, Hughes says the British government has offered to share its experience in anti-terrorist policing with Venezuela. “It’s important for all governments in the world … we must all make war on the scourge.”

Ambassador Hughes and Rangel discussed the terrorist threat to international civil aviation. “I had the opportunity to hand the Vice President a joint letter on the matter from the British Foreign and Transport ministers.”

British Airways has resumed its flights from Caracas after its gaffe allowing a Venezuelan citizen fly all the way from Caracas from London carrying a grenade.