www.upi.com By Hil Anderson UPI Chief Energy Correspondent From the National Desk Published 3/11/2003 7:29 PM

LOS ANGELES, March 11 (UPI) -- Crude futures settled 55 cents lower on the New York Mercantile Exchange Tuesday after OPEC announced it would keep the world supplied with oil should "geopolitical tensions" deteriorate further.

While not mentioning its fellow OPEC member Iraq by name, the cartel repeated its pledge that it would be able to continue production and the flow of supplies to its customers at the conclusion of its latest conference meeting in Vienna.

"In addition, noting the uncertainties stemming from increasing geopolitical tensions and while expressing its hope that peace and tranquility will prevail, the conference reiterated OPEC's determination to ensure that the market remains stable and well-supplied," OPEC said in a statement. "The organization (has) repeatedly demonstrated its ability and willingness to continue to satisfy oil market demands in a timely fashion."

OPEC refused to withhold oil from the West in a show of support for the increasingly beleaguered Iraqi government. It also refused to increase exports from its current level of 24.5 million barrels per day to help cool off oil prices that have helped send gasoline prices in the United States to near-record levels.

The news from Vienna and reports that the Bush administration might be willing to extend the proposed March 17 deadline for Iraqi disarmament combined to cool off the bullishness on NYMEX, where April crude settled at $36.72 per barrel while May settled at $35.74. Early after-hours trading Tuesday evening saw crude as largely stable.

A chronic tightness in the U.S. crude and gasoline supply has combined to push the average price of a gallon of regular in the United States to $1.702, according to AAA, whispering distance from the May 2001 record of $1.718.

"Motorists also should resist the urge to immediately buy gas following a possible declaration of war on Iraq or the commission of a terrorist act, because 'panic buying' and long gas lines have the potential of causing needless fuel shortages," AAA spokeswoman Dawn Duffy suggested.

OPEC's statement maintained, however, that there was no physical shortage of oil on the market and the recent run-up in prices was primarily the result of oil trader worries over the Iraq situation, cold weather in the United States and the continuing labor dispute that has bogged down Venezuela's state-run oil industry.

"The current high price levels ... are predominantly a reflection of uncertainties resulting from prevailing geopolitical tensions," OPEC said. "In light of the supply-demand picture for the balance of the first quarter and the second quarter, the conference decided to maintain, for the time being, the current OPEC production ceiling. Supplies are adequate to meet current market requirements."

OPEC's ability to keep its pledge depends a good deal on whether the war spills over into Kuwait, Saudi Arabia and other Gulf nations.

The Washington Times said Tuesday that al Qaida might be forming terrorist squads to attack Kuwaiti and Saudi oilfields in the event of war.

Tina Vital, an analyst with Standard & Poor's, predicted that OPEC would increase its production in the event of war -- just in case, and warned that "if a conflict in the Middle East spills over into Kuwait, we believe OPEC may not be able to cover the shortfall, raising the prospect of additional hikes in oil prices." -0- Meanwhile, in a related energy development, the U.S. Department of the Interior added some new fuel to the debate over expanded oil drilling in Alaska on Tuesday.

Interior Secretary Gale Norton announced that an extensive survey of the caribou herds on Alaska's North Slope found that the fragile animals' numbers were on the increase, rising from 27,128 in 2000 to 31,857 as of last summer. In the 1970s, the herd was only around 5,000 animals strong.

"The fact that the herd has grown steadily for the past 25 years while energy production has been ongoing on Alaska's North Slope is a solid sign," noted Norton, whose agency has been supportive of efforts to open part of the adjacent Arctic National Wildlife Reserve to oil exploration.

"Energy production in Alaska's North Slope will reduce dependence on foreign oil from dictators and unstable countries; will create new jobs; is strongly supported by labor unions; and will protect wildlife with the toughest environmental regulations ever applied," Norton said in a statement.

www.zwire.com By: Scott Tynes March 11, 2003

There's no relief in sight for escalating gas prices, according to officials, and customers are beginning to question whether they will ever see low prices again.

"It's ridiculous," said Linda Clark of Brookhaven. "I don't think I've ever seen gas prices this high. "I travel a lot. It needs to come down so people can travel more." Gas prices in the Gulf Coast region, which includes Mississippi, Alabama, Louisiana, Texas, Missouri and New Mexico, are hovering around $1.59 this week, but officials don't expect it to last. Gasoline prices are up 1.3 cents in the region since last week and up 42.6 cents from March a year ago, according to the Energy Information Administration (EIA) of the Department of Energy. Other states, however, are looking to the Gulf Coast region with envy. Their prices this week are averaging $1.71 with similar statistics for a week and year ago as those of the Gulf Coast region. Prices in the Gulf Coast region are typically cheaper than most of the U.S. because nearly half of the gasoline production in the states is done here. The latest gasoline crunch is fueled by production cuts in previous years. "The most recent gasoline price increases are due in part to OPEC crude oil production cuts in 1999," according to EIA. "In addition, higher demand from a recovering Asian economy caused more competitive bidding for crude oil supplies in the international market." This created low inventories in the world market. As the market was beginning to recover from that blow, Venezuelan workers went on strike, stopping crude oil production and exports from that key OPEC country. Strike leaders lifted the general stoppage in non-oil industries Feb. 3, but there has been no resolution of the strike in Venezuela's oil sector, now in its fourth month. "Even when crude oil prices are stable, gasoline prices normally fluctuate due to factors such as seasonality and local retail station competition," according to EIA. "Additionally, gasoline prices can change rapidly due to crude oil supply disruptions stemming from world events or domestic problems, such as refinery or pipeline outages." The loss of Venezuelan oil was partially offset by increased production from other OPEC members, who were able to match nearly 60 percent of the lost production. However, the world oil inventories were already low from the 1999 production cuts and can not rebound until full production is regained. Low inventories are driving higher gas prices in a basic struggle of supply and demand. The Venezuelan strike and other factors in the world political climate have had a very severe impact on oil prices, especially with the possibility of a war in Iraq looming. "February crude oil prices moved higher than expected pushed by fears of a war in Iraq, low inventories, slow recovery in Venezuelan exports, continued cold weather and sharply higher natural gas prices in the U.S.," according to EIA. The threat of war involving OPEC members traditionally has a negative effect on gasoline prices. "Events in crude oil markets were a major factor in all but one of the five run-ups in gasoline prices between 1992 and 1997," according to the National Petroleum Council (NPC). In 1973, gas prices climbed because of an Arab oil embargo. Events involving Iran caused the increases in 1978 and 1980, first the Iranian revolution and then when they went to war with Iraq. The Persian Gulf conflict caused the increase of 1990. Most of the Middle Eastern countries are members of OPEC, including Iran, Iraq, Kuwait, Saudi Arabia, United Arab Emirates and Qatar. Other members include Venezuela, Algeria, Nigeria, Libya and Indonesia. Middle Eastern members make up more than half of OPEC's production and the threat of a war in the region tends to force prices up, according to the EIA. "OPEC has the potential to influence oil prices worldwide because its members possess such a great portion of the world's oil supply, accounting for nearly 40 percent of the world's production of crude oil and holding about 67 percent of world's estimated crude oil reserves," according to the EIA. Because of all these factors, gasoline prices are not expected to decrease until the Venezuelan strike ends and oil exports resume there at their normal levels, and the threat of war is removed from the Middle Eastern region. Clark said she doesn't expect to ever see low gasoline prices again. She believes that after summer, when gasoline prices are traditionally higher as more people travel, prices will not decline as they usually do with the onset of fall. People will be used to paying high prices, she said, so the oil companies will keep prices high.

slate.msn.com By Daniel Gross Posted Tuesday, March 11, 2003, at 2:43 PM PT

Enron's collapse provoked—at least in those who didn't own stock—a delightful case of schadenfreude. It was pleasant to watch the humiliation of Enron's mean, bullying executives—see CEO Jeffrey Skilling—as its arrogant corporate culture imploded.

But how to interpret the humbling of once-mighty utility AES Corp., which was in many ways the anti-Enron? Founded in 1981 by Dennis Bakke and Roger Sant, the massive utility had an anti-capitalist corporate culture—its core values included "fun." When it went public in 1991, AES explicitly stated that service and social responsibility were more important than profits. And despite its hippy-dippy worldview, AES grew to be one of the largest global utilities in the '90s. The soaring stock turned its founders into billionaires.

But AES has crashed and burned just as surely as the utilities, such as Enron and Dynegy, run by craven, greedy executives. In the end, the company's I'm-OK-you're-OK management philosophy and blasé attitude toward planning left it overextended, over-indebted, and overexposed to some of the world's most notoriously volatile markets.

In the beginning, AES's founders created a company that would oppose the basic model of modern capitalism. "All of us who had been in government together saw business repeatedly fight any socially responsible thing every step of the way," said Sant, who headed the Office of Conservation and the Environment in the Federal Energy Administration in the '70s. "We knew we wanted to be different."

Sant had met Bakke at the Federal Energy Administration. In 1981, intent on stimulating both conservation and energy production, they raised $1.2 million and formed AES. At AES, values and social responsibility were intended to trump profits. When AES built a coal-fired plant in Hawaii, for example, it gave $2 million to help conserve 225 square miles of forest in Paraguay. When AES went public, its prospectus stated: "If the Company perceives a conflict between [its] values and profits, the Company will try to adhere to its values—even though doing so might result in diminished profits or foregone opportunities." SEC lawyers suggested that the language be included in the "Risk Factors" section.

This social responsibility wasn't simply a pose. Each year, AES surveyed employees to measure how well the company was sticking to its core values and based compensation for top executives in part on the results. In 1992, when the company was fined $125,000 after workers at the company's Shady Point, Okla., plant falsified emissions reports, Sant and Bakke cut their own annual bonuses by more than half.

AES's reputation came in handy when entering markets that were traditionally suspicious of large U.S. companies. In the early '90s, AES expanded into Latin America. Later in the decade it pressed into China, Pakistan, Kazakhstan, Hungary, and a score of other Second- and Third-World countries. At a press conference in Brazil, Bakke, who became the sole CEO when Sant stepped down at the end of 1993, brought a picture of Mother Teresa "to illustrate what I meant by serving." Profits, he told Business Week, "are in fact not the goal of the company, but they are the just and fair reward that needs to be paid to investors who invest in your enterprise."

As late as 1999, AES claimed to have no central business strategy, yet it continued to enjoy tremendous growth. That year it started or bought plants in New York, Panama, Brazil, Venezuela, and Mexico. In 2000, AES purchased Indiana utility IPALCO in a deal worth more than $2 billion.

AES's revenues soared from $635 million in 1996 to $3.252 billion in 1999 and doubled to $6.7 billion in 2000. When the stock peaked at $70 in October 2000, the stakes of those reluctant capitalists, Sant and Bakke, were worth $2 billion and $1.7 billion, respectively. AES was poised to become the largest private generator of electricity on the planet.

But things started to go badly in the new millennium. AES was overly reliant on the dominant positions it had built in Latin America. In 2001, Latin America provided 51 percent of the company's pretax earnings. And so the devaluations in Argentina and Brazil, the strife in Venezuela, and the general deterioration of the region's economy took a heavy toll on the parent company. AES found that its good citizenship couldn't spare it from emerging-market politics or the obligation to meet debts. Its Brazilian unit has, for example, missed debt payments to Brazil's national development bank.

Nor did domestic markets provide a buffer. Even though AES was not involved in the energy-trading scandals or the California energy crisis, its U.S. operations were still damaged by the problems of confidence, surplus supply, and botched deregulation that have ravaged the industry. The debt that AES took out to finance its expansion was sapping more and more of the company's revenues. In 2002, interest payments of $1.7 billion would eat up virtually all operating income. AES's fuzzy, warmhearted overexpansion proved just as foolhardy as Enron's mendacious, aggressive strategy.

The post-Enron meltdown cost Bakke much of his fortune as the stock slid from $70 to the single digits. And last June it cost him his job.

Bakke's successor, a company veteran named Paul Hanrahan, is now engaged in a triage operation. The company has been restructured into two broad units, instead of the decentralized regional organization that Bakke had championed. And AES is furiously writing off or selling assets. The cause of management has suddenly morphed from instilling values to instilling financial discipline. Enron's casualties may be doing their own gloating now: In this energy industry collapse, it doesn't matter if you're a saint or a scumbag.

onebusiness.nzoom.com

Oil prices fell on Tuesday as Opec producers sought to reassure markets they could avert a supply shortage in the event of war in Iraq while the US called for a UN vote this week that could authorize war.

US light crude was down 48 cents at $US36.79 a barrel, below its recent peak of $US39.99. Oil prices set a record high of $US41.15 a barrel during the 1990-91 Gulf crisis.

London benchmark Brent for April fell 39 cents to $US33.30 a barrel.

Prices fell as the Organization of the Petroleum Exporting Countries, which controls around 60% of world crude exports, pledged during a ministerial meeting in Vienna that it was ready to fill any disruption in supply.

Traders took Opec's stance to mean that it would make up for a likely halt to Iraq's oil exports if the United States launches an attack.

"There will be no shortage of oil," said Saudi Oil Minister Ali al-Naimi told reporters. "The test is, when the need is there, whether we will use the capacity or not and I can assure you we will."

Oil prices are up 20% this year on concerns that a war in Iraq could upset oil supplies from the Middle East.

Efforts by Britain and the United States to give Iraq a March 17 ultimatum on scrapping weapons of mass destruction or face attack failed to draw widespread backing, forcing them to put off a vote in the Security Council until later this week.

Both France and Russia have said they would block the March 17 deadline. Other members of the 15-nation Security Council have suggested giving Iraq a further 45 days to comply.

Dashed hopes

Opec dashed hopes among consumer nations for a formal suspension of its output limits if war broke out. Instead, the cartel decided to maintain existing quotas of 24.5 million barrels per day (bpd), said Algerian Oil Minister Chakib Khelil.

"It doesn't really matter what Opec decides officially," said Gary Ross of New York consultancy PIRA Energy. "Saudi Arabia has made its policy clear. They've told customers they won't allow a shortage."

Saudi Arabia has lifted output sharply in recent weeks and analysts say it is now pumping more than 9 million bpd of its 10.5 million bpd capacity.

Delegates said the group's official communique would stress that OPEC already has done a lot to ensure adequate supplies by filling shortages from strike-bound Venezuela.

Severe disruption to Venezuelan supplies since early December 2002 has helped push oil stocks to the lowest level since 1975, and pushed heating oil and natural gas prices during a severe northern winter to record highs.

Forecasts for milder temperatures next week in the US Northeast, the world's largest regional heating oil market, also helped pressure prices on Tuesday.

With most in Opec already pumping to the limit, the cartel would be stretched to cover the loss of Baghdad's 1.7 million barrels daily to the 77 million bpd world market.

Kuwait in addition may close up to 700,000 bpd capacity near its northern border with Iraq, where US troops are poised for war.

new.stockwatch.com 2003-03-11 17:28 ET - News Release

NEW YORK, March 11 /PRNewswire/ -- Standard & Poor's oil and gas equity analyst has issued her latest outlook on the supply and pricing of crude oil. A leading provider of independent research, indices and ratings, Standard & Poor's made this announcement through Standard & Poor's MarketScope, its real-time market intelligence service.

"The price of April crude oil has steadied above $37 per barrel, as OPEC meets in Vienna today," says Tina Vital, Integrated Oil & Gas Equity Analyst, Standard & Poor's. "According to reports from Platts, OPEC has agreed to keep its current output quotas of 24.5 million barrels per day. However, Standard & Poor's believes OPEC will back an informal plan to produce as much oil as possible should a war disrupt Iraqi oil supplies. But with OPEC's spare capacity between 1.5 million and 3 million barrels per day, and with exports from Venezuela reduced, if a conflict in the Middle East spills over into Kuwait, we believe OPEC may not be able to cover the shortfall, raising the prospect of additional hikes in oil prices," concludes Vital.

Standard & Poor's Stock Appreciation Ranking System (STARS), which was first introduced on December 31, 1986, reflects the opinions of Standard & Poor's equity analysts on the price appreciation potential of more than 1,230 U.S. stocks for the next 6-12 month period. Rankings range from five-STARS (strong buy) to one-STARS (sell).

A model portfolio comprised of Standard & Poor's equity STARS recommendations was recently recognized by Investars.com as outperforming those of other equity research firms who analyze more than 500 stocks, over the 12-month period ending December 31, 2002.*

Standard & Poor's analytic services are performed as entirely separate activities in order to preserve the independence of each analytic process. In this regard, STARS, which are published by Standard & Poor's Equity Research Department, operates independently from, and has no access to information obtained by Standard & Poor's Credit Market Services, which may in the course of its operations obtain access to confidential information.

Standard & Poor's has the largest U.S. equity coverage count among equity research firms that are not affiliated with a Wall Street investment bank, analyzing more than 1,230 U.S. stocks. Standard & Poor's, a division of The McGraw-Hill Companies , is a leader in providing widely recognized financial data, analytical research and investment and credit opinions to the global capital markets. With 5,000 employees located in 19 countries, Standard & Poor's is an integral part of the world's financial architecture. Additional information is available at www.standardandpoors.com.

*Note to Editors: Investars.com has created a performance measurement tool called ROSS (Rate of Success System). The system quantifies the recommendations of Equity Research Firms by hypothetically purchasing shares in the recommended stock at the time of the recommendation. In short, the system calculates returns as if the Firm had actually purchased or sold shares at the time of the recommendation. Furthermore, the amount of shares purchased depends on the strength of the recommendation. For example, if a Firm's initial recommendation for the period is a buy on Cisco Systems (CSCO) then the system purchases 300,000 shares in CSCO at the price at the time of the recommendation. The price used is the opening price on the day of the recommendation. If the Equity Research Firm upgrades Cisco at a later date from a "buy" to a "strong buy" then the system increases the number of shares by 50% at the time of the upgrade. Similarly, if an Equity Research Firm downgrades a stock then the system decreases the number of shares by 33.3%. If a Firm reiterates a recommendation then the position in that stock is left unchanged. If a Firm issues a bearish rating on the stock (underperform, sell or strong sell) the system goes short the stock in the hypothetical portfolio. A short position is calculated as the inverse of a long position to reflect an analyst's market timing and to eliminate a natural mathematical bias towards long recommendations. Investars returns are excellent for relative performance of analyst rating but are not comparable to market returns or stock returns. Standard & Poor's

CONTACT: John J. Piecuch, Communications Manager, +1-212-438-1102, John_Piecuch@standardandpoors.com, or Tina Vital, Integrated Oil & Gas Equity Analyst, +1-212-438-9516, Tina_Vital@standardandpoors.com, both of Standard & Poor's

Web site: www.standardandpoors.com