www.tcpalm.com By Nadia Gergis staff writer March 13, 2003

Anthony Dalle isn't taking his family out to dinner anymore.

Cutting corners and watching the family's budget is becoming more of an obsession for the owner of Coastal One Maintenance in Stuart — all because of higher gasoline prices.

"Gas used to cost me $500 a month," said Dalle, who specializes in home repairs. "Then it became $700, now it is $1,000. I have to watch my expenses so much now."

Dalle, whose territory stretches from Wellington to Fort Pierce, is considering charging customers an extra 5 to 10 percent surcharge just to keep his business afloat.

"It makes me depressed, I don't know what is going to happen next," said Dalle, as he filled up his Ford truck Wednesday at a 7-Eleven at High Meadow Avenue and Martin Highway in Palm City.

Dalle isn't alone is making adjustments to his budget and transportation costs. Soaring gas prices are causing more and more Treasure Coast residents to pinch their pennies and make fewer trips in their vehicles, especially driver with sport utility vehicles and large trucks.

"I try to get rides to and from work whenever I can," said Kathy Santilli, a manager at the 7-Eleven who owns a Nissan SUV.

Prices for regular unleaded, self-serve gasoline on Wednesday shot up to an average of $1.704 per gallon — the highest ever recorded by AAA Auto South Club. That's 10.5 cents higher than the same date last month. Compared with a year ago, consumers in Florida now are paying 50 cents more for a gallon of gas.

Other gasoline grades also jumped in Florida. Mid-grade climbed 11.4 cents to a statewide average of $1.846 per gallon. Premium rose 11.6 cents to an average of $1.88, while diesel rocketed 21.5 cents to an average of $1.892 per gallon.

Topping the state in prices at the pump was the West Palm Beach-Boca Raton market, where the average cost of regular unleaded was $1.78 per gallon.

"A combination of crude oil prices, low inventories, bad weather up north and the volatile situation with Iraq are making gas prices horrendous for consumers," said Gregg Laskoski, managing director of public and government relations for AAA Auto Club South.

The American Petroleum Institute says the lack of crude oil imports from Venezuela, one of the biggest exporters of oil to the United States, is the largest factor contributing to the gasoline price hikes.

"We had a supply disruption from Venezuela because of workers going on strike," said Bill Bush, a spokesman for the API. "Any severe disruption will affect crude oil prices."

Also contributing to the problem is the unusually cold weather gripping the Northeast and Midwest. Refineries, industry officials say, have been forced to stop making gasoline to produce more heating fuel.

And, to make matters worse, prices of crude oil might keep increasing, said Ron Planting, manager of information and analysis at the API.

"Retail prices usually lag behind crude oil prices, so who knows what we are in for in the future," he said.

That means motorists looking for relief may be in for a long wait.

"It is absurd," said Michael Colella, a Palm City resident. "Every day it (gas) gets higher. It's ridiculous."

Paul Parrott, a 49-year-old Vero Beach resident, echoes that sentiment.

"I never really cared about the price before because I only drive about 6,000 miles per year," said Parrott, who is disabled, lives on Social Security and budgets $35 a month for gas.

www.tcpalm.com By Nadia Gergis staff writer March 13, 2003

Morris Blackmon, an independent flatbed trailer operator from Texas, is being forced to spend the night in Fort Pierce.

The trucking broker he is contracted with won't pay enough, he said, to make up for the high price of diesel fuel he needs for his next pickup.

"Right now, I am going to wait for another phone call," Blackmon said in an interview this week at the Pilot truck stop. "My broker is not paying enough for me to move the truck."

With the prices of crude oil reaching a record-breaking high — Blackmon and his fellow truckers might be in for a long, bumpy road. This week, the price of a barrel of crude oil soared to more than $37 — the highest the country has seen since the Iran-Iraq War during the 1980s. Oil then reached $40 per barrel.

And the prices of crude might go even higher because of the possibility of war with Iraq, said Bill Bush, a spokesman for the American Petroleum Institute in Washington, D.C.

"It is all about supply and demand," said Bush. "We had a colder winter, so more refineries needed a greater-than-normal supply. Our supply from Venezuela was disrupted because of the strike, and we are still recovering from that."

According to the American Trucking Industry, the industry is suffering from one of highest diesel fuel price increases in the history of the United States. In Florida, diesel fuel this week hit an all-time high of $1.892 per gallon, according to AAA Auto Club South.

Because of the drastic increase, some truckers and suppliers are passing the bucks on to consumers by increasing surcharges on transported products.

"We have implemented a fuel surcharge in addition to our normal surcharge," said Jack Nicholson, treasurer of Armellini Industries, a Palm City-based trucking company.

"Unfortunately, that cost is being passed onto consumers, but we have no choice. We have to recover costs from somewhere," said Nicholson about Armellini, a floral distributor that runs 178 refrigerated tractor-trailers throughout the United States and Canada.

Armellini executives said they made the decision to tack on a 9 percent surcharge — $9 for every $100 in cargo hauled —after the company's profit margins declined sharply because of soaring diesel prices. When diesel prices were $1.15 a gallon last year, the surcharge was only 1.8 percent, Nicholson said.

"I have never seen prices this high," said Nicholson, who has been with Armellini for 25 years.

Businesses dependent upon the trucking industry also are seeing their bottom lines battered.

Laura Lewis and her husband, Bill Sellers, own Crossroads USA, a tire and trucking lube center in Fort Pierce. The couple opened the business last year, but are experiencing difficulties in maintaining a profit because oil prices are so high.

"We saw a big decline this week," Lewis said Wednesday. "Usually we do about 10 or 12 trucks a day, and we have only done two or three so far."

The ripple effects of high gas and diesel fuel prices could spread far and wide, eventually affecting retail and grocery store prices.

"For every dollar spent on freight transportation, 87 cents of that goes to trucking," said Bob Costello, chief economist at the American Trucking Institute. "If prices stay this high, we will definitely be paying more for products at the stores."

• nadia.gergis@scripps.com

www.troyrecord.com By: March 13, 2003 The talk now is that probably before the end of this month America will be at war. That consensus ignores the fact that America has been at war pretty much since 9/11/01, when our country was viciously attacked by terrorists. Within a week, President Bush declared a war against terrorism, and now he is seeking to escalate that war by invading Iraq. Whether that move is wise and just is not today's subject of debate, however. What needs to be addressed is an odious practice that has been epidemic in all wars - profiteering. There have been small-time wheeler dealers and big-time corporations drawing unfair profits on wars probably as far back as some person who sold overpriced hay to Hannibal for his elephants. That profiteering is a tradition makes it no less repugnant, and that is why Sen. Charles E. Schumer wants the Federal Energy Regulation Commission to investigate possible price gouging by the natural gas industry. We have already seen the price of fuel go through the roof. The petroleum industry claims that the threat of war in Iraq and a strike in Venezuela have driven prices up. Those excuses are somewhat questionable, as New York state has been particularly hard hit at the gas pump despite the fact that little Venezuelan gas is sold in this state, a tiny proportion of the total. And there is even less reason for natural gas prices to soar, as it is produced domestically and in Mexico, where strikes and the threat of war should play no part. Given the cruelly cold winter suffered by the Northeast, a certain spike in prices could be expected and justified, but not, as Schumer said, "49 percent in just one week." New York is the only state that has been bludgeoned by price increases. According to the Department of Energy, the Capital District paid $38 million more for natural gas this year than last. Where is the consumer to turn? Some people want to switch from oil heat to gas because of petroleum prices, but now natural gas is also exorbitant. We urge the regulation commission to hastily start a serious probe into price structures and find out if there is any justification for the huge increase. If no reason can be reasonably found, prices should not only be forced down by law, but the issue of possible refunds should be investigated. Using the threat of war and our country's fears of a sagging economy as a veil to inflate profits cannot be countenanced.

washingtontimes.com EDITORIAL • March 13, 2003

     Venezuelan President Hugo Chavez may have triumphed over the opposition-led national strike that ended last month, but the country's economy has been badly wounded. The Venezuelan subsidiary of Spanish bank BBVA, called Banco Provincial, predicted the country will suffer the largest economic contraction in its history and that oil production will be seriously hampered. The bank's projections help clarify Venezuela's economic conditions, since the assessments made by the government and private sector (which is often aligned with the opposition) have varied widely, and have sometimes been regarded as too subjective.      Washington is observing Venezuela's economic development closely. Last year, Venezuela supplied America with 13 percent of its crude oil imports. The severe economic problems could signal unabated instability and further disruptions in oil production.      According to Banco Provincial, in the first quarter of this year, Venezuela's economy will shrink 40 percent and oil sector activity will drop by 69 percent. To put this in perspective, this slowdown would be more severe than America's sharpest Great Depression contraction. The bank also said that the non-oil sector would contract by 33 percent and the unemployment rate would rise to 25 percent from the official rate of 18 percent.      Still, the situation is not as dismal as it could have been. Many analysts expected Venezuela, which last year was the world's fifth-largest oil exporter, to be producing around 1.3 million barrels of oil a day during the fourth quarter. Even oil workers sympathetic to the national strike say the national oil company, Petroleos de Venezuela, is producing about 1.8 million barrels a day, while the government says this production is up to 2.6 million barrels.      Nonetheless, Venezuela's situation looks grim. Economic projections for the whole year for Venezuela vary widely, with contraction predictions varying between 9 percent to 30 percent, demonstrating how unstable the country's socio-political situation remains. And the economic problems, as Mr. Chavez is well aware, will affect not only the oligarchs (who have become the president's nemesis) but Venezuela's poor as well. In this critical regard, Mr. Chavez's ability to deliver his promised Bolivarian revolution has been undermined.      Mr. Chavez blames the strikers and "coup plotters" for causing the current problems, while the opposition points to the president's heavy-handed tactics. Beyond the finger pointing, which has mutual justifications, it would appear that parties on both sides must strike a truce and find ways to ratchet down the tensions for the good of the country. If the opposition can not see past its hostility to Mr. Chavez, there could be little left of the country at stake. Similarly, if Mr. Chavez fails to honestly review his errors and temper his dangerously polarizing rhetoric, the president will become his own worst enemy.      Thus far, the White House has watched developments in Venezuela with concern and has forged a carefully calibrated policy. But the United States and other countries involved in the Group of Friends initiative, which are striving to facilitate talks, reduced their level of engagement after the national strike was called off. The bombs that exploded last month in Caracas demonstrate that the current situation remains highly volatile. The Group of Friends should step up their efforts, and be more aggressive in calling out publicly the dangerous brinkmanship of both sides.

washingtontimes.com Gary M. Galles

     The recent surge in gasoline prices has triggered the typical American response — politicians portraying themselves as voters' protectors against the evils of the market. Of particular note has been public servants' scrambling for air time and column space by demanding an investigation — into whether higher gas prices reflect collusion. But it is all consumer advocate imagery devoid of substance.      Absent a smoking gun documenting conspiracy, which is already illegal, not to mention impossible if the government was really protecting us, collusion is unprovable from the available price data. The reason is that the evidence of collusion is higher prices, but multiple political and market forces, with hard or impossible to quantify effects, have been pushing up gas prices. There is no way to accurately subtract the magnitude of those effects from the actual increase in market prices, particularly because the relevant costs are forward-looking, rather than historical, to demonstrate collusion.      Events in Iraq, Venezuela and elsewhere have increased crude oil prices, and with it the price of gas. And the decision to add to the Strategic Petroleum Reserve has done the same. But any alleged collusion among refiners has nothing to do with that.      Of more importance to the retail gasoline market is the uncertainty about future oil supplies. A refiner who plans to stay in business will have to replace any oil used up in current gas production, so that the relevant cost of that oil is what it is expected to cost in the near future, not what the oil they are now processing cost yesterday. But no investigator can know what that cost "really" is in the face of the present uncertainty (where war jitters add to weather forecasting, the proper timing for seasonal gasoline blend switchovers, etc., as complicating factors) . As a result, no possible relationship between the present or past cost of oil and current retail gasoline prices can demonstrate gouging or collusion.      California's cleaner gas mandate has also raised refining costs, as well as isolating California from most short-term outside sources of gasoline, since they do not conform to California's "recipe." Again, there is no way to establish exactly how much prices per gallon should rise to cover the added billions of refining costs, because that would require knowing how many total gallons will be sold, the rate of return companies "should" earn on investment, how long before California forces them to reformulate again, throwing some refinery investment away, etc.      These changes and more would have to be both understood and accurately quantified before any analysis of gasoline prices capable of establishing collusion could be done. This has not and probably cannot be done, given the multiple interacting market forces at work. But that has not stopped the political scapegoating of "big oil" in search of the conspiracy theory vote, for a simple reason. The mere accusation puts the burden of proof on oil companies, who cannot disprove the ill-defined charges beyond a shadow of a doubt any more than their accusers can prove them. But the posturing buys politicians more exposure and more votes in the next election.      If there is collusion, it should also show up in unusually high profits for refiners. But oil-refining profits have long been marginal, at best, which is also demonstrated by the substantial fall in U.S. refining capacity over the past two decades ("greedy" firms don't rush for the exits of highly profitable lines of business). This is anything but proof of successful collusion. As Salomon Brothers oil industry analyst Paul Ting said during an earlier episode of gouging and collusion accusations that recur every time gas prices spike: "Are oil companies gouging, making unconscionable profits? The indications are that on the refining and marketing side, the earnings have actually been abysmal."      What should we make of a government collusion witch hunt that cannot possibly prove what it is looking for, and which ignores clear evidence of abnormally low profits? It seems, more than anything else, to demonstrate that rather than relying on the government to protect us against the evils of the market, we need to rely more on the market to protect us against the evils of grandstanding government policies.      And after the 1970s, we shouldn't need this reminder. After all, while the market price of gas rises when underlying conditions of supply and demand warrant, only the government can create blocklong gas lines.             Gary M. Galles is a professor of economics at Pepperdine University in Malibu, Calif.