edition.cnn.com Thursday, March 13, 2003 Posted: 0626 GMT ( 2:26 PM HKT)

TOKYO, Tokyo (Reuters) -- Japan's corporate goods price index (CGPI), a measure of companies' costs, showed Thursday that wholesale prices declined at their slowest rate in two years in February.

The domestic CGPI, a revamped version of the wholesale price index, was down 0.9 percent from February 2002 and up a preliminary 0.2 percent from January, the Bank of Japan said on Thursday.

Analysts had forecast on average a year-on-year fall of 1.0 percent and a month-on-month rise of 0.1 percent.

"The main reason is the rise in oil prices," a BOJ official told a briefing. He added that a rise in the cost of other raw materials had also helped the slowdown in the year-on-year fall.

Japan's manufacturers are entirely dependent on imports for oil supplies. Recent tension in Iraq and a strike in Venezuela have pushed oil prices up about 11 percent in the past two months.

Commodity prices worldwide have also risen about seven percent this year, having knock-on effects on costs at Japanese companies ranging from food processors to metals firms.

Though the rate of decline in Japan's wholesale prices slowed, Thursday's figures show that deflation still reigns in the world's second-largest economy.

"There has been some hope that higher raw material prices could lead to inflation at home," said Seiji Adachi, economist at Credit Suisse First Boston.

"But with domestic demand poor and the supply-demand gap getting bigger, companies will struggle to pass on the rises to their selling prices."

The government has identified falling domestic prices as the top problem facing the economy.

Now into its fourth year, deflation is crimping profits at manufacturers and means that bad loans at Japan's banks are getting bigger almost as fast as the banks are managing to reduce them.

The government has called on the Bank of Japan to take new measures to help in the fight against deflation, increasing the pressure on incoming governor Toshihiko Fukui, whose appointment was approved by Japan's lower house of parliament on Thursday.

biz.yahoo.com Thursday March 13, 3:07 pm ET

NEW YORK (Reuters) - World oil prices plunged more than 4 percent on Thursday as the United States said efforts to garner support for a new U.N. resolution on Iraq could extend into next week, potentially further delaying a Middle East war.

News that the Japanese government plans to sell 300,000 barrels per day from its state reserves should U.S.-led forces begin attacking Iraq, according to a Nihon Keizai Shimbun report, added to the day's slide, traders said.

U.S. light crude was $1.68 down at $36.15 a barrel. London benchmark Brent crude oil fell $1.44 a barrel to $32.47 a barrel.

Oil prices are still up 16 percent this year on concerns that a war in Iraq, which itself ships around 4 percent of world oil exports, could upset oil supplies from other producers in the Middle East.

Prices fell as the White House said on Thursday diplomatic efforts to secure U.N consensus on a new resolution on Iraq could spill over into next week.

Secretary of State Colin Powell told a congressional committee there may be no vote at all on the resolution, a sign that Washington fears it may not get enough support.

A German government source said compromise in the U.N. Security Council on Iraq was unlikely, even if a vote is put off until next week.

Further relief for soaring prices came from an end to freezing U.S. temperatures which have supported heating oil prices at near record levels in recent weeks.

Prices rose on Wednesday as the fall in U.S. stocks combined with worries that oil cartel OPEC (News - Websites)would not be able to compensate for lost Iraqi exports in event of war.

Latest U.S. data showed crude inventories falling last week to a 27-year low. There were also sharp drops in gasoline inventories, which ought to be growing as stockbuilding starts for the summer driving season.

Analysts say core oil stocks are now 89 million barrels below normal. "Given the reported ramping of OPEC production and the continued recovery of Venezuelan production, the shortfall is shocking," SG Securities said in a research note.

OPEC STEPS UP OUTPUT

The Organization of the Petroleum Exporting Countries has stepped up output this year to cover an outage of crude from Venezuela, where an anti-government strike brought production to little more than a trickle in December and January.

Venezuela, normally the fifth-biggest exporter providing about 13 percent of U.S. oil imports, has increased shipments of crude and oil products though rebel oil workers say production is still less than half of normal levels.

Analysts say timing is now key for the war because oil demand is generally two million barrels lower in the second quarter of the year as spring advances and the loss of Iraqi crude will not be as acutely felt as now.

The West's energy watchdog, the International Energy Agency (IEA), says the OPEC cartel likely lacks enough capacity to compensate immediately for the loss of Iraqi and Kuwaiti oil.

OPEC, however, has pledged to guarantee supplies should war break out and Saudi Oil Minister Ali al-Naimi reiterated on Thursday OPEC's ability to deliver oil in case of war in Iraq.

The Nihon Kezai report said Japan will consider releasing oil with the United States, regardless of what the (IEA) advises. Japan and the U.S. are members of the 26-nation IEA, the energy watchdog for industrialized nations that is based in Paris.

The IEA has said that it will allow OPEC to try to cover any shortages in war before it considers, as a last resort, releasing inventories from emergency stockpiles held in consumer nations.

Those reserves, built after the 1974 Arab oil embargo, were last used in the 1990-91 Gulf war after Iraq's invasion of Kuwait.

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 percent 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 and Martin Highway in Palm City.

Dalle isn't alone in 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, especially those who own 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 to 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 importers of oil to the United States, is the largest factor contributing to the gasoline price increases.

"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 in order to produce more heating fuel.

And, to make matters worse, prices of crude oil may 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.

"I'm basically a shut-in ... but when I looked up and saw $1.92 for premium, I went, 'Whew,' " Parrot said as he pumped gas at a Speedway station. "If I had to drive to Fort Pierce or Melbourne every day, I'd be outraged."

Staff writer Chris Kauffmann contributed to this report

• nadia.gergis@scripps.com

www.quicken.com Thursday, March 13, 2003 00:27 AM ET  Printer-friendly version   VIENNA -- Undermining the Organization of Petroleum Exporting Countries' reassurances that the cartel can keep the world adequately supplied with oil, the International Energy Agency says OPEC alone can't immediately make up for lost Iraqi exports in the event of a war in coming weeks.

The world's energy watchdog said the global oil market is extremely tight. The agency's latest data, released Wednesday, suggest that in case of a war in Iraq later this month, oil may have to be released from strategic stocks held by the U.S., Germany, Japan and other members of the 26-nation IEA to keep already-high prices in check.

The IEA's assessment irked OPEC ministers who decided Tuesday to leave the group's output limits unchanged. These officials, gathered in Vienna this week, had sought Tuesday to reassure oil consumers the cartel can and will increase supplies to offset a disruption in case a war cuts some two million barrels a day of exports from Iraq. On Wednesday, OPEC officials disputed the IEA's findings.

"There are many figures, but I think we have enough" oil-production capacity, Bijan Namdar Zangeneh, Iran's oil minister, said.

The IEA data showed a complex, moving picture of oil markets, where rising oil supply and a coming seasonal dip in demand will result in markedly different conditions at different points in time. The bottom line: OPEC can't cover a disruption of Iraqi supplies later this month. But its ability to cover such losses increases in April, and by May it can fully offset the loss of Iraqi supplies as well as a small reduction in Kuwaiti production. The reasons have to do with certain assumptions: a seasonal decline in demand for OPEC oil, rising output from Venezuela and capacity increases undertaken by Saudi Arabia, the world's largest oil exporter.

For the moment, though, the situation is dicey. The IEA reckons if war knocked off Iraqi exports from mid-March until May, and some 300,000 barrels a day of production were lost in Kuwait, the world faces a potential oil-supply shortfall of 1.68 million barrels a day during the second half of this month. For April, the shortfall in supply is reduced to 580,000 barrels a day. In May, OPEC can once again meet expected market needs in full.

This assessment may irk Ali Naimi, the influential oil minister of Saudi Arabia. Mr. Naimi pledged "there will be no shortage of oil," because Saudi Arabia and others in OPEC had the ability and the will to raise production to levels that might be needed. Saudi Arabia is believed to be the only country that has significant unused capacity. Yet the IEA data showed Saudi capacity to offset losses was less than many had thought. With output already at some 9.1 million barrels a day, the IEA figured Saudi Arabia can only pump an extra 400, 000 barrels of oil for March. This will rise to 600,000 barrels a day in April, and 900,000 barrels a day in May, assuming early March production levels and a buildup of capacity during the next six weeks.

Saudi Arabia's output capacity is likely to have featured in discussions the IEA's executive director, Claude Mandil, had earlier this month with Mr. Naimi in Riyadh. Mr. Mandil has promised the IEA will act swiftly to release oil from strategic stocks, if needed. But Mr. Mandil has also made clear the IEA will only act after it consults with OPEC and determines whether it needs to act because the exporters' group can't fully make up for any lost supplies.

moneycentral.msn.com By Jim Jubak About this time in 2000, investors couldn’t imagine anything but good news. The economy would keep on growing at 5% or better, interest rates would keep on falling and stocks would climb to the sky. By projecting that good news into the future, investment gurus came up with predictions for Dow 36,000. Right now, it’s just about as hard to imagine anything but bad news. The consumer is about to stop buying cars and houses. Two-dollar-a-gallon gas is just the beginning of years of climbing energy prices. Interest rates will return to the double-digit levels of the early 1980s, thanks to an explosion of government debt. And unemployment will soar to 8% or more thanks, to slow growth at home and vicious competition from China and elsewhere overseas. And of course, nobody in the United States will be able to afford to retire.Fast filing = fast refund! Do your taxes online. And by projecting this bad news into the future, a different set of investment gurus now predicts Dow 700. Reality tripped up the rosy projections of 2000. For example, accounting scandals revealed that earnings growth at companies ranging from Qwest Communications (Q, news, msgs) to Bristol Myers (BMY, news, msgs) had been all smoke and mirrors. And reality will do the same to the gloomiest scenarios of 2003 by delivering positive surprises in the unlikeliest places. Here’s a short list of three areas that seem especially likely to deliver positive surprises. Surprise 1: energy prices No doubt about it, in the short run, the world’s economies are going to get slammed by $40-a-barrel oil. Or worse. Oil inventories are much lower than they were before the 1990 Iraqi invasion of Kuwait, and thanks to a crippling strike in Venezuela’s oil industry, oil-producing countries are already pumping about as fast as they can. The whole system is one unexpected event away from major disruption. But in the long run, look for surprisingly low prices, thanks to new supplies from Russia. Russia is now the second-largest oil producer in the world -- but much of that oil never gets beyond the country’s borders, thanks to an inefficient delivery system. For example, Russia can’t get more than a dribble of oil to its two biggest potential markets, China and Japan, because it doesn’t have the pipelines in place to send oil in that direction. It’s no surprise, then, that even when oil sells for $30 a barrel on the international market, it often goes for just $5 a barrel in a glutted domestic economy.