www.nj.com Tuesday, March 18, 2003 By TOM HESTER JR.

As war in the Middle East looms, gasoline prices are nearing record highs in the Trenton region and prices are expected to continue increasing as the summer months approach.

Despite the accelerating pump prices - the national average is at a record high $1.719 - motorists are being urged to avoid rushing to fill the tank if war begins in Iraq. AAA Mid-Atlantic said a panic could cause needless fuel shortages.

"Engaging in panic-buying can get us into those gas lines that we had in the past," said Pam Maiolo, spokeswoman for AAA Mid-Atlantic. "There's no reason to think we're going to run into a gas shortage, but a sudden run on the pumps can create localized outages that don't have to happen if you consume gasoline as you normally do."

AAA's fuel gauge report, which surveys 60,000 gas stations daily, reported yesterday the national average for unleaded gasoline has hit the highest level recorded, at $1.719 per gallon, topping the previous high of $1.718 per gallon set on May 15, 2001.

The average New Jersey price for regular unleaded gasoline was $1.59 per gallon yesterday with the average price 2 cents higher in the Trenton area, Maiolo said. The highest average price recorded by AAA for regular unleaded in the Trenton area is $1.66 per gallon on June 7, 2001.

The Trenton area average for regular unleaded is nearly 49 cents more per gallon than a year ago, when it was $1.12 per gallon amid a slowdown in fuel consumption after the Sept. 11, 2001, terrorist attacks.

Diesel fuel also is more expensive, up to $1.83 per gallon in Trenton, compared to $1.20 a year ago, according to AAA, which said the Trenton record for diesel is $1.92 per gallon on Feb. 14, 2000.

In Pennsylvania, the average price for regular unleaded gasoline was $1.67 per gallon yesterday, according to AAA's survey.

The U.S. Energy Department predicted the national average for regular gas prices will jump to $1.76 per gallon in April, then hover at $1.70 per gallon through the summer. But Maiolo said it was difficult to guess what may happen to prices if war erupts.

"We're just in kind of a wait-and-see hold, as everyone else is," Maiolo said. "We know the price continues to go up. It's not going to get any better as time goes on."

Analysts said gas prices have soared in the last month because of war fears, high crude oil costs, heavy heating oil demand and tight crude oil inventories, spurred partly by labor turmoil in Venezuela that cut production.

The price of a benchmark crude, West Texas Intermediary, averaged $36 a barrel, a level not seen since October 1990, just before the start of the 1991 Gulf War, the Energy Department said.

Area residents were wary yesterday as they filled up at a Ewing gas station.

Hopewell Township resident Herb Hughes said he is spending more than $20 to fill his minivan and is expecting to pay higher fuel costs if the country goes to war against Iraq.

Adrienne Earle said she is spending about $18 to fill her tank, compared to the $15 she was spending a couple months ago. Earle, a student at The College of New Jersey, said gas prices are the least of her worries.

"I'm more concerned about going to war than the actual gas prices," she said.

Katlain Catrambone, who commutes from Philadelphia to Ewing, said the $10 she used to spend to fill her pickup truck now fills just half her tank, but her worse fear is also war.

"I don't mind if the gas costs more as long as we don't have a war," she said.

The national average, while a record high, still doesn't compare to 1981 if inflation is considered. Motorists would have paid $2.90 per gallon in March 1981, using today's dollar, the Energy Department said.

New Jersey prices remain cheaper than other parts of the nation, where average prices have soared to nearly $2 per gallon for regular gasoline. The average price on the West Coast is $1.93 per gallon, according to AAA and the Energy Department. In some West Coast locales, prices have topped more than $2 per gallon.

The Gulf Coast was the only region where prices have declined.

Maiolo credited New Jersey's gas tax with helping to keep Garden State gas prices in check. New Jersey's 10.5-cent gas tax ranks as third lowest in the nation, behind only Alaska and Alabama. New York's gas tax is 22 cents a gallon, while Pennsylvania's is 26 cents.

February and March are typically when gas is cheapest, with prices traditionally increasing in the summer as travel demand rises and cleaner fuel is required, Maiolo said.

The Energy Department's short-term forecast stated: "Even without additional disruptions to the world (oil) supply in the near term, prices are likely to remain on the high side and subject to substantial volatility through 2003."

Maiolo advised motorists to shop for the best price, try to cut fuel consumption and keep vehicles properly maintained to increase fuel efficiency.

While the government said price gouging was found after the Sept. 11, 2001, attacks in a few local markets, it doesn't expect gouging is a problem now. The Energy Department blamed the increased prices almost entirely on the high crude oil prices. Staff writer Eva Loayza contributed to this report.

www.vheadline.com Posted: Tuesday, March 18, 2003 By: David Coleman

Charges against seven former oil executives, fired from Petroleos de Venezuela (PDVSA) for their roles in the 2-month opposition attempts to sabotage the Venezuela's oil industry, have been dropped for alleged violations of judicial procedure. Defense lawyer Juan Martin Echeveria says the case had been thrown out after an appeals court review of how a lower court had raised the charges in the first place ... he told reporters "we have begun to see a light in Venezuela's administration of justice."

The seven rebele have, however, decided to remain in hiding until a general warrant for their detention has been voided by proper authorities. Rebel leader Edgar Quijano is reported as saying "we must be very careful . . . because the rule of law doesn't exist in Venezuela."

The anti-Chavez opposition claims that police had acted outside the framework of law ehen they attempt to arrest former PDVSA executive Juan Fernandez, last week, as he defiantly made a rebel appearance at a Caracas opposition rally. His supporters had threatened physical violence on police officers as the dragnet closed on the PDVSA saboteur and he was rushed away to an undisclosed location.

President Hugo Chavez Frias says, however, that PDVSA sabotage leaders must be punished under the full force of the law for inflicting tremendous suffering on the Venezuelan population ... but opposition leaders claim that arrest warrants issued to detain and bring their ringleaders to trial is tantamount to political persecution.

www.vheadline.com Posted: Tuesday, March 18, 2003 By: David Coleman

A principal catalytic cracker at the Petroleos de Venezuela (PDVSA) leased La Isla refinery in Curacao has been restarted for the first time since the abortive 2-month stoppage which forced its shutdown ... in the initial phase it has begun producing 42,000 barrels of gasoline a day, according to general manager Noberto Chaclin and is scheduled to reach full 60,000 barrels a day capacity of in just two weeks.

The refinery had begun producing 120,000 bpd in January but was unable to reach full capacity because the cracker was down and repairs were inhibited by political opposition efforts to sabotage Venezuela's vital oil industry in a fruitless effort to depose democratically-elected President Hugo Chavez Frias.

PDVSA president Ali Rodriguez Araque has also revealed that Venezuela's oil production reached 3 million bpd over the weekend, close to pre-stoppage levels while Energy & Mines (MEM) Minister Rafael Ramirez says Venezuela is ready to resume production at full 3.4 million bpd capacity to make up for shortages in international markets.

www.vheadline.com Posted: Tuesday, March 18, 2003 By: David Coleman

Venezuelan Federation of Chambers of Commerce & Industry (Fedecamaras) president Carlos Fernandez has been rushed to hospital after suffering "cardiac complications" at his luxury villa in Valencia (Carabobo State) where he has been contained under house arrest since his dramatic arrest at the end of February.

A judge has formally signed papers releasing Fernandez for three days to the care of a private cardiology unit for tests and treatment after complaints about his deteriorating state of health. Family members say Fernandez has suffered from heart failure and hyperglycemia meriting intensive care and cardiac monitoring among other treatments.

Government security services are, however, alerted to the possibility that the hospitalization is a ruse to prepare Fernandez' escape from justice ... his predecessor as Fedecamaras president, Dictator-for-a-Day Pedro Carmona Estanga had duped his police minders to escape from house arrest to claim asylum at the Colombian embassy in Caracas ... he is now in self-enforced exile in Bogota.

economictimes.indiatimes.com PTI[ TUESDAY, MARCH 18, 2003 02:14:13 PM ]

NEW DELHI: A nine per cent increase in the domestic oil prices has been projected in the event of a war in Iraq and the Rs 8,116 crore oil subsidy budgeted for 2003-04 was not adequate enough to bridge the gap, an apex chamber has warned.

"The budgeted oil subsidy of Rs 8,116 crore in 2003-04 is inadequate to fully provide for the increase in the oil prices and a hike of nine per cent in domestic oil price is needed to cover the shortfall," Ficci President A C Muthiah said here last night.

In an interactive session with Forum of Financial Writers on 'Budget and Economic Reforms', he postulated two possible scenarios in the event of war in Iraq, saying the first one would be that war "will be quick and swift, ending in a matter of few days and resulting in moderate increase in the oil prices."

The reasoning for the short war, in Ficci's assessment, he said was that it was due to the vast difference in the military capabilities of the two countries (US and Iraq).

The other possibility of a prolonged war of over three months, which according to him was not a possibility, could push up the average oil prices to around $40 a barrel, thus making a "major negative impact on the Indian economy, especially industry."

The chamber also saw more business potential in Iraq even amidst human sorrows that could accompany after the war with possibility of reconstruction activities.

"What is seen as aftermath of the war is that I see a lot of scope for Indian steel, cement and construction industries and we must get prepared and be ready there," Muthiah said.

Even the Indian engineering industries would have large potential in Iraq, Muthiah said, adding there would be large-scale outsourcing.

Meanwhile, Ficci secretary general Amit Mitra equated the potential that would emerge from Iraq to a situation during the Second World War when the war stimulated demand in the economy internationally, especially in India after the Marshall Plan.

In the present case, Mitra, however, warned "this war does not have the inner dynamics of a large widespread demand pull effect."

However, he found a silverlining amidst the rising oil prices, saying the prices were bound to settle in the range of $23-25 per barrel as had happened during the previous Iraq war.

"Going by the past experience, one can say that increase in oil prices in the recent past, again fuelled by uncertainty, is to a large extent a reflection of the market discounting the war hysteria and assigning a war premium to the oil prices," Mitra said.

The other factors that had exacerbated the situation, according to Mitra, included continuing strike of oil workers in Venezuela and the less than favourable stance adopted by the Oil Producing and Exporting Countries (Opec).

Mitra also warned that even during the short war, the inflation, based on Wholesale Price Index, could go up by 4.5 per cent in 2003-04 as compared to the 3.6 per cent increase in 2002-03.