Gas prices predicted to drop

www.chicoer.com By LAURA URSENY - Business Editor

Few in the gasoline industry will guess what drivers might be paying at the gas pumps, but there seems to be an indication it will be lower, even with the latest events of the Middle East.

Some indication that prices would go down came on Thursday when the price of crude dropped. It reportedly went up slightly when news that a handful of Iraqi oil wells were on fire.

Talking about the high spikes of the past month, Warner Petroleum general manager Garth Strick said, "We're thinking around here that gas prices went up because of the expectation of war and a couple of other things." Warner distributes Chevron and CFN gas and products.

An automobile association survey of California's gas prices showed that Chico had about the lowest, at an average of $2 a gallon. In January, the average per-gallon price was $1.47.

Ultimately Strick believes the price will drop, maybe as low as the $1.60 to $1.80 range, but not until the fall because of the expensive conversions to MTBE-free gasoline.

"But we're not going to see it in the double digits like we did last year."

California struggles with gas price influences different than most other states, including high taxes and environmental regulations.

Part of that steep hike was rooted in state regulations that puts an end to use of MTBE, which has been blamed for groundwater pollution.

Nevertheless, while it suffered from the most dramatic leap in prices, Chico still enjoyed the state's cheapest gas prices for several weeks, according to California State Automobile Association.

According to AAA, Chico residents still saw gas prices averaging $2 a gallon, lower than any other city's average, according to AAA.

Though higher than in the past, Strick said he doesn't hear people complaining much about them.

"Higher gas prices is something we're getting used to."

Chico's lower prices than state averages has been attributed to the community's abundance of gas stations.

"I won't even try to guess prices. We just don't do that," said Dave Fogarty, spokesperson for Western States Petroleum Association in San Francisco.

But he noted the price of crude had come down about $9 a barrel.

Fogarty said there was good reason for the escalating gas prices in California, including the expectation of war, the phasing out of MTBE in California and retrofitting for the use of ethanol.

A labor strike in Venezuela, crippling the supply, also has had an impact, he said, as well as refinery maintenance.

Drivers everywhere in the United States are experiencing higher prices for gas, but California's circumstances made the higher prices climb more. Also adding to the cost drivers pay at the pump are California's gas taxes, which amount to about 50 cents a gallon.

"The future? No one knows. What we're watching on our television screens over the next few days will help determine the cost of crude oil," said Fogarty.

While oil wells may be burning, Strick said a quick strike against Iraq and Saddam could produce a faster drop in prices.

Neither man believed that Gov. Gray Davis' investigation into the state's gas prices would have an effect.

"There have been many investigations - about 25, with the most recent released on March 12 - that showed the gas marketplace is competitive and nothing unlawful is occurring," Fogarty said.

As far as lowest pump prices in Chico, Safeway club card holders probably enjoy the distinction.

Safeway club card holders probably enjoyed the lowest price in town at $2.029 a gallon for regular. Lines lengthened at the Mangrove Avenue gas station with drivers attracted to the card price of $2.029 and noncard price of $2.059.

new.stockwatch.com 2003-03-21 14:37 ET - News Release Mr. Dean Pelkey reports

B.C. UTILITIES COMMISSION APPROVES 16 PER CENT BC GAS RATE INCREASE

The British Columbia Utilities Commission has approved BC Gas's application for an increase in the rates it charges for the natural gas commodity.

The increase will add approximately 16 per cent to the typical residential customer's total gas bill. That works out to an additional $184 per year for a typical Lower Mainland home; $167 per year for a typical home in the Interior and $183 per year for a typical home in the Kootenays.

The increase will take effect April 1, 2003.

Natural gas is a commodity traded on the open market, like oil or gold. In the past six months, the market price of natural gas has increased substantially, driven upward by heavy demand in the east as a result of a very cold winter. Rising crude oil prices, spurred by civil disruption in Venezuela and uncertainty around the Middle East situation have also served to push natural gas and other energy prices upward.

BC Gas Utility does not earn a profit on natural gas; the utility's cost is passed onto the customer and any rate change must be approved by the B.C. Utilities Commission.

The cost of the natural gas makes up about two-thirds of the typical residential gas bill. The remaining one-third is composed of delivery charges. Customers can check the rate they pay for natural gas on their BC Gas bill, since it is listed separately from the delivery charges.

Consumers can find more information on how to save energy and reduce gas consumption on the BC Gas Web site at www.bcgas.com.

Dow talks to business people, residents

www.ourmidland.com Kathie M. Marchlewski , The Midland Daily News 03/21/2003     There soon will be increased earnings and steady growth at The Dow Chemical Co., its leader told Tri-City business people and residents Thursday.     The company has struggled through eight quarters of poor performance and negative cashflow, but Bill Stavropoulos, chairman, president and CEO, at a community meeting assured an audience of about 175 that a turnaround is in sight.     "There’s no doubt these are challenging times for the chemical industry," Stavropoulos said. "I like to think these are exciting times for Dow."     Turnaround strategy     In place is an aggressive strategy that in the near term will increase profit margins, improve cash flow and reduce debt, Stavropoulos said. "We’re making progress and progress is rapid."     But before the company can break out of its earnings slump and achieve those goals, costs need to be cut.     The task, in the short term, will continue to affect Dow customers and employees.     Expenses have been reduced across the company, a goal that is "on track," Stavropoulos said.     Price increases are in place at 15 Dow businesses to compensate for energy costs that doubled in the last year. About 13 underutilized and non-competitive sites with combined 2002 revenues of $2.5 billion have been identified and will be shutdown or sold.     The businesses include the Tungsten Carbide site in Midland, which will be closed in April. Employees will be moved to other jobs within the company, Dow spokeswoman Holly LaRose-Roenicke said.     Other shutdowns will take place in Texas, West Virginia, New Jersey, Louisiana, Canada, Italy, Venezuela and Puerto Rico. Sales and shutdowns will eliminate 3,000 to 4,000 jobs. The reduction in employment in the short-term will spur future growth for the long-term, Stavropoulos said.     "A company constantly has to change to stay ahead," he said.     Obstacles to overcome     Part of the Dow struggle in recent months has been with high and volatile energy costs, slow global growth rates and uncertainty about the economy.     Stavropoulos addressed the controversial Union Carbide merger that to some has appeared a mistake. He assured people that despite the residual legal disputes brought into Dow by the merger, including asbestos lawsuits and lingering aftereffects of a 1980s industrial disaster in Bhopal, India, that teaming with Union Carbide was a wise move.     "We were aware of the situation," he said. "It’s something that we have to deal with."     It takes at least five years to realize the benefits of most acquisitions, and the Union Carbide deal is no different, Stavropoulos said. He expects the merger will save money later, particularly energy expenses.     "You’re going to see big-time earnings potential," he said.     Keeping Midland     globally competitive     To address how changes and strategies impact Midland, Gary Veurink, vice president and site manager, took the stage.     While Michigan Operations still struggles to attract new business, the gap between the site’s prime controllable costs and the cost of comparable locations is shrinking.     "Over time we will in fact attract new business," Veurink said.     In 2000, the cost for a new business to locate in Midland was 4 percent higher than at other existing Dow sites. Today, Midland costs are 1.5 percent higher.     "We’ve been trying to get this site into the game," Veurink said.     Layoffs and voluntary departures have reduced costs, along with outsourcing.      Local 12075 United Steelworkers of America President Kent Holsing said union workers understand the importance of keeping Michigan Operations competitive with other markets.     "We understand it and we do support any initiative to bring new investment and add more jobs," he said, adding the union has not agreed with all of Dow’s cost-cutting measures.     "I guess that’s the cost of business," Holsing said.     Midland is in the running for new investment, Veurink said.     Dioxin in Midland     Veurink also discussed dioxin issues, noting that health statistics show the community is healthy and that the health of the Tittabawassee River continues to improve.     The Midland Dow site now emits nearly no dioxin into air and water, he said. The most recent tests show .063 of a gram per year of emissions, meaning that accumulation of a gram, or the amount of sugar in a restaurant-style packet, would take more than a decade.     The dioxin existing in Midland, a problem the company is working to resolve, is from historical manufacturing, Veurink said.     A health study still is in the works, he added.

Dow talks to business people, residents

www.ourmidland.com Kathie M. Marchlewski , The Midland Daily News 03/21/2003     There soon will be increased earnings and steady growth at The Dow Chemical Co., its leader told Tri-City business people and residents Thursday.     The company has struggled through eight quarters of poor performance and negative cashflow, but Bill Stavropoulos, chairman, president and CEO, at a community meeting assured an audience of about 175 that a turnaround is in sight.     "There’s no doubt these are challenging times for the chemical industry," Stavropoulos said. "I like to think these are exciting times for Dow."     Turnaround strategy     In place is an aggressive strategy that in the near term will increase profit margins, improve cash flow and reduce debt, Stavropoulos said. "We’re making progress and progress is rapid."     But before the company can break out of its earnings slump and achieve those goals, costs need to be cut.     The task, in the short term, will continue to affect Dow customers and employees.     Expenses have been reduced across the company, a goal that is "on track," Stavropoulos said.     Price increases are in place at 15 Dow businesses to compensate for energy costs that doubled in the last year. About 13 underutilized and non-competitive sites with combined 2002 revenues of $2.5 billion have been identified and will be shutdown or sold.     The businesses include the Tungsten Carbide site in Midland, which will be closed in April. Employees will be moved to other jobs within the company, Dow spokeswoman Holly LaRose-Roenicke said.     Other shutdowns will take place in Texas, West Virginia, New Jersey, Louisiana, Canada, Italy, Venezuela and Puerto Rico. Sales and shutdowns will eliminate 3,000 to 4,000 jobs. The reduction in employment in the short-term will spur future growth for the long-term, Stavropoulos said.     "A company constantly has to change to stay ahead," he said.     Obstacles to overcome     Part of the Dow struggle in recent months has been with high and volatile energy costs, slow global growth rates and uncertainty about the economy.     Stavropoulos addressed the controversial Union Carbide merger that to some has appeared a mistake. He assured people that despite the residual legal disputes brought into Dow by the merger, including asbestos lawsuits and lingering aftereffects of a 1980s industrial disaster in Bhopal, India, that teaming with Union Carbide was a wise move.     "We were aware of the situation," he said. "It’s something that we have to deal with."     It takes at least five years to realize the benefits of most acquisitions, and the Union Carbide deal is no different, Stavropoulos said. He expects the merger will save money later, particularly energy expenses.     "You’re going to see big-time earnings potential," he said.     Keeping Midland     globally competitive     To address how changes and strategies impact Midland, Gary Veurink, vice president and site manager, took the stage.     While Michigan Operations still struggles to attract new business, the gap between the site’s prime controllable costs and the cost of comparable locations is shrinking.     "Over time we will in fact attract new business," Veurink said.     In 2000, the cost for a new business to locate in Midland was 4 percent higher than at other existing Dow sites. Today, Midland costs are 1.5 percent higher.     "We’ve been trying to get this site into the game," Veurink said.     Layoffs and voluntary departures have reduced costs, along with outsourcing.      Local 12075 United Steelworkers of America President Kent Holsing said union workers understand the importance of keeping Michigan Operations competitive with other markets.     "We understand it and we do support any initiative to bring new investment and add more jobs," he said, adding the union has not agreed with all of Dow’s cost-cutting measures.     "I guess that’s the cost of business," Holsing said.     Midland is in the running for new investment, Veurink said.     Dioxin in Midland     Veurink also discussed dioxin issues, noting that health statistics show the community is healthy and that the health of the Tittabawassee River continues to improve.     The Midland Dow site now emits nearly no dioxin into air and water, he said. The most recent tests show .063 of a gram per year of emissions, meaning that accumulation of a gram, or the amount of sugar in a restaurant-style packet, would take more than a decade.     The dioxin existing in Midland, a problem the company is working to resolve, is from historical manufacturing, Veurink said.     A health study still is in the works, he added.

www.forbes.com Reuters, 03.21.03, 1:14 PM ET

NEW YORK, March 21 (Reuters) - NYMEX crude oil futures slumped to their lowest level in nearly four months midday on Friday as the United States launched a major air war against Iraq and U.S. and British ground forces penetrated deep into Iraqi territory. An early impetus to the day's price decline, the seventh in a row, was news that U.S. and British forces had seized control of key oil producing areas in southern Iraq, increasing prospects of a shorter interruption of Iraqi oil exports. News midday that Royal Dutch/Shell <RD.AS> <SHEL.L> had declared force majeure for up to 14 days on up to one million barrels per day (bpd) of Nigerian crude oil exports due to ethnic violence limited the midday slippage, traders said. NYMEX May crude, the new front month, fell as much as $1.77 or 6.3 percent to $26.30 a barrel, the lowest since November 26. In London, May crude was down $1.35 or 5.5 percent at $24.15 a barrel, moving down with NYMEX crude. A U.S. official, who asked not to be named, said the United States had began major air strikes against Iraq. He spoke as bombs and missiles rained on Baghdad for the third successive night in a war to dislodge President Saddam Hussein from power. Earlier, British Defense Chief Sir Michael Boyce said all key components of the sourthern Iraqi oilfields, which pump half the country's output, had been safely secured. Only seven oil wellheads had been torched in the south, less than the 30 previously reported, although oil-filled trenches were also ablaze, he said. British Defense Minister Geoff Hoon said allied forces also secured Faw, a strategic port linking pipelines to Iraq's main Gulf export terminal Mina al-Bakr. Briefing U.S. congressional leaders, U.S. President George W. Bush said on Friday that "we're making progress" in the war on Iraq, though White House officials cautioned that U.S.-led forces still faced many risks. As armored columns raced toward Baghdad, U.S. forces ran into resistance from Iraqi troops near Nassiriya on the Euphrates river, about 235 miles (375 kms) southeast of Baghdad, which halted their advance on Friday, according to news reporters embedded with the troops. One murky issue, oil traders said, was whether Iraqi Saddam survived a missile attack that targeted him and other Iraqi leaders in a compound that began the war on Wednesday night. Iraq said he did survive but there were reports that he might at least have been injured. ABC News said Saddam was seen being carried out of the rubble on a hospital stretcher wearing an oxygen mask. Analysts at Energy Security Analysis Inc. (ESAI) in Massachusetts said they expected the general price downtrend to continue, with room for periodic price spikes, should there be widespread torching of Iraqi oilfields or if conflict spreads to Kuwait, among a number of possible developments. Traders said a quick end to the conflict would hasten the return of Iraq's sizable exports to the market, creating the possibility of a market awash in oil. This is a distinct possibility, they said, as OPEC, led by powerhouse Saudi Arabia, has been ratcheting production up in the past months to cover any likely interruption of Iraqi exports. The cartel members also raised oil flow to plug shortfalls caused by a long strike in major producer Venezuela, also an OPEC member. Falling in line with NYMEX crude, NYMEX April heating oil futures were down 4.34 cents at 78.10 cents a gallon while NYMEX April gasoline futures were down 5.99 cents at 85.00 cents a gallon.