<a href=www.billingsgazette.com>But don't expect the reprieve to last for long. By SARAH HALE The Orlando Sentinel

A more than week-old decline in crude-oil prices, which started even before the United States attacked Iraq, is expected to trickle down eventually to consumers in the form of lower gasoline prices.

But don't expect the reprieve to last for long.

Oil prices have fallen about $12 a barrel, from about $38 to $26, in just the past 10 days, and energy experts predicted Friday that prices will continue to spiral downward. The days of crude hovering just below $40 a barrel have passed, they said.

$25 a barrel oil? "It's fair to guess we'll fall back to $25 and, barring another event, that's where we'll stay," said Fred Rozell, retail-pricing director with OPIS Energy Group, a research firm in Lakewood, N.J.

But while gasoline prices tend to mimic changes in the cost of crude oil - which accounts for about 40 percent of the total cost of a U.S. gallon of gasoline - other factors are likely to blunt any drop in prices at the pump.

Even as the price of gasoline falls in the wake of war, seasonal adjustments in fuel formulas, cyclical driving trends and the possibility of supply shortages are likely to force prices upward again. Ongoing problems in oil-producing countries such as Nigeria and Venezuela could further hurt supply and pinch distribution. Iraqi retaliation against oil-production facilities in Kuwait or Saudi Arabia also is still a possibility as the war intensifies, experts said.

"Whether crude is going up or down, the price is essentially - but not immediately - passed on to consumers," said James L. Williams, president of WTRG Economics, an energy-economics firm in London, Ark.

"We can expect gasoline costs to drop in the coming month. But - and this is a big, wide 'but' in capital letters, bold - there are just so many variables in this tight energy situation that we could see prices go back up in almost zero time."

OPEC action In an attempt to calm worried markets, the Organization of Petroleum Exporting Countries announced Thursday that its members had pledged to increase their crude-oil output in an effort to make up for any disruption in exports from Iraq - about 2 million barrels a day.

However, Williams said OPEC is operating nearly at capacity already, so there is very little "wiggle room" should something unexpected occur on the supply side.

The worldwide oil market currently consumes 75 million barrels a day, or about 98 percent to 99 percent of what's being produced, he said.

With the United States' busiest driving season about to shift into high gear, rising demand for gasoline could soon offset any savings from lower crude-oil costs.

Last year, for example, the average price for regular gasoline in metro Orlando, Fla., started off at little more than $1 a gallon, only to climb by mid-April to $1.47 a gallon, according to OPIS. It then averaged about $1.40 through August as oil companies sought to capitalize on the usual upswing in summer vacationers hitting the road.

"Gasoline prices tend to go up as the summer approaches," said Bruce Cavella, an oil-industry analyst with Global Insight Inc. in Lexington, Mass. "There's more consumer demand as people go on vacations."

Even if gasoline prices fall by 10 cents or more a gallon in the next several weeks, they will likely head right back up again.

"We're looking at the $1.70-a-gallon range again," OPIS' Rozell said.

The U.S. average for regular gasoline dropped a half-cent to $1.71 Friday.

In addition to seasonal driving trends, refineries make adjustments each spring and fall to the gasoline mixtures they produce, which can lead to higher prices in some circumstances.

By May 1, for example, U.S. refineries must switch from winter-grade to summer-grade gasolines, depleting inventories and cleaning out pipelines, a process that can take two weeks or more.

Because the United States consumes more gasoline in the summer, it is important that the refineries overstock on oil ahead of time to compensate. But "refineries are expecting lower crude prices," said Williams, of WTRG Economics. "They don't want to get caught with overstock that's too expensive and have to sell it at a smaller profit margin."

And because refineries have been conservative in their purchasing strategies, inventories are already low, he said.

Should inventories fall below necessary levels, the U.S. government has reserves that could be used to relieve some of the pressure. The Department of Energy says nearly 600 million barrels of crude oil - about 7 percent more than a year ago - is currently stored in underground facilities as the nation's strategic petroleum reserve.

Nigeria, the world's eighth-largest oil exporter, is experiencing serious disruptions to its oil supplies amid ethnic warfare in the Niger Delta, where production equivalent to some 315,000 barrels a day has now been shut down.

Fighting between Ijaws and rival Itsekiri have claimed the lives of 10 soldiers and scores of civilians, prompting the deployment of thousands of soldiers and the evacuation of oil workers from threatened facilities.

In Venezuela, the world's fifth-largest oil exporter, a nationwide strike earlier this year sharply curtailed oil shipments that have yet to return to normal levels.

Although the Venezuelan government is trying to rebuild its oil industry, opposition to President Hugo Chavez is ongoing. The country is now exporting about 1.8 million barrels a day - a little more than half of what it was producing a year ago.

"In August - during the peak of our driving season - the Venezuelan constitution allows for a recall vote for Chavez's position," Williams said. "The probability for armed conflict goes up."

"Bottom line: As gas prices begin to drop, enjoy them," said OPIS' Rozell. "Prices may stay low in the short term but will likely increase."

<a href=www.heraldtribune.com>Gas prices are actually pretty good right now. It's been worse

The top 10 most expensive years to gas up and go (according to prices adjusted for inflation using the Bureau of Labor Statistics' Consumer Price Index):

Year Actual price Price in 2003 dollars

1981 $1.38 $2.47 1980 $1.24 $2.46 1982 $1.30 $2.19 1983 $1.24 $2.03 1979 $0.90 $2.03 1984 $1.21 $1.90 1949 $0.27 $1.88 1985 $1.20 $1.82 1950 $0.27 $1.81 1957 $0.31 $1.79

By LAUREN MAYK

Sound crazy? Not when you take inflation into consideration.

Most people don't walk around calculating the effect of the Consumer Price Index on the price of milk, eggs and gas in the good old days. But if they did, they would find that the cost of filling up at the pump pales in comparison to the painful prices of the early 1980s and late '50s.

The Herald-Tribune took a look at gas and oil prices over the last half-century to better understand why the prices of oil and motor gasoline have been rising over the past few months and what effect the U.S. attack on Iraq might have.

In 1981, a gallon of regular unleaded gasoline for the family station wagon cost an average of $1.38 -- the equivalent of a whopping $2.47 in 2003 dollars, if the Consumer Price Index used by the Bureau of Labor Statistics is applied to adjust for inflation.

Back in 1949, as the United States was revving up for the post-war boom and the golden age of the automobile, a gallon of leaded gasoline cost about 27 cents. But in today's dollars, that trip to the corner gas station cost about $1.88 per gallon.

So why aren't motorists grateful for the measly $1.71 they were paying last week?

"People don't look at that," said Yoli Buss, director of traffic safety for AAA Auto Club South. "If you tell them that, they get mad at you."

In addition to the fact that motorists generally don't consider inflation, their frustration can be blamed on the sluggish economy and the particularly steep curve of this price increase.

Retail gas prices jumped from less than $1.40 per gallon just before Thanksgiving 2002 to $1.70 by early March. The 20 percent jump was compounded by rising unemployment and uncertainty about military conflict with a country that produces millions of barrels of oil every day.

As the nation's second war with Iraq unfolded last week, retail gas prices generally held steady, edging up by a few cents at the beginning of the week and hovering at around $1.70 to $1.72 per gallon of regular unleaded.

Despite reports that Saddam Hussein was torching Iraqi oil fields, crude oil prices steadily declined, dropping below the $30 mark for the first time since mid-December, according to the Energy Information Administration.

Spot prices for crude oil from West Texas Intermediate -- a company often used as a benchmark for tracking oil prices -- sank from $37.87 on March 13 (the week before the first strike by U.S. forces) to $28.62 per barrel by the end of the day Thursday.

Lessons from the past

When it comes to the effects that war with Iraq could have on oil and gas prices, at least analysts have something to go on.

The buildup to the Persian Gulf War pushed up oil and gas prices to levels similar to what refiners and motorists were paying last week as the country prepared for another war with Iraq.

In the spring of 1990, a barrel of crude oil from West Texas Intermediate was selling for $16 to $18, according to the Energy Information Administration.

By the end of August, the month Saddam Hussein invaded Kuwait and President George Bush called up the first round of U.S. reserves, a barrel was going for almost $30. In mid-October, the price briefly topped $40.

"What markets don't like (is uncertainty)," said Stephen Gengaro, managing director and senior equity research analyst for the oil services industry at Jefferies & Co. "Uncertainty is bad."

Crude oil prices had been skyrocketing for months as the United Nations and the U.S. Congress debated the use of force in what would be the Gulf War, but when U.S. forces launched their first strike, the price of a barrel of crude settled back in the $20s.

"When we don't know, we kind of extrapolate the worst case scenario," Chapman said.

On Jan. 16, 1991, West Texas Intermediate was selling a barrel of crude for about $32 (the equivalent of about $43 today).

That night, after the markets closed, the air war in the Persian Gulf began. The next day, the cost of a barrel dropped more than $10 to about $21 (about $28 in today's dollars).

Oil prices stayed in the low $20s and high teens through the ground war and the rest of the year, nudging into the mid-$20s around the time Iraq created massive oil slicks in the Gulf.

But even as smoke was rising from Kuwaiti oil fields in February 1991, oil held steady, topping out around $23 a barrel (about $31 in 2003 dollars).

As it turns out, fear is a greater motivating factor than war itself. Fear of a shortage of oil, and its refined products, drives up prices.

"It happens before," Buss, the AAA official, said about the tendency for prices to spike before military action. "After the fact, they find there is oil available and gas prices go down."

By early 1992, after the Gulf War, prices at the pump were hovering back around $1 -- about $1.30 in today's prices.

The length of the current war, as well as whether the United States could become a battleground, is the wild card this time.

Military conflict in the Middle East won't necessarily mean an automatic respite from the money Americans are shelling out to fill up. A quick resolution to the war and disarmament of Saddam could push prices down, but an extended battle could add to the uncertainty and the total charge at the pump.

Are we ready?

In 1990, the United States imported about 5.9 million barrels of crude oil per day. By 2002, it was taking in about 9 million barrels per day, according to the Energy Information Administration.

Imports represented about 42.8 percent of U.S. oil consumption in 1990, compared to 52.8 percent last year.

"The U.S. dependency on foreign oil is rising, not falling," Gengaro said.

Import ratios have changed, too.

Over the past decade, the country decreased its dependence on oil from Saudi Arabia and stepped up its reliance on imports from Mexico, Canada and Venezuela.

In 1990, the United States bought about 514,000 barrels of oil each day from Iraq, about 8.7 percent of its total imports. By 2002, that figure was only 4.9 percent, or 442,000 barrels.

But analysts are quick to point out that where the United States gets its oil doesn't have as much bearing on retail gas prices as the amount of oil available.

Because oil prices are determined based on worldwide availability and demand, a crisis in a country that supplies only a small amount of U.S. oil imports could have the same impact as an oil shortage in Saudi Arabia, where the United States gets about 20 percent of its foreign oil.

When a strike in Venezuela cut oil production in the South American country this winter, prices in the United States, which gets about 13 percent of its imports from Venezuela, went up.

It's difficult to define exactly how much the events in Venezuela influenced the price increase in the United States because the strike coincided with war fears and Hurricane Lili, which complicated the transport of oil in the Gulf of Mexico.

But the industry is still suffering from the hole the strike left in oil reserves.

"You're not talking about a whole lot of wiggle room," Gengaro said. "It's tight right now."

That could be bad news for pocketbooks and supplies if a war with Iraq slows production in the Middle East, as it did during the Gulf War.

With only the Gulf War as a reference point, refiners have made some business decisions that could come back to haunt them and their customers if the 2003 conflict lasts longer than the five-week 1991 incursion, analysts say.

Because the Gulf War was a "blowout," many refiners and industry insiders assume this war will be, too, said Richard DeKaser, chief economist at National City Corp.

"Those very expectations led to a different course of events," DeKaser said. "Because they thought it would be brief, they really didn't take proactive measures to beef up inventories."

When it came to feeding those reserves, buyers figured why purchase a barrel of oil for $30 or $35 today when you could buy it, presumably, for $20 to $25 later?

So unlike after the Gulf War, this time when prices do go down they may sink slowly.

"They will not fall like a stone," DeKaser said.

www.vheadline.com Posted: Sunday, March 23, 2003 By: Patrick J. O'Donoghue

Quinto Dia columnist Miguel Salazar has attacked oil expert, Jose Toro Hardy and the "caravan of 'experts' and 'analysts' that have passed through TV talk shows" for their glee over the war on Iraq.

"I understand that you (Hardy Toro) were one of those people who jumped for joy when you heard that thanks to the Venezuelan justice system those responsible for provoking the oil stoppage are just as harmless as Franciscan friars."

Salazar says he cannot understand how anybody could show enthusiasm for such a war as though it were a game of basketball, especially knowing the fate of people awaiting the onslaught of the most powerful war machine the world as seen ... and how some people are now shouting for the transfer of Desert Storm to the sand dunes of the Coro Medanos (Falcon).

"You, who look as if you would jump with fright when a firework goes off, would no doubt cheer an armed invasion against Venezuela ... from the other side of the river."

www.vheadline.com Posted: Monday, March 24, 2003 By: Roy S. Carson

Leading economist and editor-publisher of the Caracas Daily Journal, Janet Kelly (56) has been found dead close to the Cota Mil highway above Caracas ... her Toyota Yaris automobile was parked at a tourist vantage point overlooking the upper Altamira suburb of Caracas close to a major exit from the highway and her body found over the edge, 150 meters below.

At this moment there are no indications as to how Janet's death occurred, but police detectives are at the scene which has been cordoned off while investigations proceed. Our highly-regarded colleague Janet Kelly had only just taken over the Daily Journal (March 10) and had great ambitions for the publication under her leadership. She was also part of an international negotiating committee between the Chavez Frias government and the opposition.

Philadelphia-born Janet had graduated in international studies at the John Hopkins University (USA) and had become a much-respected economics professor at the Institute for Higher Economic Studies (IESA) in Caracas and had gathered a group of investors to buy-out the DJ from the Neumann family in a deal that closed earlier this month. She was an associate professor at the Simon Bolivar University (USB) in Caracas and a leading light in the expat American comunity as well as a director at the Venezuelan American Chamber of Commerce (VenAmCham).

Chacao Mayor Leopoldo Lopez is at the scene and says that it is up to the experts to determine what happened ... suicide has apparently been ruled out and it is thought that she may otherwise have been the target of political assassination.

http:www.vheadline.com Posted: Sunday, March 23, 2003 By: Robert Rudnicki

According to estimates from the Confederation of Trade Unions (CTV), the Venezuelan Federation of Chambers of Commerce & Industry (Fedecamaras) and Coordinadora Democratica the rate of unemployment in Venezuela is alleged to have risen to around 25%, equivalent to 2.95 million people out of work.

The estimates also put the number of Venezuelans working in the informal sector at around 56% of the total work force. The opposition blames continued mistakes by the government for the worsening situation, particularly the two month lack of foreign exchange trading after the government suspended trading on January 22 to protect foreign reserves and a plummeting bolivar following a two month long opposition-led work stoppage which brought the country's economy to its knees.