The Venezuelan effect - Unrest in South America affecting pump prices in United States

vh80299.vh8.infi.net John Sullivan January 7, 2003   Striking oil workers of Petroleos de Venezuela, SA, hold their daily meeting recently in front of anchored oil ship Morichal in Maracaibo Lake in western Venezuela. The strike has paralyzed oil exports and helped drive international oil prices above $30 a barrel. Venezuela is the world's fifth-largest oil exporter and a top supplier to the United States.

LAFAYETTE - Motorists will soon be seeing the effects of civil unrest in South America in the prices they pay for gasoline, and just where they are will depend on how much.

"We are finally beginning to see the see the actual impact of the Venezuelan strikes in U.S. markets," said John Eichberger, Director of Motor Fuels for the National Association of Convenience Stores. "As the crude market continues to rise and supplies become more constrained, there will be a market reaction and retail prices will increase."

According to U.S. Energy Information Administration, a branch of the Department of Energy, crude imports into the United States reached a three-year low on Dec. 27.

The United States was importing about 7.6 million barrels of oil per day, a low that hasn't been seen since Jan. 28, 2000, the EIA reported.

The EIA reported that refiners will begin drawing from their inventories to make up for the loss of crude oil from Venezuela. Venezuela is the fifth-largest producer of oil in the world and during 2002, the country imported an average of 1.2 million barrels of oil in the United States each day.

"The EIA reports that unofficial data indicates that Venezuela imports last week were almost nonexistent," Eichberger said. "Marketers should be prepared to explain the situation to their customers."

In Louisiana, the Louisiana Oil Marketers and Convenience Store Association reported no problems yet from their members, according to executive director Natalie Babin.

"There has been no major disruption of our supplies due to the situation in Venezuela," Babin said. "There may be some indirect effects later, but for right now, we have not had any complaints from our members."

The organization represents 350 businesses - such as convenience stores - across the state, Babin said.

"We are kind of the middle man in this situation," Babin said. "Whether we are affected as time goes, we will just have to wait and see."

The EIA reported Monday that the national average price for a gallon of gasoline rose for a third week in a row, increasing by 4 cents per gallon as of Dec. 30 to end at $1.44.

The average for the Gulf Coast, according to the federal report, was $1.389 a gallon. This is an increase of almost 5 cents a gallon from the previous week.

The Venezuelan crisis has also affected Murphy Oil refinery in Meraux, Lyondell-Citgo Refining joint venture near Houston; and Farmland Industries refinery near Coffeyville, Kan.

Officials at Citgo announced Monday that the Texas refinery, which has an operating capacity of 268,000 barrels per day, is operating at half capacity. Citgo is owned by Petroleos de Venezuela, the state controlled oil company of Venezuela.

Murphy Oil, headquartered in El Dorado, Ark., said its Meraux plant, which has a 100,000-barrel-a-day capacity, will cut back production by 15,000 barrels.

The Kansas refinery, owned by Farmland Industries, can process up to 95,000 barrels of oil per day. Company officials have said the refinery will scale back production by 15 percent.

"What will happen with our members is yet to be seen," Babin said. "For right now, we haven't seen any problems. But we are keeping an eye on the situation as it develops."