Energy secretary offers mixed forecast for oil prices

By MIKE BRANOM <a href=www.heraldtribune.com>HeraldTribune.com-Associated Press

Oil prices are in a steep drop thanks to the quick success of coalition forces against the Iraqi regime, U.S. Energy Secretary Spencer Abraham said Tuesday, but he added that fallout from last year's turmoil in Venezuela could create a gas crunch this summer. "According to our own agency's outlook that we prepared last week, things look like they're quite a bit better now than they appeared just a few days before that," Abraham said. On the New York Mercantile Exchange, crude oil futures have dropped almost 25 percent over the past month. Prices topped out at $37.83 a barrel on March 12, a week before the war began. A barrel was selling at $29.02 at noon Tuesday. Such drops were showing up at the pump, as the current average price for a gallon of unleaded gas is $1.60, according to AAA. That's down more than 12 cents since from its peak March 18. "I'm happy to say that for the fourth week in a row, we saw gasoline prices, on a national basis, come down," Abrahams said. However, Abraham added, a two-month general strike in petroleum-rich Venezuela has crimped America's oil supply. Production dropped below 200,000 barrels a day during the walkout, which began in December. "It's meant that our inventories are lower than we'd like them to be," Abraham said. "And when we come into the driving season, particularly after Memorial Day, we could start to see some strain in the marketplace." The Venezuelan government fired 17,000 of the state oil company's 40,000 workers and gradually restarted paralyzed oil refineries. On Sunday, the nation's energy minister said oil production has risen to 3.2 million barrels a day - the highest level since before the strike. Venezuela's production capacity is 3.4 million barrels a day. Gas prices are closely watched in Florida, where a tourism-dependent economy relies on visitors to fly and drive into the state. "When we have a war, when we have an Orange Alert (for homeland security) and we have high gas prices, that devastates our economy on a temporary basis," said U.S. Rep. Ric Keller, R-Orlando, who accompanied Abrahams. "No doubt, our economy will be hurt a little bit in the short term." But Keller added that he thinks people will feel safer traveling and gas prices will drop, because of the success in the war against terrorism and the military's success in Iraq. "I think we'll have a temporary surge, at least with respect to the next couple of weeks, of boosting up our economy," Keller said. Last modified: April 15. 2003 2:49PM