The Washington Dispatch Commentary by Steve Chapman May 11, 2003

Presidential candidates sometimes do surprising things, and Joseph Lieberman, who made his name as a "new Democrat," is not one to slavishly follow his party's traditional prescriptions. But who would have thought he'd be borrowing themes from Richard Nixon?

In a major policy speech in Washington Wednesday, the Connecticut senator proposed "a Declaration of Energy Independence" to "put us on a path to the day when we won't have to use one drop of foreign oil." He intends to reduce our dependence on foreign oil by two-thirds within 10 years and end it completely within 20.

Where have we heard that before? In Nixon's Project Independence, announced during the energy crisis of 1973. He explained it in language that sounds eerily like Lieberman's. "Let this be our national goal: At the end of this decade, in the year 1980, the United States will not be dependent on any other country for the energy we need to provide our jobs, to heat our homes, and to keep our transportation moving."

Maybe this is just proof that in politics, there are no new ideas -- just ideas so old that everyone's forgotten what was wrong with them the first time. Energy independence didn't make sense in 1973, when oil prices were skyrocketing, inflation was raging, and we lived in fear of Arab oil-producing nations. And it doesn't make sense in 2003, when oil prices are dropping, deflation looms, and Arab oil-producing nations live in fear of us.

The notion of national self-sufficiency conflicts with the most unassailable proposition of international economics: Nations don't lose from importing goods; they gain. That's why they do it. We import oil because other countries can find and extract it cheaper than we can. For Americans to insist on producing, at high cost, something we could buy from abroad at low cost is not a recipe for prosperity.

But oil is different from other goods, we are told. "For too long," says Lieberman, "our economy and our security have been at the mercy of foreign producers . . . I'm not going to let foreign countries blow our families' budgets by running up your heating bills and what you pay at the pump."

Even if we produced 100 percent of the oil we consume, though, foreign countries would still be able to run up our energy bills and hurt our economy. If a supply disruption occurs in Saudi Arabia or Venezuela, world oil prices will shoot up -- and so will U.S. oil prices. Why? Because American producers will sell to the highest bidders, whether they're at home or abroad.

Lieberman hopes to achieve self-reliance by spending lots of money subsidizing the use of coal, which we have in abundance. He wants to spend $15 billion on schemes to convert coal into hydrogen, "the cleanest fuel in the universe." Another $6.5 billion would go to research and development on "fuel cells and other innovative technologies to wean us off oil."

That approach makes the same mistake made by President Carter, who burned up large sums on harebrained schemes to extract oil and gas from coal. It assumes federal employees are better able than energy companies to figure out the most efficient sources of energy. They aren't.

But they are good at using tax dollars to satisfy political constituencies. The chief virtue of Lieberman's plan is that it would make him lots of friends in coal states like Illinois, Pennsylvania and West Virginia that the Democrats need to win next year.

He also proposes a sharp increase in fuel economy standards for automakers. But while it may make sense to cut our overall fuel consumption to combat global warming, slapping mileage standards on cars and trucks is the clumsiest method you could find. Every energy economist in America will attest that the cheapest and surest way to do it is to put heavier taxes on oil and gasoline -- inducing drivers to buy more efficient cars, drive less, or both.

Lieberman, like presidents before him, pretends to put the burden on the auto industry instead of consumers. In fact, motorists will pay higher prices for their vehicles, or they'll pay more at the pump. But if the sticker price of a car rises, every politician knows, citizens will blame car makers, not Congress. Lieberman wants us to think we can 1) have energy independence and 2) require no sacrifice from ordinary Americans.

He's wrong on both counts. Thirty years ago, a lot of people thought energy independence was an idea whose time had come. In reality, it was an idea whose time hadn't come, and never will.

Stephen Chapman is a columnist and editorial writer for the Chicago Tribune. His twice-weekly column on national and international affairs appears in some 60 papers across the country.

<a href=new.stockwatch.com>stockwatch.com 2003-04-14 12:37 ET - News Release

LOS ANGELES, April 14, 2003 (PRIMEZONE) -- Sonoran Energy, Inc. (OTCBB:SNRN) announced today that CEO John Punzo and Sonoran Energy, Inc. are now featured on MacReport.Net, a leading provider of online business and financial information, to increase the Company's exposure to the investor community at: www.macreport.net

Sonoran Energy has had a very positive recent history and is poised for growth and expansion. The MacReport.Net is an information and media company that provides a Web-based forum for public and private issuers to communicate corporate audio and video news content to the business, financial and investing community through its Web site, located at www.macreport.net. The MacReport.Net also plans to provide creative and production services to develop visual events ranging from live coverage of merger announcements to public relations campaigns to new product introductions.

Sonoran Energy recently announced that it has successfully reactivated eight of the 12 wells on its Emjayco Glide #33 Property and has started production. The Company anticipates reactivating four additional wells over the next 60 to 90 days. Sonoran also recently announced that it has acquired working interests in three natural gas producing properties in California's Sacramento Basin from Archer Exploration, Inc. Sonoran Energy has acquired varying percentages in the three properties that are producing 3,700 Mcf/day. These acquisitions increase the Company's natural gas production and reserves, and move Sonoran Energy closer to its goal of producing 2,500 to 5,000 Mcf/day. Through its partnership with Longbow LLC the Company intends to continue to make acquisitions over the next 12 to 24 months to reach this goal and enable the Company to become a producer of 1,000 to 1,500 BOE per day.

Domestic U.S. oil producers like Sonoran Energy, Inc. are positioned to significantly benefit from rising demand for U.S. domestic oil production in light of the brewing International oil production crisis due to war, strikes, and terrorist threats.

Just this month, the Nigerian subsidiaries of Royal Dutch/Shell Group (NYSE:RD) (NYSE:SC), ChevronTexaco Corp. (NYSE:CVX) and TotalFinaElf (NYSE:TOT) halted production totaling 817,500 barrels a day, or about 40% of Nigeria's output of some 2 million b/d amid violence between rival ethnic groups, the Ijaws and Itsekiri, leading up to April 19 parliamentary and presidential elections. Militant Ijaws reportedly threatened to blow up multinational oil installations they said they had captured in retaliation for government military raids. Additionally, oil-well firefighters from Houston-based Boots & Coots International Well Control (AMEX:WEL) are traveling to southern Iraq to assess damage in the country's key Rumaila oil fields. The firefighting teams are looking at a timetable of 30 to 45 days to extinguish the fires and cap the wells. But one source said the timing will depend on ``what's all there.'' The Pentagon has contacted a number of major oil industry service companies -- among them Halliburton Co. (NYSE:HAL), once run by Vice President Dick Cheney -- to repair any of Iraq's wells that are damaged and assess everything from wells to pipelines and pumping stations.

Venezuela's oil industry collapsed in December, when employees at state-owned Petroleos de Venezuela walked off the job, angry about changes in the company under the administration of President Hugo Chavez. By the height of the strike, 16,000 employees had walked out, and production shrank to 200,000 barrels a day, costing Venezuela $6 billion. The country had to import fuel to keep vehicles moving, and drivers waited days at gas stations. The strike, which failed to oust Chavez or call early elections, was strongest in the oil sector, though businesses around the country shut down.

About Sonoran Energy

Sonoran Energy's primary objective is to identify, acquire and develop working interest percentages in smaller, underdeveloped oil and gas projects that do not meet the minimum requirements of major oil and gas corporations. Sonoran Energy's goal is to be recognized as a promising junior oil and gas producer.

Certain statements in this news release may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.

CONTACT: Sonoran Energy John Punzo (866) 599-7676 info@sonoranenergy.com www.sonoranenergy.com

<a href=www.newsday.com>Newsday.com By Tom McGinty Staff Writer April 2, 2003, 7:30 PM EST

A March 24 notice from the Long Island Power Authority and KeySpan Corp. informed John Brolly that his balanced-billing payment for electricity and natural gas was about to go up by $100 a month, a 35-percent increase.

What it didn't tell Brolly, a certified public accountant who is pretty good with numbers, was why.

"Is it electricity or gas? Is it usage or price? You look at this [notice], and it really doesn't tell you much," said Brolly, who lives in Plainview.

The spike in Brolly's utility bill is almost entirely attributable to cold weather and soaring fuel prices, according to LIPA and KeySpan, and he is far from alone.

While the adjustments may surprise LIPA and KeySpan's 149,000 balanced-billing customers, other gas and heating oil users have been paying higher bills for months.

KeySpan officials said that from November through March the average heating customer used 38 percent more natural gas than the same period last winter, and the price of the fuel was 75 percent higher.

The cost of gas accounts for about 50 percent of heating bills, with the rest going toward fees for long-distance transmission and local distribution of the fuel. That means the net impact on gas heating bills is a 40-percent increase over last year, with the November-to-March total cost going from $900 to $1,260 for the average homeowner, KeySpan officials said.

Heating oil customers did not fare any better, according to Kevin Rooney, chief executive of the Oil Heat Institute of Long Island. From October through March last year, an average oil customer who did not have long-term, fixed-rate contracts paid about $850, Rooney said. This year, that same customer paid about $1,400, he said.

Fuel use was up because this winter was 10 percent colder than the 40-year average and a whopping 42 percent colder than last year's mild winter, according to the New York State Energy Research and Development Authority.

The high cost of fuel can be attributed to a confluence of factors, including the high demand, fears about the impact of a war in the Middle East, and a drastic reduction in the amount of oil flowing from politically troubled Venezuela, said Rooney, who called it "an energy version of the perfect storm."

KeySpan spokeswoman Bonnie Habyan pointed out that monthly bills always break down the charges and say how far actual costs are diverging from the projections that were used to set the monthly payment.

Brolly said he suspected most customers do what he does: Look at the bottom line and ignore the complicated details. "Maybe I shouldn't be on balanced billing," he said. "You're dumb and happy for three months and then, all of a sudden, wow! Maybe I should just get killed each month."

<a href=www.energypulse.net>Energy Pulse 4.2.03   Jose Luis Gambande, President, Andrews SA

Not all things are worsening in Latin America economy and, particularly, in energy markets. Technology is opening new businesses niche, if you have an aggresive vision and a ground knowledge.

Scenario The old problems of the Latin-American economies have not disappeared. Even, some of them seem to have aggravated with the problems of American economy and some hard changes in Brazil and Argentina, including unstable politics in Venezuela and Bolivia.

But, in the last decade, some progress were made in public services. The liberal wave left better de-regulated markets in almost all countries, most of them in the electric wholesale market.

In the 90´s, continuing and copying the models of Chile and Argentina, almost all the countries adopted electrical markets of similar characteristics, among which the most importants were:

• Self-regulated Markets
• Authority independent rules
• Marginal Pricing
• Prohibition of vertical integration
• Prohibition of generators and distributors concentration(monopoly)
• Incentives for the private investment
• Free access to the transmission grid

Strictly speaking, many of these criteria were not applied in all countries in the same way, but each one adopted restrictions imposed by its internal economic most powerful actors. (perhaps Argentina could be the more close example to the ideal market in electric energy related business)

Old problems All these efforts to modernize the electrical energy market have been faced to the old and classical regional problems. And there were exactly these problems the ones that have braked the development of these markets.

The strong dependence on foreign capital is one of them. This kind of capital only moves on with gigantic transactions and projects, often executed by governments itself far beyond its management skills, and with an implicit trend to excite the structural corruption. This dependence was clear in all privatization processes in Latam.

Failure to create serious and independent control and regulation agencies, conducted by expert and honest professionals, and provided with sufficient resources. These agencies are the guarantee of market transparency and its poor performance elevates notably the risk of any investment, more in the energy business where the ROI requires constant settings during many years.

Today Now the governments are not able to face new great generation plants like in the past. They have to wait international capitals to enter the game, but private funds are looking at recession indexes, establishing an impasse before enter in new projects. But in the future, with new and great projects on the way, prices will not move downwards as it were in the past. Market works.

In spite of the fact that markets have been submitted to strong tensions, as the originated by the devaluations of the local currency (Brazil, Argentina), the political difficulties (Venezuela) and the macroeconomic changes (Ecuador), they are still operating within its rules. This is a good signal.

Renewal energies, in special hydro, are plentiful in Latam. And technology is breaking down the prices of turbines and governors, achieving costs /kW that in the past were proper of big machinery. A new and realistic option for the region. And another fact: Nevertheless the energy continues being a strategic commodity and of great profit in the majority of the countries of the region. Self-regulated markets, working at international price level with few exceptions, are a big chance.

New business South America is not the promised land. But it has opportunities for all people that have certain intelligence and know how to avoid the traps that the underdevelopment imposes.

The model of CSHP (Coordinated Small Hydro Projects), for instance, offers a new vision of the energy generation business in the region. Its fundamental premises are based on identification, evaluation and assembly design of small hydro generation plants with the paradigm of construction and operation costs reduction through design.

These hydroelectric plants (typ 2 to 10MW each, qty 3 to 6), designed as a whole system, will achieve a very much lower cost per Kw installed than any of them separately.

We all heard about hydro plants that they are always different each from another. But we ask: what is “different”? And the answer is not so easy. It requires a new approach from the point of view of what “different” means from the cost´s point of view.. The fact that many components are not ´on the shelves´ does not mean, necessarily, that it has different manufacturing costs.

The model requires a modelling of possible universe of plants in a specific region, to choose the better granularity and the possibilities of expansion in the time, that reduce investment and, therefore, increase IRR.

To date, we have the technology to do perform that. Specialized programming tools, better and wider insights in to the manufacturing process, and innovative thoughts, are the key. And we are moving forward.

Utilizing criteria of modularity and standarisation, the expected reduction of different elements (generators, governors, controls, etc.) conducts to very optimized costs. On the other hand, programming joint or scheduled manufacturing already causes reductions in the final price of various components.

The careful selection of the location of the plants contributes to diminish the climatic risk, permitting a diversified income that assures a balanced cash flow. So, investments are more stable in time inside a same country. Technology offers today systems to perform O&M of plants located far away.

Even in civil design works, different designs can be carried out with a minimum investment if you know and program the complete set of work to do. In addition, local costs are diminishing in all Latam countries compared with developed ones and measured in USD.

And there are more advantages: An adequate design of the facilities of O&M will do also improve the operational conditions. And the ROI, of course.

The majority of the markets of the region permits the sale of energy blocks, some with the figure of the trader, or by means of contracts to term that enable the sale of a block of energy and/or power. The greater availability of these blocks do them more attractive for the industries that are so called electro-intensive. Though this increase the transmission toll, only the reduction of operational cost will over compensate this greater cost. Looking at the future, even the simultaneous and joint undertaking in various countries will improve the necessary forecasts of political risk, for instance.

CSHP is applicable in greater or smaller measure in almost all the countries of the area. In some of them it is still necessary to remove some regulatory obstacles and in other the practical incentives to renewal uses is still negligible.

Figures The total volume of hydro energy composed by SHP (< 10MW) that can be mobilized in Latam is of 2400 TWh/yr, based on expert estimations of 1999.

Not all of these sources can be implemented, not even studied inside CSHP framework. Considerations must be made regarding site conditions, grid conditions, isolated systems, and restrictions that could be operative in each one. The modelling process often begins with a complete projects database feeding an expert system that moves forward and backward looking for the proper project´s suit

As one of various simulation processes showed, following a conservative calculation, a case modelled on the base of 5 x 10MW in a small market like Ecuador, presents rates of ROI of 25%+ in optimistic conditions of evolution of prices, and 18% in the pessimistic (worst) case.

Conclusions All the facts showed above are of common sense, you can say, but difficult to implement. Think it twice. We did. CSHP coud be a good option for small and medium size investors who are now looking for diversified risks with a creative mind. All you need is knowledge of what and where.

And CSHP is an example, too, of the opportunities that the Latin-American market, in spite of its distortions and ambiguity, has to offer to smart investors. The only condition is to challenge those things that are called “impossible”.

Sunday, March 30, 2003 By CP

The U.S. slurps up more oil and natural gas from Canada than any other foreign country on Earth. And with war raging in the Mideast, civil uprisings in other oil producing countries and a recent decision not to drill in a sensitive U.S. Arctic wildlife refuge in Alaska, even greater demand for Canadian energy is expected. The daily flow of Canadian oil to the U.S. has increased dramatically over the last few years and almost double the quantity from a decade ago. Canada is now second only to Saudi Arabia as a source of imported oil for the U.S., which imported 1.8 billion barrels per day from the Saudis in January and 1.6 million barrels per day from its northern neighbour. When imports of natural gas are included, the importance of Canada as an energy source for the U.S. becomes even more apparent. Canada supplied about 94% of American gas imports last year. Yet with all the volatility in global energy markets, talk of future U.S. energy rarely focus on Canada. "I don't think Canadian oil production comes first of mind to Americans when they think of where their gas, diesel and jet product comes from," said Rick George, president of oilsands giant Suncor Energy. But recent U.S. media attention to the massive energy reserves in the northern Alberta oilsands -- and the synthetic crude created from its bitumen -- suggests awareness is quickly growing, he said. For the first time, a recent report by the Oil and Gas Journal on global oil reserves included 177 billion barrels of reserves from the oilsands -- a number that dwarfs estimated reserves of Canadian conventional oil. Greg Stringham, a vice-president of the Canadian Association of Petroleum Producers, says political stability is also a key ingredient for energy trade between the U.S. and Canada. "They're a good market, we're a good supplier. (The U.S.) is close and it's connected by pipeline. So all of those things add to our attractiveness as a potential producer," Stringham said. Meanwhile, recent political problems have made several of the world's other large energy producers less-than attractive as an energy source for the U.S. Vince Lauerman, a global energy strategist with the Canadian Energy Research Institute, says a "relatively long and brutal war" in Iraq would greatly enhance demand for Canadian energy. "The worse the war goes, and the more the Middle East boils, the higher energy security becomes as an important issue to Washington," Lauerman said. "And with that comes benefits to Canada." But the Mideast is not the only trouble spot for global oil production. About 40%, or 800,000 barrels per day, of Nigeria's oil was cut off this week as energy companies evacuated staff amid tribal fighting that has killed at least 100 people in the past two weeks. And Venezuela is still struggling to recover from a two-month strike that failed to oust President Hugo Chavez and paralysed the South American country's lifeblood oil industry, costing about $9 billion. Still, geopolitical turmoil does not necessarily mean greater demand for Canadian oil, said one U.S. energy company spokesman. "There's lots of sources out there and a well-developed oil infrastructure all over the world." But a recent political decision in Washington has the potential to increase U.S. demand for Canadian energy in future. Last week, the U.S. Senate narrowly rejected a budget provision that would have allowed oil drilling in the 77,000-sq.-km Alaska National Wildlife Refuge.