Sheila Gardner and Pedro Morales <a href=www.rgj.com>RENO GAZETTE-JOURNAL 3/29/2003 12:18 am

Gas prices have dropped about 12 cents a gallon at some stations in northern Nevada in the past week, but suppliers said Friday they don’t expect the break in skyrocketing fuel costs to last.

“On the West Coast, one of the issues compounding the gas prices besides the war in Iraq and the repercussions from the Venezuela strike is the changeover at the refineries from winter fuel to summer fuel,” said Steve Yarborough, who is president of the Nevada Gasoline Retailers Association and owns Union 76 stations in Reno, Carson City and the Lake Tahoe area. “That is complete now and all the refineries are back up and operational.

“The supply side is starting to catch up with the demand,” he said “When you have an adequate supply, competitive forces come into play and drive the price back down.”

In Reno, some drivers at the Arco on the corner of Mill Street and Kietzke Lane said they were relieved to see the price drop to $1.91-a-gallon there, but expressed skepticism about whether prices would rise.

“I hope it’ll last. I don’t know though. I’m doubtful because it’s happened before. We think it’s going to go down and then it goes up,” said Fallon resident Frankie Galaz, 31, a housemother. “If it drops a penny, I think it’s better than nothing. Twenty cents is twenty cents.”

Yarborough said prices at his stations have dropped from $2.01 two weeks ago to $1.89 for regular. Comparable pump prices were reported in Carson City, Minden and Gardnerville.

He declined to predict what might happen to gas prices or what role the war in Iraq will play.

“I don’t think in this day and age you can count on a lot of anything,” he said. “We’ve got this issue and this tragedy of war going on in the hub of our oil exports, and I don’t know where our administration is going to stop.”

Sean Comey, a spokesman for the California State Automobile Association, said Friday fuel prices on the West Coast remained the nation’s highest from $2.27 in San Francisco to $2.03 average in Nevada. The national average Friday was $1.67 per gallon, down a penny from Thursday.

According to the automobile association, the cheapest gas in the United States is $1.50 a gallon in Missouri.

“We’re seeing a brief period of stability in prices. Whether that continues is uncertain,” Comey said. “It’s too early to say it if is a trend, but it’s the only encouraging news in retail gas prices consumers have had. Unfortunately, gas prices go up quickly like a rocket and drop like a feather.

“When gas gets over the $2 mark, people just get irate,” he said. “It’s real money. If current prices continue climbing, you are talking about $400 more a year in fuel costs for the average motorist.”

Peter Krueger, state executive director of the Nevada Petroleum Marketers and Convenience Store Association, said the price of crude oil had dropped more than $10 a barrel.

“The war jitters have been put aside a little bit. We’re doing OK,” he said. “There is a lot of uncertainty in the market. Gasoline is a commodity and people speculated before the war driving the prices up. Would the oil fields go up in smoke? How well would we do? Pretty much those fears are allayed.

“Can it go back up?” he asked. “Sure it could. But if I get out my big crystal ball, I think within 90 days, if all goes well, it could go back down to $1.65.”

He said members of the organization were not profiting from the high prices.

“There is no doubt in my mind. Our members are not gouging these prices,” Krueger said. “These men and women are making small margins and they’re gross margins at that. Nobody is getting wealthy.”

One motorist in Reno, Keith Lockhard, 56, a senior civil engineer for the city of Reno, said he believes the lower prices probably are a result of people driving less. He said dealers have had to adjust their prices accordingly for now, but expects prices to go up.

“My inclination is that it might drop a little and stay down for a while,” said Lockhard, a resident of an unincorporated area of Washoe County. “After some point in time it (gas) will be subject to other factors.”

Reno resident Casey Collins, 36, said people should hope for the best, but even he couldn’t look too far into the future.

“You gotta be optimistic, I think everybody is. I think they’re not going to get higher,” Collins, an auto mechanic, said. “But we’ll see when summer comes.”

Jeff Stone, 32, of Reno, was a little more pragmatic.

“I don’t think they’ll go as low as they once were,” Stone, a carpenter, said, referring to the prices of several years ago. “We’re seeing the beginning of high gas prices.”

“The time of the internal combustion engine is over. They need to find an alternative fuel source.”

Reference 2:04 PM PST Friday 

Gasoline prices Friday in Sacramento and around California have ebbed slightly from their record highs set this month, according to the latest data from the state's affiliates of the American Automobile Association.

The breathing room in many cases could be measured in tenths of a penny. In Sacramento, the average price recorded by AAA for a gallon of self-serve unleaded was $2.163, down from the high mark of $2.169 set Wednesday. A month ago the average was $2.008, and it was $1.626 a year ago.

For the state as a whole, the average price per gallon was $2.17, AAA reported, barely down from the $2.177 high recorded March 22. Every one of the 25 markets tracked in California showed prices Friday that were down from the record highs set between March 15 and Wednesday.

Gas prices have shot up since December, driven by a variety of factors including fears about the war in Iraq, labor-related supply problems in Nigeria and Venezuela, the shift to summer fuel formulations and changeover in California to a new oxygenating compound used to reduce smog.

Crude oil prices spiked ahead of the start of fighting in the Mideast, but have since declined without a corresponding reduction in retail fuel prices. Officials, including U.S. Senator Barbara Boxer, have called for an investigation. Boxer introduced a bill this week to require a federal probe if certain price conditions occur.

San Francisco, as usual, had the highest average prices in the state; Friday's was $2.27, down from a March 19 high of $2.276. San Jose's average price Friday was $2.151, down 2.5 cents from the record of $2.176 set March 15. Oakland was at $2.165, down from the March 18 high of $2.177.

The Chico-Paradise market had the lowest average price among those tracked by AAA, at $2.07 per gallon, down from the record of $2.109 set March 22.

"The annual change-over from winter grade gasoline to summer grade is now complete in California, so the supply stream is once again moving smoothly," says Carol Thorp, a spokeswoman for the Automobile Club of Southern California. "We should see prices continue to edge lower over the next couple of weeks."

<a href=www.qctimes.com>Source Last Updated: 10:14 pm, Thursday, March 27th, 2003 By Thomas Geyer .  Gasoline prices at many Quad-City area stations fell by as much as a dime per gallon Wednesday and Thursday as wholesale prices plummeted. . A number of stations in the Iowa Quad-Cities were selling regular unleaded at between $1.43 and $1.47 a gallon Thursday, a day after at least one Moline station dropped its price to $1.50, a level last seen in the area during January. . Analysts say the primary reason prices at the pump have plummeted is because crude oil, the largest cost component of gasoline, has fallen after reaching more than $37 a barrel March 12 on the New York Mercantile Exchange, or Nymex. . “The Midwest is faring a lot better than the national average right now,” said Doug MacIntyre, an oil analyst with the Energy Information Administration, the statistical arm of the U.S. Department of Energy. . But he warned consumers energy prices are volatile in the short run and that things could change. . While the Organization of Petroleum Exporting Countries, or OPEC, has promised to make up any shortfall of Iraqi oil during the war, it was expected that Iraq would be able to export some oil in the Oil for Food Program. But that has been put on hold. . And civil strife in Nigeria has caused the African country’s production and exports to drop. . “Normally, Nigeria produces about 2.2 million barrels a day,” MacIntyre said. “Currently, we have them down to about 1.4 million a day.” . In 2002, he added, Nigeria exported 1.85 million barrels a day worldwide, making that country the seventh-largest oil exporter in the world, according to the DOE. Last year, Nigerian crude accounted for about 6 percent of U.S. oil imports, or about 600,000 barrels a day. . But there is some good news, he said. . During the week ending March 21, the United States received normal imports from Venezuela, the first time that has happened since the week of Dec. 6, and it appears production is back up to 3 million barrels a day there. . Production at the South American country’s state-owned oil company, Petroleos de Venezuela, the parent company of Citgo, was crippled after a nationwide strike. . Before the strike, Venezuela provided about 15 percent of U.S. crude imports. . “It’s an encouraging sign,” MacIntyre said. “But one week does not make a trend, so we’d like to see a few more weeks before we pronounce them back to normal.” . Still, said Greg Bereskin, an economist at St. Ambrose University, Davenport, and president of the National Transportation Research Forum, oil had nowhere to go but down since it reached a price no one wanted to pay. . “That’s why our stocks were so low,” he said. “Nobody was buying it.” . Venezuela, he added, was a large reason why crude prices were so high. . As for the war, the Arab members of OPEC are willing to make up the difference for Iraq, not just because they fear Saddam Hussein, but because they have a chance to make money, he said. . “Publicly, they pay lip service to Saddam,” he said. “But all of them in one way or another are either supporting, or at least not fighting, the war effort in Iraq. And simply by not going against it is tacit support. Underneath it all, the rulers in all those countries are probably just as scared of Saddam as anyone in this country is.” . And while those rulers might be scared of democracy as well, the oil producers are businessmen, he added. . “They’re profit maximizers,” he said. “Even though the price has come down, they have an incentive to keep producing because they’re picking up the profit. OPEC is profiting off of Saddam’s loss.” . Thomas Geyer can be contacted at (563) 383-2328 or tgeyer@qctimes.com.

<a href=www.stltoday.com>AP By JIM SALTER Associated Press updated: 03/27/2003 01:09 PM

ST. LOUIS (AP) -- Only Oklahoma can boast of lower gasoline prices than the Show-Me State, an analyst with AAA Auto Club of Missouri said Thursday.

The average price of a gallon of regular unleaded is selling for $1.51 in Missouri, second to Oklahoma's $1.50 and well below the national average of $1.67. Some states are still paying more than $2 per gallon, including California, where the average price is $2.17, according to AAA's nationwide survey.

The lowest prices in Missouri are in the St. Louis area, where a typical gallon of regular unleaded is selling for $1.45, said Mike Right, of AAA's St. Louis office.

Prices around the state and the nation have fallen sharply in the past month-and-a-half, and particularly since the war with Iraq began March 19.

The average price for a gallon of regular unleaded in St. Louis was $1.72 on Feb. 13 and $1.61 on March 19. Experts said the 10-cent drop in the past eight days comes as pre-war anxiety has given way to a feeling that the U.S.-led effort seems to be going well.

The price of gasoline is tied directly to crude oil. As war neared and investors worried about the potential for attacks on oil wells and interruption of supply shipments from the Middle East, the price of crude oil rose sharply, reaching $38 per barrel on March 7.

By Thursday, the price had dropped to around $28 per barrel.

Crude oil is like any other commodity,'' said Ronald Leone, vice president of the Missouri Petroleum Marketers and Convenience Store Association in Jefferson City. It's sold just like pork bellies or shares of IBM. There are many psychological factors that go into it, and they're difficult to predict or quantify.''

The drop in crude oil prices has allowed wholesale gasoline prices to drop from $1.07 per gallon on March 7 to 88 cents per gallon Thursday. When that happens, the retail price declines as well.

We deserved it, for crying out loud,'' Right said. We've been paying excessive prices for quite a while now.''

War anxiety wasn't the only factor. Internal strife late last year in Venezuela cut off much of that country's export of oil to the United States. Right said America imports 15 percent to 17 percent of its crude oil from Venezuela.

Prices at the pumps may be about to bottom out, Right said. As the weather gets warmer, more people travel so the demand for gasoline is greater. That usually leads to an increase in prices, though Right doubted they would exceed the pre-war highs.

``Hopefully we have seen the highest prices for 2003,'' he said.

But Leone noted that things could change quickly, depending on what happens in the Middle East.

There seems to be some certainty in the marketplace in how the war will end and that it will be a quick war with relatively little disruption in supply,'' Leone said. But you know, that could change tomorrow if Saddam Hussein sets a bunch of oil wells on fire or if the war doesn't go like we want it to go.''

Ref By Andrew Caffrey, Globe Staff, 3/27/2003

Regardless of what happens in Iraq, American drivers could see another bout of high pump prices    

Melrose MA - Lauren Rotondo stands next to her SUV's in her driveway in Melrose. Lauren and her husband own two SUV's and are still willing to pay the extra money to drive them, even though gas prices are increasing.

Political violence in Nigeria has cut production of high-grade crude oil used for gasoline in the United States by 40 percent, forcing refineries on the East Coast in particular to scramble for replacement stocks and bidding up prices in the process. Meantime, Venezuela's state-owned petroleum industry, which still hasn't fully recovered from the civil strife begun in December, is in such poor condition that some analysts warn it may see a drop in output.

These developments come when stocks in the United States are so low that the US Energy Information Administration yesterday said "it will likely take many more weeks, or months, before US petroleum inventories return to normal levels."

Despite a recent surge of imports, the agency said gasoline stocks are declining when suppliers should be reloading ahead of the peak summer driving season. Future prices for gasoline for April delivery rose 4 cents a gallon, or 4.44 percent, to 92.4 cents yesterday after the government released its report. And analysts say the system is so tightly stretched that even small, unanticipated developments could push prices up further.

"It doesn't look like we're going to have a lot of relief on the gasoline prices," said Michael Lynch, president of Strategic Energy & Economics Research Inc., a Winchester consulting firm. "Right now, we're getting stung by yellow-jackets -- a lot of smaller things that are creating problems. When the market gets really tight, little operational problems that you wouldn't ordinarily notice make a really big difference."

Another looming worry: disquiet among oil workers that could lead to a strike in Colombia, which sends its crude to American states located on the Gulf of Mexico for refining. If Colombia "went down, clearly we would be looking at a very tight situation for the US Gulf for gasoline production," said David Fyfe, an oil analyst for the International Energy Agency in Paris.

The near-term global outlook for oil supply and prices continues to see-saw. Prices had plummeted to $26 a barrel, from $38, when it looked like the US-led military coalition was heading to swift victory in Iraq. That in turn had begun to pull down retail gasoline prices. But now oil prices have been creeping back up as those forces encounter stiffer resistance from Iraqi fighters, in addition to concerns about the situation in Nigeria. Yesterday, oil futures on the New York Mercantile Exchange rose 66 cents, to $28.63 a barrel.

One big factor in the earlier drop is increased output from Saudi Arabia and other producers to keep spiraling prices from harming the US economy, and to compensate for lost Venezuelan and Iraqi suppliers. Indeed, some analysts are predicting that the Saudis and other producers may soon cut back output to prevent a glut that could collapse prices.

But the rosy macro outlook doesn't necessarily filter down equally to local energy markets.

Saudi Arabia's oil, for example, is high in sulphur, and so most of it is sent to refineries in the US Gulf region that are equipped to process it into gasoline. East Coast refineries, meantime, got about 26 percent of crude oil supplies from Nigeria and Venezuela last year, while Venezuela provided about 10 percent of the region's stocks of finished gasoline, leaving the region vulnerable to problems in those countries.

Venezuelan oil production has bounced backed markedly since the strikes petered out, with analysts saying oil production is now around 2.4 million barrels a day. But they add that it will be weeks before the state-owned petroleum company will be exporting gasoline from its refineries in significant amounts.

Moreover, the Venezuelan system is in poor shape after the strike, and even in the best of times production from existing wells declines so quickly that analysts say the system requires billions in ongoing investment.

But the Chavez government fired thousands of workers, including engineers it needs "to arrest oil field decline rates," said Fyfe of the International Energy Agency, and Venezuela faces such a cash crunch after the strike that yesterday President Hugo Chavez said the country needs to restructure its foreign debt.

"You are going to see a fall in production. The problem is, you don't know how much that's going to be," said David Voght, managing director of IPD Latin America, an energy consultancy in Caracas. Voght cautioned that the Venezuelan oil executives are "in an uphill battle and are going to encounter a lot of difficulties." A spokesman for Petroleos de Venezuela SA, the state oil company, didn't return messages seeking comment.

Meanwhile, the situation in Nigeria remains highly volatile since the violence that erupted in the Niger Delta March 12 prompted three major oil companies to shut or curtail facilities and evacuate workers, cutting the nation's oil output by 800,000 barrels a day. Yesterday ethnic Ijaw militants called for a cease-fire if the government and a rival tribe would agree to renegotiate political boundaries for national elections April 19. A spokesman for the rival warring tribe of Itsekiris seemed to reject the Ijaw call, according to wire service accounts.

Producers elsewhere in Nigeria are believed to be increasing output, which may partially offset current declines. But analysts said the intensity of the current fighting has them worried that the instability in the Niger Delta could last for months.

The war with Iraq is the wild card in all of this global turmoil. If the war does indeed go quickly, then crude prices could fall further, pulling down gasoline prices. Already the decline in crude prices from the March highs has been "so profound" that gas prices should be in the $1.50 to $1.60 a gallon range by summer, down from the $1.69 a gallon national average, Energy Security Analysis Inc., a Wakefield energy consultancy, said yesterday.

Another potential source of relief could come from additional exports from Europe, and from Asian producers drawn by higher prices in the United States. However, Fyfe of the International Energy Agency warns that US gas prices might not fall as much as oil prices if problems in Nigeria and Venezuela persist.

And if the war takes longer than expected, and the United States is not able to return idle Iraqi oilfields to production anytime soon, crude prices could continue marching back up.

"If crude stays high, and your gasoline develops this tightness, you can get gasoline bounce to over $2 a gallon quite quickly, and it might get worse from there," said Jan Stuart, who heads up research on global energy futures for investment bank ABN Amro Inc., in New York.

Andrew Caffrey can be reached at caffrey@globe.com.