read more Posted on Mon, Mar. 24, 2003 BY TOM AVRIL Knight Ridder Newspapers

PHILADELPHIA - KRT NEWSFEATURES (KRT) - Your car's gas tank is thirsty. Your wallet hurts. Two things to consider:

1. Prices aren't really as high as they seem.
2. A little pocketbook pain, according to some, is not entirely a bad thing.

Not that anyone wants economic hardship, much less a war, but some clean-air advocates hope the recent rapid increase in gasoline prices will cause motorists to think about alternatives to the almighty automobile.

"It definitely forces people out of their cars," said Ronda R. Urkowitz, program director of Cross County Connection, a New Jersey nonprofit that promotes transportation alternatives. "We hope that people who do try alternatives like carpooling like it, so that once gas prices do come down, they'll keep doing it."

Joseph O. Minott, executive director of the Philadelphia-based Clean Air Council, holds a common view among environmentalists when he says gasoline prices are not high enough.

The price does not reflect the true societal cost of byproducts such as air pollution, Minott said. Yet he wishes the current high prices were happening for a different reason.

"Ideally, they shouldn't be high because oil companies and Middle Eastern countries are making a lot of money off it," Minott said. "I'd rather see them high because they're taxed so highly, and then the government can invest in ... alternatives to the car."

The run-up in fuel prices is already being cited by interest groups in Washington in promoting initiatives for energy efficiency.

On Thursday, the nonprofit coalition Alliance to Save Energy applauded the introduction of a bipartisan Senate bill that calls for a wide range of energy-efficiency tax credits.

"With energy costs reaching record levels in recent days, lawmakers are right to get behind energy efficiency that will help consumers and the environment with longer-term benefits for the economy and national security," said David M. Nemtzow, alliance president.

Energy experts agree that current gasoline prices - said to be higher because of a possible war with Iraq and labor unrest in Venezuela - are not high enough to significantly reduce consumption. Indeed, after accounting for inflation, gas prices are as low as they were in the 1960s.

And even if the current hikes continue, gasoline prices are what economists call "inelastic," meaning that higher prices have little effect on demand, at least in the short term.

That's because people still have to get to work or school, and in many parts of the country there aren't many options besides the car.

Still, Honda dealers credit high gas prices with recent record sales of the company's fuel-efficient "hybrid" cars. And in big cities such as Philadelphia, commuters will readily forsake their cars when pushed. Witness the packed mass-transit trains when the weather is bad.

Urkowitz said her organization had seen an increase recently in inquiries about ride-sharing and mass transit, but could not say whether it had been prompted by higher gas prices or by bad weather.

How high would gas prices have to go before people start taking the train, buying fuel-efficient cars, or living closer to where they work and play?

"What's the pain threshhold?" said Bill Veno, a director of Cambridge Energy Research Associates and co-author of a 2000 study titled Gasoline and the American People. "Gasoline doesn't cost enough to really have a significant impact on the average person's income."

Veno said a good model is Europe, where gasoline prices are triple what they are here - a difference due mostly to higher taxes.

Greater use of mass-transit and smaller cars have long been the norm on the other side of the Atlantic, though part of the reason for small cars could be the narrow roads in older cities, Veno said.

Here in the United States, said Kert Davies, the U.S. research director for Greenpeace, the goal should be to "change behavior without nuking the economy."

Whatever their impact, current high gasoline prices may be short-lived, according to one expert.

George Gaspar, an energy analyst with the Robert W. Baird & Co. financial firm in Milwaukee, predicted that crude oil prices, now at about $37 a barrel, won't go higher than $45. That means average prices at the pump, now about $1.70 nationwide, won't go up more than 20 cents a gallon, he said.

The reasons are that a war is expected to be quick, and that the Bush administration would open the nation's strategic petroleum reserves to keep prices in check, he said. In the meantime, oil companies are building up non-OPEC supplies, Gaspar said.

All of which makes Minott, of the Clean Air Council, lament that prices won't have much of an impact.

"It takes an awfully large price hike for Americans to change their gas-consuming ways," Minott said. "Culturally, we love our cars."

<a href=www.wilmingtonstar.com>More Last changed: March 23. 2003 5:16PM The Associated Press After weeks of big increases, gas prices rose less than a penny nationwide over the past two weeks as oil markets calmed with the beginning of U.S.-led military action against Iraq, an industry analyst said Sunday. The average price for gas nationwide, including all grades and taxes, was about $1.76 a gallon on Friday, according to the Lundberg survey of 8,000 stations. That was an increase of just 71 cents from March 7, the date of the last Lundberg survey. "Right now it appears possible that this year may already have seen its peak pump price," said analyst Trilby Lundberg. War fears and uncertainty over the outcome of the Iraq crisis combined with a strike in Venezuela to send gas prices up more than 25 cents a gallon so far this year. The price is leveling off now due to factors including the perception that the war will not substantially impact Iraqi oil production, Venezuela's comeback after the strike, and production increases by Saudi Arabia, Kuwait and others, Lundberg said. "There was a lot of jargon such as war premium - it was more like an uncertainty premium," Lundberg said. "The perception changed in favor of supply security enough so that oil futures prices have tumbled down." The price of a barrel of oil dropped $8 last week, from $34.93 at the close of the day March 17 - the day President Bush gave Saddam Hussein 48 hours to leave Iraq - to $26.90 at the end of the day Friday. Lower prices could lie ahead, Lundberg said, "assuming of course there is no refining problem with getting our spring and summer formulas into place." Still, one year ago motorists were paying 38 cents less per gallon - a weighted average of $1.38. The national weighted average price of gasoline, including taxes, at self-serve pumps Friday was about $1.73 per gallon for regular, $1.82 for mid-grade and $1.91 for premium.

Annual adjustment raises rate to 28.5 cents a gallon By STEVEN WALTERS swalters@journalsentinel.com Last Updated: March 23, 2003

Madison - Wisconsin's gas tax, already one of the highest in the nation, will rise from from 28.1 cents to 28.5 cents per gallon on April 1, an increase that coincides with the start of the spring and summer driving season.

With the 0.4 cent increase scheduled to become law April 1, the gas tax alone will bring in $900.5 million this year.

The state gas tax, adjusted every spring for inflation, and the $45-per-car annual registration fee are the two main taxes that pay for highways, bus system subsidies, bridges, aid to local governments and other transportation programs. A separate 3 cent-per-gallon tax funds the replacement of underground fuel tanks.

With the 0.4 cent increase scheduled to become law April 1, the gas tax alone will bring in $900.5 million this year. And Gov. Jim Doyle has recommended a $10 increase in the vehicle registration fee, saying it has not been raised for several years. The April 1 increase will drive gas prices even higher.

Uncertainty over fuel supplies before the U.S. attack on Iraq, and the interruption of oil supplies from Venezuela because of a national strike, boosted the average price of a gallon of self-serve regular in Wisconsin to about $1.75 a gallon last week, up about 23 cents from January and about 39 cents from a year ago, according to AAA Wisconsin.

State Sen. Tim Carpenter (D-Milwaukee) tried last month to add to an emergency spending bill an amendment killing the April 1 scheduled gas-tax increase. But the Senate used a parliamentary maneuver to shelve his proposal.

Carpenter calls the 0.4 cent automatic increase a "covert tax increase" that the full Legislature should have to pass and the governor should have to sign into law.

"All tax hikes in Wisconsin should be openly and publicly debated, and voted on under scrutiny of the citizens who will bear the burden of such taxes," he said.

He also is sponsoring a bill to permanently kill the automatic spring adjustment - called "indexing" - of the gas tax first approved in 1985. According to the Legislative Fiscal Bureau, the spring adjustments have cost drivers a total of about $2.5 billion between 1985 and 2002.

AAA backs increase But AAA Wisconsin official Ernie Stetenfeld said his group, with 590,000 members in the state, supports the annual spring adjustments in the gas tax, despite the "perception" problem the next increase poses by coming at a time of soaring gas prices.

"Indexing maintains the buying power" of the gas tax, which is desperately needed as the state struggles to find money to rebuild highways and intersections, including the Marquette Interchange in downtown Milwaukee, said Stetenfeld, the group's vice president for corporate relations.

"We don't think it's the right time to undo indexing," he said.

While gas prices jumped significantly in January and February, they have leveled off in the last few weeks. But Stetenfeld said no one can predict what will happen to prices now that America and its military allies have invaded Iraq.

Gas prices in Wisconsin soared to about their current levels before the Persian Gulf war in the early 1990s but quickly fell after the war actually started, he noted.

Then, he said, prices fell because "once the war broke out, there was less uncertainty about the future."

But too many unknowns in worldwide oil supplies exist this time to predict future prices, Stetenfeld added. "This isn't an analogous situation, by any means," he said.

Read... Monday March 24, 11:25 AM Contact Us: Bombay 91 22 2288 4212-18, New Delhi 91 11 2307 4020; kindly email your feedback to DJN.IN@dowjones.com

0855 [Dow Jones] Oil prices may not fall as fast as they did after first Gulf War because of low inventories, says Shell global business environment manager David Frowd. "Stocks today, particularly in the U.S., are very low, supporting prices in the upper 20s (dollars a barrel) even without a war premium," he tells oil conference in Melbourne. Says OPEC capacity enough to cover lost Iraqi output, provided no interruptions in Venezuela or elsewhere. (AND)

0852 [Dow Jones] OVERSEAS SHARES FRIDAY: Indian ADRs ended higher Friday on Nasdaq's 1.4% rise; Infosys (500209) up 5.2% at $67.21 (share equivalent INR6,405) and Satyam Infoway up 7.7% at $3.66 (not listed in India). On NYSE, Wipro (507685) up 6.2% at $31.50 (share equivalent INR1,501), Silverline (500389) up 4.6% at $1.83 (share equivalent INR9), Dr. Reddy's (500124) up 2.7% at $19.30 (share equivalent INR1,839) and Satyam Computer (500376) up 0.3% at $9.88 (share equivalent INR235).(ABB)

0848 [Dow Jones] Some unease may grow in Asia markets (despite Friday's NY gains in U.S. stocks, USD) with some setbacks for U.S. coalition forces; troops more than two-thirds of way to Baghdad but being slowed by fierce resistance in south, while Iraq has captured handful of U.S. soldiers. Iraqi air defenses remain active; suggests Iraq military leaders retain at least some control of forces around Baghdad. Scattering of special-forces troops operating in North, but promised big northern front yet to materialize; and much-hoped-for mass surrenders of Iraqi soldiers haven't occurred. (RXM)

0846 [Dow Jones] Asia bourses heavily weighted toward successful, and fast, conclusion for U.S. in war vs Iraq, but players probably too optimistic Iraqi regime can be toppled quickly, say analysts; and war's unlikely to improve economic fundamentals, company balance sheets. "Finding a solid explanation for this rather perverse relief rally is difficult, making it hard to justify playing this volatile market," says Henderson Global's Shane Oliver.(RXM)

0843 [Dow Jones] One potentially complicating factor for U.S.-led war on Iraq which may start to concern market: U.S. denies reports Turkey has sent troops into northern Iraq since war started but some fear this still possible; U.S., Russia have called on Turkey to keep troops out, though Turkey has refused to agree to this, continuing to mass armor on Iraqi border. May raise fears of bloody "war within a war" between Turks and Kurds, provide distraction U.S. can ill-afford. (RXM)

0842 [Dow Jones] MSNBC TV quotes unnamed U.S. military officials as saying special operations teams and units of CIA are in Baghdad; officials hint recent explosions there (with no air raid sirens or indications of U.S. aircraft overhead) may have been work of Iraqi resistance groups, possibly working with U.S. forces. Unclear if this is just U.S. disinformation, but it may help sustain markets' hopes for quick U.S. victory. (AXT)

0838 [Dow Jones] U.S. officials say U.S. troops have found suspected "chemical factory" in south Iraq, but don't confirm whether it's actually believed to be chemical weapons facility as Fox TV reported earlier. If U.S. can prove Iraq had major WMD projects, it will greatly help to justify U.S. decision to go to war in court of world opinion, and reduce negative geopolitical fallout from war - so positive for USD and equities. (AXT)

0836 [Dow Jones] It became clear at weekend that one key war aim - securing Iraq's oilfields intact - has been mostly achieved. Key parts of southern fields and major export terminals on Gulf have been taken; northern fields not yet fully in U.S. hands but appear so far to have avoided damage; U.S. official said Saturday only 9 of Iraq's 500+ fields have been sabotaged. This removes one big fear of markets, even though fall of Baghdad may be days or weeks away. (AXT)

0834 [Dow Jones] WALL STREET: Stocks soared Friday, with DJIA going into positive territory for year on news of heavy bombardment of Baghdad; DJIA +2.8%, Nasdaq +1.3%, Philly semicon index +2.2% in heavy trade, with DJIA +8.4% for week, biggest weekly gain since October 1982. Players took cues too from reports suggesting Saddam Hussein may have been killed in initial air strike, though later reports cast doubt on this; airline, tourism stocks fared well with Southwest Airlines +7.3%, Walt Disney +9.3% on hopes a short war would ease concerns about tourism. Some analysts say this just relief rally, others though say gains have legs; "just as it wasn't smart to buy on the dips through the bear market, it's not wise to sell this rally," says one. EDS +12% after ousting CEO Thursday, Micron +11% despite 2Q loss as sales surged; but Intuit slid 24% on FY earnings warning. Intuit remained active after-hours, down another 1%.(RXM)

0830 [Dow Jones] OUTLOOK: 0900 RBI to release money market data for Saturday, Mumbai;

1000 Start of 2-day Gas Summit, organized by FICCI, Mumbai;

1200 RBI to announce results of 1-day repo and reverse repo auctions, Mumbai;

1200 Kotak Mahindra to hold media conference on its conversion to a bank, Mumbai;

Syngenta India to report FY02 results.(DJ Team)

Read source. Posted on Sun, Mar. 23, 2003
Associated Press

CAMARILLO, Calif. - After weeks of big increases, gas prices rose less than a penny nationwide over the past two weeks as oil markets calmed with the beginning of U.S. military action against Iraq, an industry analyst said Sunday.

The average price for gas nationwide, including all grades and taxes, was about $1.76 a gallon on Friday, according to the Lundberg survey of 8,000 stations.

That was an increase of just 0.71 cents from March 7, the date of the last Lundberg survey.

"Right now it appears possible that this year may already have seen its peak pump price," said analyst Trilby Lundberg.

War fears and uncertainty over the outcome of the Iraq crisis combined with a strike in Venezuela to send gas prices up more than 25 cents a gallon so far this year.

The price is leveling off now due to factors including the perception that the war will not substantially impact Iraqi oil production, Venezuela's comeback after the strike, and production increases by Saudi Arabia, Kuwait and others, Lundberg said.

"There was a lot of jargon such as war premium - it was more like an uncertainty premium," Lundberg said.

"The perception changed in favor of supply security enough so that oil futures prices have tumbled down," she said.

The price of a barrel of oil dropped $8 last week, from $34.93 at the close of the day March 17 - the day President Bush gave Saddam Hussein 48 hours to leave Iraq - to $26.90 at the end of the day Friday.

Lower prices could lie ahead, Lundberg said, "assuming of course there is no refining problem with getting our spring and summer formulas into place."

Still, one year ago motorists were paying 38 cents less per gallon - a weighted average of $1.38.

The national weighted average price of gasoline, including taxes, at self-serve pumps Friday was about $1.73 per gallon for regular, $1.82 for mid-grade and $1.91 for premium.