www.tcpalm.com By Nadia Gergis staff writer March 13, 2003

Anthony Dalle isn't taking his family out to dinner anymore.

Cutting corners and watching the family's budget is becoming more of an obsession for the owner of Coastal One Maintenance in Stuart -- all because of higher gasoline prices.

"Gas used to cost me $500 a month," said Dalle, who specializes in home repairs. "Then it became $700, now it is $1,000. I have to watch my expenses so much now."

Dalle, whose territory stretches from Wellington to Fort Pierce, is considering charging customers an extra 5 percent to 10 percent surcharge just to keep his business afloat.

"It makes me depressed, I don't know what is going to happen next," said Dalle, as he filled up his Ford truck Wednesday at a 7-Eleven at High Meadow and Martin Highway in Palm City.

Dalle isn't alone in making adjustments to his budget and transportation costs. Soaring gas prices are causing more and more Treasure Coast residents to pinch their pennies and make fewer trips, especially those who own sport utility vehicles and large trucks.

"I try to get rides to and from work whenever I can," said Kathy Santilli, a manager at the 7-Eleven who owns a Nissan SUV.

Prices for regular unleaded, self-serve gasoline on Wednesday shot up to an average of $1.704 per gallon -- the highest ever recorded by AAA Auto South Club. That's 10.5 cents higher than the same date last month. Compared to a year ago, consumers in Florida now are paying 50 cents more for a gallon of gas.

Other gasoline grades also jumped in Florida. Mid-grade climbed 11.4 cents to a statewide average of $1.846 per gallon. Premium rose 11.6 cents to an average of $1.88, while diesel rocketed 21.5 cents to an average of $1.892 per gallon.

Topping the state in prices at the pump was the West Palm Beach-Boca Raton market, where the average cost of regular unleaded was $1.78 per gallon.

"A combination of crude oil prices, low inventories, bad weather up North and the volatile situation with Iraq are making gas prices horrendous for consumers," said Gregg Laskoski, managing director of public and government relations for AAA Auto Club South.

The American Petroleum Institute says the lack of crude oil imports from Venezuela, one of the biggest importers of oil to the United States, is the largest factor contributing to the gasoline price increases.

"We had a supply disruption from Venezuela because of workers going on strike," said Bill Bush, a spokesman for the API. "Any severe disruption will affect crude oil prices."

Also contributing to the problem is the unusually cold weather gripping the Northeast and Midwest. Refineries, industry officials say, have been forced to stop making gasoline in order to produce more heating fuel.

And, to make matters worse, prices of crude oil may keep increasing, said Ron Planting, manager of information and analysis at the API.

"Retail prices usually lag behind crude oil prices, so who knows what we are in for in the future," he said.

That means motorists looking for relief may be in for a long wait.

"It is absurd," said Michael Colella, a Palm City resident. "Every day it [gas] gets higher. It's ridiculous."

Paul Parrott, a 49-year-old Vero Beach resident, echoes that sentiment.

"I never really cared about the price before because I only drive about 6,000 miles per year," said Parrott, who is disabled, lives on Social Security and budgets $35 a month for gas.

"I'm basically a shut-in ... but when I looked up and saw $1.92 for premium, I went, 'Whew,' " Parrot said as he pumped gas at a Speedway station. "If I had to drive to Fort Pierce or Melbourne every day, I'd be outraged."

Staff writer Chris Kauffmann contributed to this report

• nadia.gergis@scripps.com

www.csmonitor.com By Leila Wombacher Knox | Special to The Christian Science Monitor

After paying $2.20 for gas in the San Francisco Bay area, student Chelsea Tamulevich has decided not to visit her parents as much. It isn't that she doesn't like her mother's cooking or the opportunity for a free laundry service. It's that Tamulevich's car, even though a fuel-stingy Honda Civic, costs twice as much to fill up now as it did a year ago, and she doesn't have the money to make the 500-mile round trip commute from San Luis Obispo, where she goes to college. "Judging by this last trip, I think I'm going to have to not go as often," she says.

Tamulevich's decision to forgo some of her trips home symbolizes how many Californians are changing their lifestyles, in ways both subtle and significant, in the face of the highest gasoline prices in US history.

While energy prices have jumped nationwide in the run-up to war, nowhere are they more expensive than in the Golden State, the unofficial car capital of the world. If you were to suddenly plunk down in Los Angeles, you might think it was Amsterdam or Paris, except for all the spandex and mini-malls: Prices are now high enough - $2.10 a gallon on average - that they are approaching European levels. Nationally on Tuesday, the average gas price was $1.70.

For Homa Atash, a retiree living on fixed income, the price hike hasn't stopped her from filling her spotless Mercedes with premium gasoline, which was running $2.25 a gallon at a busy Chevron station in San Luis Obispo on Monday.

"In order to keep my car maintained, I have to buy expensive gas," she says, polishing her car windows with a rag.

Ms. Atash says she typically comes into San Luis Obispo from Los Osos, 10 miles away, three times a week to run errands and visit her daughter. But now that gas is so expensive, she is reconsidering how often she will drive into town.

Lifestyle changes

Indeed, small adjustments to driving routines are typical when gas prices reach new highs. But wholesale changes, such as taking public transportation or carpooling, are rare here.

"Some people will start consolidating their trips, for example doing several errands at once rather than making random trips," says Ron Cogan, editor of the Green Car Journal, an industry publication based in San Luis Obispo. "Others will cut out nonessential local trips."

In California that might mean forgoing a drive to pick up an afternoon coffee at Starbucks but not weekly trips to the nail salon.

Janet Hiller has certainly noticed how the price boards outside gas stations seem to change their numbers faster than a scoreboard at a Lakers game with Kobe off the bench.

The correctional officer at the county jail in San Luis Obispo raised her teenage son's allowance from $30 to $40 a week so he could afford to drive to school in his minivan. "His costs have gone up considerably," she says.

Isolated state

California has always had its own rules when it comes to the economics of gasoline.

For starters, consumers have always had to pay higher state and local taxes on gas. Mainly though, production costs are higher here. Most of the state's supplies come from refineries in the West because of California's strict environmental rules on gasoline inputs.

Analysts say that it's a new state requirement, coinciding with supply shocks in the petroleum market, that has caused the sudden spike in prices at the pump in California. Refineries in the state are in the process of switching from fuel that is oxygenated by Methyl Tertiary-Butyl Ether (MTBE) to fuel oxygenated by ethanol.

"The whole process of changing over for a different formulation is extremely expensive for the industry, and it takes time to pull it off," says Mr. Cogan.

The result will be a cleaner-burning gasoline that won't find it's way into groundwater. But the regulations do mean that the state is unable to tap into gas supplies elsewhere in the nation because of different refining standards.

Other factors are at work too.

The impending war with Iraq is certainly contributing to high gas prices nationwide. Additionally, the petroleum workers' strike in Venezuela - one of the top ten crude oil producers in the world - and the cold winter on the East Coast have had a significant impact on gas prices.

"Refineries are either making home-heating oil or gasoline, but they're not making both," says Jerry Taylor, director of natural resource studies for the Cato Institute in Washington, D.C. "Typically they are making home-heating oil in the winter, and the harsh winter we've had has forced refineries to make home-heating oil for longer than they have in the past, and that has hurt the gasoline supply."

But drivers in the Golden state may have to wait a while yet for relief when they fill up.

"Regardless of strikes, war, or the cold, gas goes up in the summer," says AAA spokeswoman Cynthia Harris. "Summer gas is more expensive than winter gas because it has more additives."

Businesses feel the pinch

That's not good news for Dan Routt, moving-department head at Meathead Movers in San Luis Obispo (the company name is a tad misleading, it employs students as movers and packers).

Mr. Routt is counting on gas prices eventually returning to normal since his company, which has nine diesel-powered trucks, must accept what the prices are at the pump without passing them on to clients. "We know that ... our great economy will come back to where it should be and gas prices will be affordable," he says. "We've got to keep plugging ahead regardless."

But other companies are already charging their customers more - especially small businesses with smaller profit margins. Steve Sheetz, a window cleaner from San Luis Obispo whose Nissan Rodeo is loaded with ladders and cleaning supplies, certainly jokes that he'll raise his rates to compensate for the higher gas prices.

"This is tax time, so I'm trying to cut back," he says as he buys $21 worth of gas at $2.06 a gallon. "Right now I just don't have the money to fill all the way up."

money.cnn.com March 12, 2003: 4:54 PM EST

NEW YORK (Reuters) - Oil prices rose sharply Wednesday after weekly government and industry inventory data showed U.S. crude and gasoline supplies fell last week, as war with Iraq loomed.

Around 2:45 p.m. ET, light crude oil for April delivery was up $1.11 at $37.83 a barrel on the New York Mercantile Exchange. Oil prices set a record high of $41.15 a barrel during the 1990-91 Gulf crisis.

Earlier in London, April Brent crude rose 62 cents to $33.91 a barrel.

U.S. crude oil stocks fell 3.8 million barrels in the week to March 7, the U.S. Energy Information Administration (EIA) said in its weekly report released at 10:30 a.m. ET.

Distillate stocks were up 1.8 million barrels, and gasoline inventories fell 4.1 million barrels, the EIA said.

The industry group American Petroleum Institute (API) said crude stocks fell 1.7 million barrels, distillate stocks dipped 129,000 barrels and gasoline stocks dropped 4.88 million barrels.

Analysts polled by Reuters expected U.S. crude stocks for the week to March 7 to have risen by about a million barrels while they expected gasoline stocks to have declined 1.7 million barrels. Distillates were forecast to have dwindled by 2.0 million barrels.

"Imports were down and makes dubious Venezuela's claims of a return to output normalcy," said John Kilduff, senior vice president and analyst for Fimat USA. "There was some relief on the distillate side."

Crude imports were down 1.06 million barrels, and product imports were off 652,000 barrels in the week to last Friday, according to the DOE report. API also said that imports of crude oil and refined products fell last week.

Heating oil for April delivery was 0.5 cents higher at $1.0352 a gallon, while gasoline for April delivery was 1.52 cents higher at $1.1139 a gallon, after ending overnight trade down 0.77 cent. Click here to go to CNN/Money's commodity page

The bullish gasoline and crude statistics were pushing prices up after Tuesday's losses on forecasts for warm weather, traders said.

Prices also fell Tuesday after OPEC ministers meeting in Vienna decided to keep the cartel production stable while pledging to ramp up production to meet any supply disruption.

Market jitters over a possible war in Iraq remained, though a possible extension of the deadline for Iraq to comply with U.N. disarmament demands was creating more uncertainty.

Britain said Wednesday that Iraqi President Saddam Hussein must declare on television that he will give up hidden weapons of mass destruction as one of six conditions to avoid war.

Foreign Office minister Mike O'Brien said the conditions, which Britain wants to attach to a draft second resolution on Iraq, were being discussed with fellow U.N. Security Council members as negotiations reached an end game. Related stories U.S. ready to release oil reserves Gas prices near record high Oil prices retreat

Spare OPEC oil production capacity has been squeezed to just half the volume of Iraq's exports ahead of the possible conflict interrupting exports, the International Energy Agency (IEA) said Wednesday.

In its monthly Oil Market Report, the IEA said that output increases in the past two months had left effective spare capacity in OPEC now of just 900,000 barrels per day.

Iraqi exports have been running at 1.7 million barrels a day over the past month and, in addition, Kuwait has said it may need to suspend as much as 700,000 barrels per day as a safety precaution if war breaks out in its neighbor.  

www.upi.com By Hil Anderson UPI Chief Energy Correspondent From the National Desk Published 3/12/2003 6:41 PM

LOS ANGELES, March 12 (UPI) -- Oil prices moved ever higher on Wednesday after closely watched weekly inventory reports showed the United States' oil supply fell nearly 4 million barrels last week as crude imports declined by more than 1 million barrels per day.

The news contributed to a jump of $1.11 for April crude futures on the New York Mercantile Exchange Wednesday and an increase of more than 70 cents on London's International Petroleum Exchange.

"Crude oil imports have averaged over 8.3 million barrels per day over the last four weeks, but this is still 300,000 barrels per day less than averaged during the same four-week period last year," the Energy Information Administration said. "Although the origins of weekly crude oil imports are very preliminary ... imports from Venezuela over the last two weeks appear to be much closer to pre-strike levels than earlier in the year."

The agency reported last week's total imports averaged 7.6 million barrels per day. Modern supertankers generally have a cargo capacity of nearly 2 million barrels.

The news, coming at a time that the United States is poised to launch a war in the Persian Gulf, contributed to Wednesday's upward momentum on NYMEX that carried April crude to $37.83 per barrel, a level not seen since Iraq's brief occupation of Kuwait in 1990. Prices were expected to test $38 per barrel during after-hours trading.

April heating oil gained a half-cent to $1.0352 per gallon while April gasoline settled at $1.145 per gallon, up 1.58 cents.

Oil has been extremely volatile to the upside ever since the United States and Iraq began moving toward a military confrontation. Gasoline prices in the United States have reached virtual record levels of $1.706 per gallon, according to AAA, with California averaging a whopping $2.119.

The EIA said that U.S. gasoline stocks fell 4.1 million barrels last week and remained "below the low end of the normal range," while crude supplies in the Midwest continued to bump along at slightly above the lowest level recorded since the EIA began keeping supply records in 1989.

This year's low supply and high prices have been used to bolster the Bush administration's goal of increasing domestic petroleum production, particularly in the pristine Alaskan wilderness where environmentalists fear wildlife could suffer a devastating blow to their habitat.

The Department of the Interior announced Tuesday that the North Slope's caribou population had boomed since oil production in the region began in the 1970s. The announcement was followed Wednesday by an Interior press release calling the protected Arctic National Wildlife Reserve the most-promising area in the nation for potential oil production.

"The Coastal Plain of ANWR's 1002 area is the nation's single greatest onshore oil reserve," Interior Secretary Gale Norton said in the statement. "The U.S. Geological Survey estimates that it contains a mean expected value of 10.4 billion barrels of technically recoverable oil. To put that into context, the potential daily production from ANWR's 1002 area is larger than the current daily onshore oil production of any of the lower 48 states."

www.bayarea.com Posted on Thu, Feb. 27, 2003 By David A. Sylvester Mercury News

Soaring gas prices in the Bay Area -- averaging $2 a gallon in San Jose -- could go even higher after crude oil hit its highest price in 12 years Wednesday amid tightening supply and fears of war.

Crude oil surged to $37.70 a barrel in the New York markets, a price not seen since October 1990, when Iraq occupied Kuwait at the start of the Persian Gulf War. At the same time, the federal Energy Department reported oil inventories fell last week to the third-lowest level in at least 19 years.

That's pushing gas prices higher and, unfortunately, relief is not in sight.

Among the reasons prices are rising: fears of the loss of Iraq's oil during a U.S.-led attack; the unusually low inventories and tight supplies after a strike blocked oil from Venezuela; and higher profit margins among refiners and oil dealers.

Bay Area motorists are paying anywhere from an average of $2 for a gallon of regular in San Jose, to $2.12 in San Francisco, only pennies away from the highest prices last year. That's higher than both the state and national averages.

In California, some state refineries have cut production while they change equipment to produce the blend of gasoline used during the hot months of summer. The California Energy Commission reports that this conversion is temporarily tightening supplies in the state, making the cleaner-burning gas used here more expensive than normal.

But the biggest reason for the higher prices remains the threat of a war. Iraq sits atop the world's second-largest oil reserves, and serious damage to its oil fields could destabilize world markets.

``Until something gets resolved about Iraq, we're likely to see prices stay this high,'' said Severin Borenstein, director of the University of California Energy Institute in Berkeley.

So far, the oil markets are following the same pattern they did during the gulf war. After Iraq invaded Kuwait in 1990, prices jumped sharply, to $41.15 a barrel. After U.S.-led forces expelled Iraq from Kuwait, prices fell dramatically.

Whether prices fall again depends on how the war against Iraq proceeds, observers say.

Norman Higby, energy consultant at WMP Forecasts in Menlo Park, predicts prices will drop again after the conflict and stay below their current levels for the foreseeable future.

If so, it would help keep the economy out of a recession.

Keitaro Matsuda, senior economist at the Union Bank of California, said he believes the economy is strong enough to take ``some negative shock'' from the oil price increase.

``The question is how high oil prices might get and how long this will last,'' he said.

In the past two months, dealers and refineries have increased their operating margins -- which include their costs and their profits. Margins for dealers of branded gasoline have doubled, from 9 cents a gallon at the beginning of the year to 18 cents a gallon in late February, according to the California Energy Commission. For brand refineries, the margin rose from 27 cents a gallon at the beginning of the year to 36 cents in late February.

Dennis DeCota, executive director for the California Service Station and Automotive Repair Association, representing brand and independent gas stations, said margins are higher because stations are selling less gasoline.

``As a dealer's volume goes down, he has to increase his margin to stay in business and pay his rent to the oil company,'' DeCota said.

However, UC's Borenstein worries that the state is vulnerable to profiteering during gas shortages.

``The big question is: Is this a tight supply market or is this some sellers driving up prices? I don't know the answer. It's very hard to separate the two.''

Of all the reasons for higher prices, one possible cause has not apparently had much effect. Some oil analysts worried that prices might rise this year as California substitutes ethanol for an additive called MBTE in gasoline to reduce pollution. But so far, the change has not added to the price increases because ethanol is more plentiful than previously expected and cheaper than gas, said Rob Schlichting, energy commission spokesman.

Instead, California's relatively higher gas prices reflect the more refined type of gas used to meet stringent air quality controls.

``California gas tends to be more expensive because it has to go through a more expensive refining process,'' said Chris Kelley, spokesman for the American Petroleum Institute in Washington, D.C.

Contact David A. Sylvester at dsylvester@sjmercury.com or (408) 920-5019.