money.cnn.com February 19, 2003: 2:33 PM EST

NEW YORK (Reuters) - U.S. oil prices rose for the sixth straight day Wednesday, hitting 29-month highs ahead of government inventory data expected to show crude stocks shrinking in the United States.

Cold weather in the world's biggest heating oil market in the U.S. Northeast also underpinned prices, which are just $4.00 shy of the all-time high set after Iraq invaded Kuwait in 1990.

U.S. crude futures rose 39 cents to $37.35 per barrel in New York, the highest since September 2000.

International benchmark Brent crude oil was up 1 cent to $32.55 per barrel in London, and just below a two-year high of $33.10 touched last week.

Traders said the market remains wary as the United States and Britain, despite strong international opposition, are pushing for a new U.N. resolution that would authorize the use of force to disarm Iraq.

But the new resolution may not be put to a vote before early March, after another report by chief U.N. weapons inspector Hans Blix, diplomats said Wednesday.

"The world is facing the prospect of losing Iraq's two million barrels per day of oil exports, and perhaps some of Kuwait's oil too, at a time when oil prices already are well above $30 per barrel and stocks are abnormally low," the Center for Global Energy Studies said in a monthly report.

President Bush shrugged off global anti-war demonstrations Tuesday, while Washington and London worked on a second United Nations resolution to sanction war if Iraq fails to disarm immediately.

The United States warned reluctant ally Turkey Wednesday that time is running out to agree to a deployment of U.S. troops on its soil as an Iraq invasion force as the two states wrangled over the size of a multi-billion-dollar aid package.

The U.S. Defense Department ordered another 28,000 troops to the Gulf region this week as it builds a force of more than 200,000 for a possible invasion of the Arab oil power.

Iraq is the world's eighth-biggest oil exporter, selling roughly two million barrels per day (bpd) into the international market, and traders fear war could disrupt supplies from other producers in the Middle East, which supply 40 percent of world exports.

The White House has said a new resolution could be proposed this week to the U.N. Security Council, where Bush has met opposition from France, Russia and China, who want more time for weapons inspections to continue. Tight supplies

Government data to be released Thursday are expected to show that U.S. crude oil stocks fell by a modest 1.0 million barrels, a Reuters survey of analysts showed.

Analysts also expected a draw of 3.0 million barrels in distillates, including heating oil, and a minor decline of 500,000 barrels in gasoline stocks.

Concerns over supply disruptions resulting from a war come at a time when strike-hit Venezuelan exports struggle to return to normal and senior oil workers in Nigeria walked out, although supplies from Africa's top producer have remained normal so far.

Venezuela's oil production was 1.4 million bpd Wednesday, roughly 50 percent of normal levels, despite government efforts to increase output.

Venezuela accounted for 13 percent of U.S. oil imports before the strike, aimed at toppling President Hugo Chavez, and the stoppage has severely dented U.S. fuel stocks.

U.S. stocks of crude oil already are below 270 million barrels, seen as the minimum level required to keep the nation's refineries running normally.

Supplies could be tightened further if there is an escalation in a Nigerian oil strike over pay and conditions that began Saturday but has not touched exports so far.

Nigeria pumps just over two million bpd and is the world's seventh-biggest exporter.  

www.alertnet.org 19 Feb 2003 19:00

NEW YORK, Feb 19 (Reuters) - An energy crunch that is dealing a blow to fuel consumers' pocketbooks proves the need for the United States to become more independent from unreliable foreign oil supplies, the American Petroleum Institute (API) said on Wednesday.

The Bush Administration has been attempting since 2001 to push through controversial aspects of the White House energy program that would increase domestic oil drilling, but it has met resistance from Democrats claiming the need for more petroleum does not justify the environmental costs.

"We're in the same fix we were in two years ago, and nothing's been done to fix the problems that existed then." said John Felmy, director of policy analysis and statistics at the API, which represents members of the oil industry.

"Our energy infrastructure is straining to meet the ever-growing demand, and when problems occur, like the ones we're seeing, we experience this volatility," he told Reuters.

Oil prices have spiked to within reach of two-year highs near $38 a a barrel, as a national strike in Venezuela cripples exports from the OPEC nation and the United States is hit with strong heating demand and fears over war on Iraq.

Retail gasoline prices have surged above record highs for February at $1.66 a gallon on average, while heating oil prices have hit three-year highs at $1.71 a gallon, leading to calls from petroleum distributors for a release from the nation's Strategic Petroleum Reserve (SPR).

The Bush administration said last week it was monitoring a drop in U.S. crude oil inventories, now the lowest in 27 years, but indicated there would be no release of oil from the SPR, which is used only in cases of severe disruption.

Against this backdrop, the Senate is expected to vote in mid-March on whether to open the Arctic National Wildlife Refuge (ANWR) to oil drilling -- the most controversial aspect of Bush's energy plan -- with supporters hoping to reverse last year's defeat and stressing the need for energy independence.

The Bush administration is pushing to open the refuge and tap its potential 16 billion barrels of oil to reduce U.S. dependence on crude imports, particularly as fears mount that a possible war with Iraq could disrupt supplies from the oil-rich Middle East.

But most Democrats and environmentalists oppose drilling in ANWR and want to protect the reserve's wildlife. They say there is not enough oil in the refuge to justify disturbing the area's wildlife, and argue the government should raise fuel mileage standards for sport utility vehicles.

www.suntimes.com February 19, 2003 BY ART GOLAB STAFF REPORTER

A fire Tuesday shut down most of the gasoline-producing capacity at the BP oil refinery in Whiting, Ind., prompting an immediate rise in Chicago area wholesale gas prices of 7.5 cents a gallon and making it likely that prices will rise at the pump later this week.

"That's a terrific jump," said Bill Fleischli, vice president of the Illinois Petroleum Marketers Association, which represents independently owned gas stations and convenience store operators.

The wholesale hikes could translate to higher prices at the pump later in the week, when gas stations are resupplied, Fleischli said, though he added that, in competitive markets like this, dealers sometimes will absorb the increases for a while before passing them on.

Already last week, gas prices in the Chicago area hit a record high for February, $1.60 a gallon, on average, for regular unleaded, according to a survey by the AAA-Chicago Motor Club. On Tuesday, the Chicago average was $1.74 a gallon, according to chica gogasprices.com, a Web site that compiles averages based on reports from consumers throughout the area.

"Stockpiles of crude oil are the lowest since 1975," Fleischli said. "So now you've got an interruption of a major refinery in the Midwest, this along with problems in Venezuela, the uncertainty of the political situation in the Middle East and the cold weather on the East Coast. All that has caused supplies to shrink and has sent the markets higher."

Not helping matters is that the fire happened at a critical time, as refineries across the nation are preparing to make the switch to summer-grade fuels, said Dave Sykuta, executive director of the Illinois Petroleum Council, which represents major refiners and oil companies.

Shortages of these fuels, which are refined especially for the Chicago area because of federal air pollution regulations, have pushed prices higher here in past summers. The special formulations have to be in the pipeline May 1, and refineries need 45 to 60 days to make the switch and build up adequate supplies.

The fire at the BP refinery in northwest Indiana knocked out 550,000-gallons-a-day of gasoline-refining capacity at the largest of the three oil refineries in the Chicago area.

It started around noon Tuesday and was extinguished within an hour. A preliminary investigation indicates it started when a leak from an oil line ignited, BP spokesman Tom Keilman said.

Three BP employees received hospital treatment for minor injuries.

Keilman said the blaze affected a part of the refinery that makes gasoline and that other parts of the plant will still be operational. The company might not know until the end of the week how extensive the damage is or how long it will take to repair, he said.

News of the fire sent the wholesale price of gasoline here--the price paid by gas stations buying on the "spot" market--up by 7.5 cents and contributed to smaller increases in New York and the Gulf Coast.

www.pilotonline.com By MICHAEL DAVIS, The Virginian-Pilot © February 19, 2003 Last updated 9:15 PM Feb. 18

A delayed shipment caused some Hampton Roads filling stations to run short of gasoline over the weekend, according to those in the business.

The gas arrived early Tuesday, but not before creating headaches for area wholesalers.

Supply was very, very short everywhere,'' said Corey Russell, vice president of wholesaler Supreme Petroleum Inc. in Suffolk. It was kind of a pain.''

Officials at Exxon Mobil Corp.'s headquarters in Irving, Texas, did not return telephone calls for comment Tuesday. The company's regional office in Fairfax was closed due to bad weather.

But distributors and dealers were told that Exxon Mobil's fuel terminal in Chesapeake ran out of gas Friday night after an inbound barge was delayed by bad weather.

The shortfall at the terminal -- one of the region's biggest suppliers of fuel -- forced wholesalers to go elsewhere. That demand, in turn, depleted supplies around the area.

Distributors scrambled to make their deliveries. Supreme, for instance, had to send trucks to Giant Industries Inc.'s Yorktown refinery, formerly owned by BP, to pick up gas.

Some frustrated Exxon dealers said they ran out of gas entirely over the weekend.

The biggest thing is customer confidence,'' said Pete White, owner of B & B Exxon in Ghent. We didn't expect it. I looked like an idiot.''

But wholesalers said similar supply disruptions happen occasionally.

It's not unusual,'' said Tim Hampton, vice president of wholesale for Sentry Services in Norfolk. We've seen it throughout the years.''

The shortage was evidently not related to tensions in the Middle East. But a 79-day oil workers' strike in Venezuela and unseasonably cold weather in the Northeast, which compels refineries to make heating oil instead of gas, have undercut supplies and driven up prices.

AAA says that self-serve regular unleaded averaged $1.59 a gallon in Hampton Roads Tuesday, up 60 percent from a year earlier.

Though Venezuelan output appears to be on the rebound, uncertainty over military action in Iraq has helped drive crude oil prices to 29-month highs of $37 a barrel.

The federal Energy Information Administration said earlier this month that ``world oil markets will likely remain tight through most of 2003.''

But Hampton Roads wholesalers said that large shortages are extremely unlikely.

``I'm confident that we could take care of our commitments,'' Hampton said.

Reach Michael Davis at 446-2599 or midavis@pilotonline.com

new.stockwatch.com 2003-02-18 12:41 EST - News Release

ST. PETERSBURG, Fla., Feb. 18 /PRNewswire-FirstCall/ -- Citing rising prices for fuel used to generate electricity, Progress Energy Florida (formerly Florida Power) will today request an increase to the price customers pay for electricity. Progress Energy does not profit when prices increase due to higher fuel costs. The costs are a direct passthrough to customers.

(Photo: www.newscom.com )

Progress Energy's residential customers currently pay $80.35 per 1,000- kilowatt hour (kWh), 10 percent below the national average. If the request is approved by the Florida Public Service Commission (FPSC), the fuel adjustment will increase residential bills by 4.2 percent -- to roughly $83.71 -- beginning April 1, 2003. A decision is expected from the FPSC in March.

"Considering the state of potential conflicts in the Middle East and government unrest in Venezuela, fuel prices are expected to remain high into the foreseeable future," said Bill Habermeyer, president and CEO of Progress Energy Florida. "We will do everything we can to control these costs, but we also encourage customers to make efficient use of electricity and conserve whenever possible."

While time remains before the summer air conditioning and peak electric use season arrives, Progress Energy urges customers to maximize energy efficiency and conservation to help mitigate the impact of higher fuel prices.

Progress Energy offers these tips to help customers keep their energy costs down:

• Set the air conditioning system (which is the largest user of electricity) thermostat to 78 degrees in summer months. * Make monthly inspections of air conditioning system filters for the purpose of cleaning or replacing them when needed. * Reduce the temperature setting on the electric water heater to 120 degrees. * Use ceiling and portable fans to keep air circulating. * Close blinds, drapes and shades during the hottest part of the day. This keeps the sun's rays from heating your house. * If you have a pool, limit the time your pool pump runs to six hours a day during the summer.

Residents can also take advantage of Progress Energy programs designed to help customers control electricity use. For more information about these programs, customers should visit www.progress-energy.com or call 1-800-700-8744. Some of these programs include:

Budget Billing: Customers on fixed incomes or others who need a bill that is a consistent amount are encouraged to take advantage of Budget Billing. The program is free and helps customers forecast monthly energy costs as well as better plan their finances. Customers pay an average amount that is approximately the same each month. The difference between the budget billing amount and the actual amount also appears on the bill.

Home Energy Inspection: A free home energy inspection can be conducted for customers by a Progress Energy representative. The representative will survey your home's insulation, duct work, water heating, cooling and heating systems and overall efficiency. Then the customer is provided with energy-saving recommendations and practices and other cost-effective, energy-saving measures.

Progress Energy Florida, a subsidiary of Progress Energy , provides electricity and related services to more than 1.4 million customers in Florida. The company is headquartered in St. Petersburg, Fla., and serves a territory encompassing over 20,000 square miles including the cities of St. Petersburg, Clearwater, as well as the Central Florida area surrounding Orlando. For more information about Florida Power, visit the company's Web site at: www.progress-energy.com. Photo: NewsCom: www.newscom.com AP Archive: photoarchive.ap.org PRN Photo Desk, 888-776-6555 or 212-782-2840 Progress Energy, Inc.

CONTACT: Corporate Communications of Progress Energy, +1-866-520-NEWS -6397

Web site: www.progress-energy.com