<a href=www.businesswire.com>Business Editors

    NEW YORK--(BUSINESS WIRE)--March 27, 2003--Fitch Ratings affirms the 'BBB' rating on the Virgin Islands Water and Power Authority's (WAPA) $100,000,000 electric system revenue bonds. The Rating Outlook is Stable. The affirmation is in anticipation of WAPA's $70 million bond issuance expected to price in April 2003. Proceeds will be used to fund certain capital improvements including upgrades to the transmission and distribution system, adding new generating capacity on St. Thomas and St. Croix, and paying down lines of credit. Public Financial Management is the financial adviser and Salomon Smith Barney is senior manager.     The rating affirmation reflects WAPA's historically good financial performance, adequate liquidity, a favorable fuel contract, improving system reliability, and stable economic growth, which is tied to the US Virgin Island's (the Island) tourist economy. Despite initial concerns stemming from the events of Sept. 11, 2001, the Island's tourism business continues to grow. Another positive factor is WAPA's good relationship with the Virgin Islands Public Service Commission (PSC), evidenced by the PSC's recent approval of WAPA's rate case effective April 1, 2003. The order includes the approval of WAPA's upcoming debt issuance, a rate increase that allows management to maintain annual debt service coverage above 1.75 times (x), a surcharge for payments in lieu of taxes, and other reclassifications of charges.     Financial results for fiscal year 2002 were stable with debt service coverage at a solid 1.86x. Adequate liquidity in the event of short-term financial disruptions is provided by about $18 million cash reserves, FEMA reimbursements, and self insurance funds. Additional liquidity of about $18 million will be available in the form of lines of credit with two local banks after the WAPA's planned financing.     Credit risks center on WAPA's accounts receivables associated with the government's delinquent payments, a dependence on a single fuel (oil) for generation, the economy's reliance on tourism, and the potential for future hurricane damage. While there has been significant improvement in reducing the United States Virgin Island government's (USVI) delinquent payments to WAPA, this issue remains a concern. The USVI's delinquent bills are about $7 million of WAPA's electric system accounts receivables (6% of revenues), an improvement from a high of about $14 million in 1999.     The 'BBB' rating also takes into account current world events that could adversely affect air travel to the USVI, and fuel supply to the Island. Through a favorable contract that extends to 2022, WAPA purchases its fuel oil from HOVENSA (formerly Hess Oil Virgin Islands Corp. prior to entering into a joint venture with Petroleos de Venezuela, S.A. of Venezuela) which operates the Western hemisphere's largest petroleum refinery on the island of St. Croix. HOVENSA receives crude oil from various locations, but primarily Venezuela. In the event that HOVENSA loses its Venezuelan supply (which was sharply reduced earlier this year) and reduces production, they remain obligated to serve WAPA first. In the unlikely event that HOVENSA were to stop production, WAPA would purchase oil from the world markets. Fitch believes that WAPA has an adequate risk management program including an emergency response program that addresses this issue.     While hurricanes and the resultant damage remains a risk, system replacements and improvements over the past several years have significantly strengthened the system's infrastructure. In addition, access to financial assistance from the Federal Emergency Management Agency (FEMA) continues to provide bondholders with credit support in the event of future hurricanes, as does a long-term hazard mitigation program that reimburses 50-90% of eligible costs related to projects designed to mitigate future storm damage.     WAPA is virtually the sole electricity provider for the US Virgin Islands. WAPA's power system serves approximately 50,000 customers with sales consisting of 33% residential, 20% commercial, 43% industrial, and 4% other. The system is governed by a 9-member board and operates autonomously from the Virgin Islands Government.

--30--IK/sf*

CONTACT: Fitch Ratings, New York
         Karl Pfeil, III 212/908-0516  
         Alan Spen, 212/908-0594
         Media Relations: 
         James Jockle, 212/908-0547

KEYWORD: NEW YORK INTERNATIONAL LATIN AMERICA
INDUSTRY KEYWORD: BANKING BOND/STOCK RATINGS
SOURCE: Fitch Ratings

More.. By Connie Cartmell, ccartmell@mariettatimes.com

Good news at the gas pumps this week is a direct result of good news in the southern deserts of Iraq as U.S. troops keep oil well fires at a minimum. Only about seven wells, of Iraq's reported 1,400 wells are burning.

"What has gone well in this war, so far, is that he (Saddam Hussein) has not done more damage to the oil fields than he has," said Robert Chase, chairman and professor of the petroleum engineering department at Marietta College. "That's why our gasoline prices have gone down."

Chase attributes the reduction to the same reason prices shot to $1.75.9 only a few weeks ago. It is the old adage, "Buy the rumor, sell the fact."

"This is exactly what the market has done," Chase said. "People thought that he would destroy the fields and disrupt supply. The fact is, it didn't happen and when it doesn't happen, the prices go down."

People also think most of American oil supplies come from the Middle East. Chase said this is also somewhat false in that most of U.S. oil is from Mexico, Canada, and Venezuela.

"We were buying some of their oil, I think to ensure money was going in went to the food program, to humanitarian needs, instead of to the military," he said.

Coalition troops secured most oil fields and wells in southern Iraq early on, likely quicker and more deliberately than Iraqi leadership anticipated. Chase even suspects special operations forces may have been on the scene even before war broke out to further ensure the wells were safe.

"I expect part of the reason Saddam wanted to blow up the oil fields was to go out in grand style," Chase said. "I know the people of Kuwait, and you would never see that happen in Kuwait. In fact, I don't think there's another person in the region, or world, would allow his own people to suffer so much, for his own gain."

Chase believes a "primitive mentality" is behind the brutality and mindset of Iraq's leadership.

Work will begin soon to put out the fires. Today's technology is making a major difference. Last time after Desert Storm there were 400 oil well fires in Iraq.

"We were ready for it this time," said Kean Weaver, president of Triad Resources Inc., of Reno. "The U.S. government anticipated this. Also, last time, because of the type of well heads, the large number of fires, and lack of technology, it was more difficult."

A graduate of Marietta College's petroleum engineering program in 1984, Weaver had visited the Middle East (Bahrain) and has an understanding of what it takes to put out a well fire. His company does oil and gas exploration and development in the region.

Both are confident the oil fields are under control.

"Clearly, Saddam Hussein is a detriment to the whole region," Weaver said. "If we want to maintain the lifestyle we enjoy today ... the oil supply must be defended."

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

egardless of what happens in Iraq, American drivers could see another bout of high pump prices this summer because of political tensions elsewhere in the world.

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

<a href=www.pottstownmercury.com>Read URL Margaret Fitzcharles, mfitzcharles@pottsmerc.com March 27, 2003

With a long, cold winter, a strike in Venezuela and now, the war in Iraq, area motorists watched as gasoline prices climbed to all-time highs in the tri-county area. They grumbled when they stopped to fill their tanks and paid $1.65 or more for a gallon of regular gas. Now, prices are on the decline, with several area stations charging around $1.55 for a gallon of regular. But will it last? In Chester County, Ken Miller of the Coventry Hess Mart said gasoline prices at his station went from $1.39 or so in late fall to $1.65 a gallon. Miller said prices have fluctuated so often recently that he wasn’t sure of this year’s low price. He said he believes it was $1.39 a gallon. "Right now, we’re kind of staying the same," Miller said. He was reluctant to speculate, however, on whether gasoline prices in the area might drop even more. "We watch the futures on a day-to-day basis, but if I knew what was going to happen, I’d be rich," Miller joked. The story is the same at most service stations. Tom Munir of Pottstown Sunoco on Charlotte Street said Wednesday that his prices are also down since they spiked at $1.66 a gallon, compared with the $1.35 charged for a gallon of regular late last fall. "First it went way up there, but the price didn’t go up on the market," Munir said. Munir believes the harsh winter and talk of war had oil companies expecting a shortage ahead, which caused the price increases. "Now our prices are actually going down," he said. "Things are more stable." Munir, whose station was charging $1.54 for a gallon of regular Wednesday, said he believes the price of gasoline will continue to fall. Matt Brown of the Turkey Hill on East Philadelphia Avenue in Boyertown said gasoline prices, at $1.56 for a gallon of regular Wednesday, are on the way down in Berks County, too. The Boyertown Turkey Hill’s price peaked at $1.65, said Brown, who was reluctant to speculate on future prices. "Personally, I think it’s going to depend on whatever happens with the war," Brown said.

URLMarch 27, 2003 Last updated 10:34 AM Mar. 27

For truck driver Tom Test, runaway diesel fuel prices have reached the speed of lunch.

Earlier this month, the Norfolk resident pulled into a Massachusetts truck stop for a quick bite and a fillup.

The cost of diesel, according to the sign out front, was $1.96 a gallon.

One burger and about half an hour later, he drove back around from the restaurant to the pumps.

The new price: $2.01.

It was the same . . . stuff they had 30 minutes ago,'' Test said. It made the hair on the back of my neck stand up.''

Diesel prices are up one-third in the past year -- an even sharper jump than gasoline -- due to costlier crude oil and instability in the Persian Gulf.

And the increase is pounding motor carriers, especially small owner-operators like Test, for whom fuel is the biggest single piece of operating costs.

You tighten your belt up and do the best you can,'' he said. But your bottom line just plummets.''

Around Hampton Roads, diesel now averages about $1.81 a gallon, according to AAA.

While that's off slightly from the $1.82 local record set two weeks ago, the price is 39 percent higher than last year at this time.

Nationwide, diesel prices are also off from the new average high of $1.77 reached earlier this month, although they are still up 30 percent from a year ago.

Prices on the East Coast typically run higher than the national average, which includes cheaper areas such as the Southeast, the Midwest and the Gulf Coast.

The recent prices are not adjusted for inflation; in current dollars, fuel costs were well over $2 per gallon in the early 1980s.

Analysts cite several factors for the increase.

A work stoppage in Venezuela in December and January crippled that country's production of crude oil, from which gasoline, diesel and other petroleum goods are made.

Although the strike ended Feb. 1, production by the No. 4 supplier of crude to the United States has not caught back up.

Civil unrest in Nigeria, the fifth-largest supplier of U.S. crude, has also reduced oil output.

As a result, domestic crude oil stocks are down more than one-sixth from a year ago, at 270.2 million barrels.

Predictably, unrest in the Middle East has also driven up prices.

While the weeklong interruption of oil from Iraq has created no supply problems yet, speculation by fuel traders drove up some crude prices as high as $38 a barrel this month -- more than half-again as high as a year earlier -- on fears that a protracted war could cut oil output in the region.

And an unusually cold winter meant more domestic refiners continued making fuel oils rather than changing over to producing gasoline or diesel.

The explanation offers little comfort to the trucking companies that need diesel to survive.

Fuel comprises up to 30 percent of operating expenses for trucking companies, according to American Trucking Associations, an Alexandria-based trade group. Diesel is the second-largest cost after labor.

The industry has paid more than $1 billion in additional fuel costs this year compared to the first quarter of 2002, ATA said.

With inflation under control, the impact on the price of goods is difficult to gauge. Outside of volatile food and energy costs, the consumer price index climbed just .1 percent in February, the federal government reported, capping the smallest 12-month gain in nearly four decades.

Nonetheless, for motor carriers, the sharp jolt in a major cost like fuel can be devastating.

The association estimates that every 10-cent increase in the price of diesel drives 1,000 motor carriers out of business.

And that only includes fleets with five trucks or more; thousands of smaller carriers are also jeopardized by rising prices.

The organization estimates that more than three-fourths of the nation's 600,000 trucking companies operate six or fewer vehicles.

``It's become a crisis,'' said ATA economist Diego Saltes.

Bigger trucking companies can buy fuel at higher volumes than individuals, for instance, and spread out fixed costs over numerous vehicles. The economies of scale allow them, they say, to scrape by with some profits.

Many can also charge more when their costs go up.

Bay West Transport in Chesapeake adjusts the rates for its 60-truck fleet daily, to stay current with the expense of the 20,000 or so gallons of diesel it burns each month.

The company's charge per mile is running about $1.30 now vs. about $1.10 late last year, with no business lost to date.

We had to do that,'' said owner Mason Bailey. This fuel thing is a great spike in our costs.''

The strategy doesn't always work.

Baltimore-based O.S.T. Trucking Co. Inc. has instituted a 9.5 percent surcharge to cover fuel.

That does not offset costs that have risen more than triple that rate in a year, however.

``We can recoup part of it, but not all of it,'' said Bill Mayes, manager of the company's Virginia Beach terminal.

For independent truck owner-operators, who have to cover their own costs from maintenance and insurance to fuel, the bite is even harder.

As the industry has become more corporate and independents have scrambled for work, many are hesitant to raise prices too much for fear of losing jobs. Profit margins are evaporating.

The ATA says many drivers are simply parking their trucks, and even putting them up for sale, because they are not generating the income to survive.

Test -- who hauls under contract for Ram Transport of Virginia Beach -- says that with a $1,000-a-month payment on his 1998 Freightliner, he cannot afford to stop driving.

A 12-cent-per-mile fuel surcharge levied by Ram and passed along to Test helps: With fuel economy of six miles per gallon in the truck, he's actually up about 3.5 cents a mile from a year ago, based on Norfolk prices.

But every time he fills up in a big city in the Midwest or Northeast, where diesel can be 20 cents a gallon higher, that advantage is gone.

Test admits he is resigned to waiting for the fuel price runup to ease.

You just have to ride the storm out,'' he said. That's all you can do.''

And the outlook is mixed. Crude prices continue to whipsaw hourly between $27 and more than $30 a barrel on war news.

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