Q&AsPosted on Wed, Mar. 26, 2003

Q If people don't like paying high prices for gas, why is it that they don't buy smaller cars? Even with today's high prices, people continue to buy monster SUVs. Could the reason be that most Americans are just too big and overweight to fit into smaller cars? Next time you are driving around, look at the people driving large SUVs. Andros James . San Jose

A Ouch, this gas debate is getting nasty.

Q It's amazing how far a tank of gasoline can be stretched by simply driving the speed limit (in the slow lane, of course). Very few drivers on Interstate 280 seem to realize that. Judy Clark .San Jose

A If you drive 65 mph instead of 75, your gas mileage will increase by 10 percent.

Q I haven't worried about gas prices since I bought my Prius, which regularly gets about 50 mpg. When I'm relaxed, I get about 54 mpg. When I'm intense and drive 75 mph, I get more like 45 mpg. The biggest misconception about the Prius is that people think we have to plug them in. Jill Boone . San Jose

A But . . .

Q The price of crude oil has dropped to under $30 a barrel. So when will we see prices drop at the gas station? Scott Irby. San Jose

A In about a month or so -- if the war in Iraq is over; if OPEC's third-biggest producer (Venezuela) is again cranking out 3 million barrels a day; and if civil unrest eases in Nigeria, the fourth-largest source of U.S. oil imports in January.

Q I wish you would stop beating around the bush about high oil prices -- dwindling supplies, crude oil prices are higher, special blend, because the market will bear it, etc. The main underlying reason for this mess is because the environmental extremist politicians in California insist we use a special form of gas that is limited. You touched on this but did a tap dance around this main cause. Until politicians in California change their extremist attitudes, which don't really help much (look at MTBE), we will always get screwed. It's up to voters to change it by not adopting such anal-retentive environmentalist attitudes. John Formale

A But the reformulated gasoline we use -- first MTBE and now ethanol -- is part of a federal mandate. California didn't want to use ethanol, but Midwest politicians (both liberals and conservatives) were successful in pushing the corn-based additive.

Q I am glad I am not living in Europe, where gas is almost $5 a gallon. Ouch! I feel grateful we're paying $2.17 a gallon. Yes, gas is expensive and so is living here. Next topic. Michael McWalters Alviso

A Right on.

Contact Gary Richards at mrroadshow@mercurynews.com or (408) 920-5335.

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World oil prices fell back on signs of an uprising against President Saddam Hussein in Iraq's second largest city of Basra.

US light crude fell 69 cents to $US27.97 a barrel after a $1.75 jump on Monday.London Brent crude dropped $1.28 a barrel to $US24.81.

The British chief of staff at Central Command battle headquarters said on Tuesday early indications suggested an uprising might have started in Basra.

The reports reversed early gains made as Iraqi forces resisted a US-led military thrust toward Baghdad while tribal violence in Nigeria kept nearly 40% of the country's crude output shut.

Oil fell 25% last week as traders bet on a short war with little damage to Iraq's oil industry. Before the conflict, Iraq exported about 1.7 million barrels per day (bpd) to the 77 million bpd world market.

But confidence in a quick war waned after the weekend as US and British forces suffered casualties and saw slower progress.

Meanwhile, a series of bloody clashes in Nigeria forced closure of just over 800,000 bpd of the 2.2 million bpd produced by Western oil firms in the West African OPEC nation.

Ethnic groups in the oil-rich Niger Delta have said they were battling for a greater share of the country's oil wealth.

Nigeria is one of the top six oil exporters to the United States, where fuel supplies have been running at 27-year lows partly due to an oil workers' strike in Venezuela.

Nigeria, which averaged 560,000 bpd to US refiners last year, where its crude is valued for its high gasoline content, also exports to Europe and Asia.

"Nigerian crude is not the kind of stuff you want to be short of," said Paul Horsnell, oil analyst at JP Morgan. "It's very serious. It's not a little local disturbance."

OPEC said it could make up any shortfall in supply from Nigeria, its fifth largest producer.

The group has also pledged to make up for the disruption to Iraqi exports, but now has only the slimmest of spare capacity cushions.

<a href=www.vicksburgpost.com>More By Sam Knowlton

[3/25/03]Consumers may have noticed slightly lower or at least more stable gasoline prices recently, but a wholesaler and an economics professor see no relation to the war in Iraq.

After approaching record highs, prices have been continued near or above $1.60 a gallon.

“We haven’t had a price change in two or three weeks,” said Catina Freeman, manager of Mac’s Gas, 1920 Drummond St., where today’s price was $1.59. The last change was a 3-cent increase, she said.

A manager at Hill City’s Exxon Jubilee Store No. 114, Mission 66 at Clay Street, said the price there had been decreased a couple of days ago from $1.65 to its current $1.63.

The Gulf Coast average was $1.58.9, down 2.3 cents from the previous week but up 31.4 cents from a year ago, Department of Energy statistics show.

The retail-administration manager at local fuel wholesaler Hill City Oil, Benno Van Ryswyk, said the price his company pays for gas fluctuates daily.

“The last decrease we had was last week,” he said. “I think it’s going to go up again tonight.”

Wholesalers like Hill City, which provides gasoline to several Vicksburg retail stations, respond at different rates of speed to the price increases or decreases.

“I look across the street to my competitor and if he’s going down, I’ll go down,” Van Ryswyk said. “Within a day, day and a half, people come to about the same decisions. They’re economic decisions.”

Van Ryswyk said this morning that he had seen an overnight increase in the price asked by independent oil producers, who deliver the least-expensive gas to Vicksburg, of 3.65 cents per gallon, and an increase of 1.5 cents per gallon in gas from name-brand producers.

Prices charged by the oil companies are strongly influenced by a futures market at the Chicago Board of Trade, he said, adding that trouble spots in at least two other places in the world besides the war in Iraq may have contributed to the recent relatively high U.S. gas prices. The additional factors he mentioned are decreased production in Nigeria and Venezuela.

“Most of the problem is related to problems in the refining sector,” said Professor William Shughart, the Hearon Professor of Economics at the University of Mississippi, adding that American now has less oil-refining capacity than it had in 1970.

“That reduction, combined with growth in demand and balkanization in domestic gas markets caused by variations in environmental regulations from state to state, have been major culprits in the most recent spike” in gas prices,” he said. “As well as an interruption in supply from Venezuela,” which has been experiencing domestic strife in recent months.

The Organization of the Petroleum Exporting Countries has pledged to step up production of oil from Saudi Arabia, he said.

“Even though Iraq is the location of the second-largest known crude-oil deposits, it has been a minor player in world markets because of the embargo, which only the French have violated,” Shughart said.

For gasoline consumers, the end of the winter heating-oil season may be good news, Shughart said.

“A day or two ago we saw a fairly significant decline in the world price of crude oil,” he said, adding that as refineries shift capacity from the production of heating oil to that of gasoline, “that should lead to declining prices at the pump.”3

Reuters, 03.25.03, 2:51 PM ET By Timothy Gardner NEW YORK (Reuters) - Iraq's official oil exports slid 75 percent to 443,000 barrels per day (bpd) in the week ended March 21, after the United Nations effectively shut the country's main oil port by removing personnel ahead of the U.S.-led attack on Iraq, U.N. officials said Tuesday. That was down from the previous week in which official exports were 1.8 million bpd. The loss comes as U.S. stocks are hovering just above minimum operating levels and as a military-tribal clash has slashed exports from Nigeria, a leading U.S. supplier of high quality crude. U.N. Secretary-General Kofi Annan on March 17 ordered the evacuation of all U.N. personnel in Iraq, including "oil for food" program personnel. That has effectively shut shipments from Mina al-Bakr, which normally handles about two-thirds of Iraq's official oil exports. A reduced amount of oil is still flowing via pipeline from northern Iraq to the Turkish Mediterranean port of Ceyhan where tankers can still legally pick up crude. On Tuesday oil flow on the line was 179,000 barrels, down from an average of about 700,000 barrels in February. But few oil companies have been willing to risk buying Iraq's crude in wartime. There were two loadings from Mina al-Bakr and two from Ceyhan in the week. The tanker Caithness completed loading last week at Ceyhan, U.N. officials said. There are no other vessels currently expected at Ceyhan. Storage tanks at the terminal are near capacity. The slide in shipments pushed the four-week rolling average of oil exports down to 1.38 million bpd, compared to 1.7 million bpd last week, which was the average rate for 2002. The average price for Iraqi crude fell to $22.00 per barrel, down $5.60 from the previous week. These figures do not include oil smuggled out of Iraq to Syria, Turkey, Iran or other points.

SAUDI STRENGTHENED Though a crimp in Iraqi exports was expected, it comes when the United States, the world's largest consumer of oil, begins to boost gasoline making to gear up for summer holiday driving season. And clashes ahead of elections in Nigeria between the Ijaw ethnic group and the military has removed 817,000 barrels per day (bpd) there. Combined, the two slowdowns total 2.1 million bpd loss from the 76 million bpd global oil market. U.S. spare crude supplies were 272 million barrels the federal government reported last week, just above the 270 million barrel level industry says is the minimum operating level for U.S. refineries to run smoothly. "As always we have to be concerned about a compound risk," said Tim Evans, senior market analyst at IFR-Pegasus in New York. Top Organization of Petroleum Exporting Countries producer Saudi Arabia has booked 14 tankers to move 29.5 million barrels of crude to the U.S. Gulf for delivery in May to make up for losses from Iraq and Venezuela, where oil production is recovering from a two-month strike. Saudi is one of the few world exporters with spare oil producing capacity. If the Nigerian situation drags on it would remove worries of an oil surplus in the second quarter and strengthen Saudi Arabia's command of the global oil market, said Evans.

<a href=www.timesdaily.com>More.. By BRAD FOSS AP Business Writer March 24. 2003 6:31PM The average nationwide price of gasoline fell nearly 4 cents per gallon at the pump last week, the Energy Information Administration said Monday. The Energy Department's statistical arm reported that regular unleaded gasoline declined 3.8 cents, on average, to $1.69 per gallon. It was the first decline in three weeks as cheaper fuel at the wholesale level appeared to make its way to the retail level, analysts said. The wholesale price of gasoline has declined more than 23 cents a gallon in the past two weeks. On Monday, unleaded gasoline for May delivery finished the day at 89.79 cents a gallon on the New York Mercantile Exchange, rising 4.5 cents. Retail prices dropped sharpest in the Midwest, falling 8.5 cents per gallon on average. On the East Coast, the decline was 2.1 cents and on the West Coast, where prices are highest, the decline was a mere 0.4 cent per gallon. Last week, the average pump price for regular unleaded gasoline reached $1.728, surpassing the record high set in May 2001. Even with the latest decline, retail gasoline still costs 35 cents per gallon more than it did a year ago. Today's high price of gasoline reflects the tight inventories and high price of crude oil, caused by falling imports from Venezuela and fears that a war in Iraq could disrupt supplies from the Middle East. Gasoline prices tend to rise in spring anyway as refiners shut down equipment, scrub it clean and switch from winter- to summer-grade fuel ahead of the peak driving season. That process, known in the industry as "turnaround," causes supplies to temporarily shrink and prices to rise. Because of this seasonal trend, motorists should not anticipate too much relief at the pump in the coming weeks, said Tom Kloza, director of Oil Price Information Service, a Lakewood, N.J., provider of industry data.