www.thevictoriaadvocate.com March 22, 2003 THOMAS DOYLE Victoria Advocate

Gasoline prices could come down significantly in the next two to eight weeks, one analyst said.

Oil prices have fallen from around $38 a barrel on March 12 to just under $27 a barrel at the close of business Friday, said Doug MacIntyre, senior oil market analyst with the Energy Information Administration, a branch of the U.S. Department of Energy.

The market is foreseeing improvements in the supply and demand situation after war with Iraq, he said, which is putting downward pressure on oil prices.

"Until something happens to shake that perception in the market, we are likely to see prices stay relatively low where they are now," MacIntyre said.

A drop of a dollar in crude oil prices equates to about a 2.4-cent drop at the retail gasoline pump, he said. The drop seen so far should translate to about a 26-cent drop in retail gas prices, he said.

However, MacIntyre cautioned that there are still many uncertainties concerning the oil market, and things could easily change.

Oil prices, and as a result gasoline prices, jumped earlier this year as oil supplies were reduced because of labor disputes in Venezuela. The threat of war with Iraq further inflated prices.

MacIntyre explained gasoline prices have remained high because retail prices are based on the average oil price over a period of time. Current retail gasoline prices still include the higher oil costs seen earlier this month.

The average price for self-service regular unleaded gasoline in Texas rose a half-cent this week to $1.613 a gallon, according to AAA Texas' weekly fuel price survey.

Increased output from Saudi Arabia has reached the American oil system, said Mary Rose Brown, a spokeswoman for oil company Valero Energy, and a large amount of oil is on the way.

The increased supply is also forcing U.S. crude prices lower and should be reducing gasoline prices soon, she said.

In addition, Venezuelan exports continue to increase closer to pre-labor strike levels, said Mike Shanahan, spokesman for the American Petroleum Institute.

"So the result is the demand pressure that had been affecting prices seems to be lessening some," he said.

"We're still waiting for there to be some downward movement (in gas prices)," said Paul Gonzales, a spokesman for AAA Texas.

Even so, people shouldn't let uncertainty lead to a gas panic, he said.

"There is ample supply to meet our normal demands for gasoline. This is nationwide," Gonzales said. "If people panic-buy it is going to cause artificial shortages and make prices go up. Just buy gas when you normally buy gas and everything will be fine."

Tesoro needs the money Howard Dicus   Pacific Business News

Tesoro Petroleum Corp. has told the Securities and Exchange Commission that the recent oil price situation, so clearly a bad news story from the point of view of consumers and businesses that rely on fuel to transport their goods, is much-needed good news for the owner of one of the two refineries on Oahu.

In its 10-K filing Friday to the SEC, Tesoro told the same story we've all heard before, but from the point of view of a debt-ridden petroleum refining and marketing company that can use higher revenues to reduce that debt and perform useful capital improvements on its refineries.

"The prices of crude oil and refined products have fluctuated substantially in our markets. Our operating results can be significantly influenced by the timing of changes in crude oil costs and how quickly refined product prices adjust to reflect these changes," Tesoro said.

"These price fluctuations depend on numerous factors beyond our control, including the demand for crude oil, gasoline and other refined products, which is subject to, among other things, changes in the economy and the level of foreign and domestic production of crude oil and refined products, worldwide political conditions, threatened or actual terrorist incidents or acts of war."

During 2002, Tesoro said, it experienced the lowest refined product margins since 1998. Demand for jet fuel plummeted after 9/11, and the winter of 2001-2002 was mild, reducing demand for heating oil as well.

When there is less demand for those fuels, refineries devote more capacity to gasoline. But when there's more gasoline, it gets cheaper. Margins fall for refineries. This happened for Tesoro right after it had spent big money acquiring more refineries on the mainland.

Even when crude oil prices began to climb in 2002 because of the Iraq crisis and a general strike in Venezuela, retail prices were slow to catch up and margins actually fell some more at first.

But now the story takes a turn in a more positive direction, at least from the point of view of a refiner.

The prices charged by refiners began to catch up. And the winter of 2002-2003 was really cold. Heating oil demand soared, and to meet that demand by making more heating oil, refiners made less jet fuel and gasoline.

"We believe the industry conditions that led to low margins in 2002 have improved," Tesoro said. "The winter in the Northeast has been extremely cold in 2003, increasing demand and margins for distillates throughout the country. Jet fuel demand has slowly improved and now approaches pre-September 11, 2001 levels. Gasoline supply is expected to tighten."

There's your happy ending...provided you're a refiner.

Postscript: Tesoro said in the same Friday filing that it intends to spend several million of the dollars it hopes to make on improvements to its refinery on Oahu.

Industry experts say Iraq war unlikely to cause shortage 3/21/03 By KEITH CLINES Times Staff Writer kclines@htimes.com

Long lines of cars waiting to get gasoline is an image from the past Gulf War, not the one that started Wednesday night.

Afternoon rush-hour business Thursday was quiet at the Exxon convenience store on Governors Drive near Huntsville Hospital.

"There's not been a rush,'' said clerk Sherrie McKinley. "Most of the regulars filled up instead of getting $5 or $10 worth."

Outside at the eight pumps, the average was two customers at a time. There were moments when no one was buying.

Wanda Jones of Guntersville stopped for a few dollars worth before heading home. She was surprised not to find a line at the station, which was selling regular unleaded gas for $1.699.

"I'm not afraid of not getting any gas," she said. "I just want to find the cheapest."

Should war stop the flow of crude oil from Iraq, Americans would have little problem getting gasoline for their cars and trucks, a state expert said Wednesday.

"I don't see any reason for panic buying,'' said Dr. Peter Clark, associate professor of chemical engineering at the University of Alabama. "There is no hint of a shortage."

Iraq can produce about 2 million barrels of crude oil daily, or about 3 percent of world production. Saudi Arabia and Qatar have increased production to ensure an adequate supply, and Venezuela is increasing its output to make up for a two-month strike that shut down its oil exports.

Oil futures on the New York Mercantile Exchange have grown steadily over the last two months as traders faced the uncertainty of war in the Persian Gulf. The futures prices hit $39.99 a barrel on Feb. 27, the highest price since October 1990 when the price rose to a record $41.15 a barrel the day after Iraq invaded Kuwait.

But President Bush's ultimatum to Saddam Hussein this week and the beginning of the war Wednesday night actually calmed fears. Thursday, oil futures fell on the belief that the war would be short with limited disruption of supply from the Middle East. The futures price was $35.32 a barrel last Friday. By Wednesday the price had fallen to $29.88, and oil ended trading Thursday at $28.61.

Those drops won't immediately show up at the pumps, although the average local price for a gallon of unleaded dropped from Wednesday to Thursday, according to AAA Alabama's fuel survey. The average price in Huntsville on Wednesday was $1.692 and was $1.690 Thursday.

A check of some Huntsville restaurants Thursday night also revealed typical crowds, despite the war in Iraq.

At Applebee's Neighborhood Grill &Bar, 2028 South Memorial Parkway, manager Robby Barnes said during the evening dining time the crowd at his restaurant was normal for that day of the week. "It's been about the same as it usually is," he said around 8:15 p.m.

The TV sets were tuned to war coverage, he said, but the telecasts were not drawing an especially large amount of attention from the patrons.

"We have CNN on and people are looking up at it now and then. It doesn't even appear to be a big topic of conversation," Barnes said.

Dave Montgomery, manager of Ruby Tuesday's at Madison Square Mall, also reported business as usual.

"The evening started out a little slow and at first I thought we were going to have a slow night, but around 7:45 people began coming in. The numbers were about typical for a Thursday night," Montgomery said. The restaurant has several TV sets and all but one were tuned to war coverage, he said. One was tuned to sports channel ESPN, but nobody was watching it.

The Steak Out location at 2105 Whitesburg Drive specializes in home delivery, customers stop there for carry-out orders. Assistant manager Darla Mayo said, "We have about the same for a Thursday night. We've got the news about the war on TV and people are watching it."

Times staff writer Howard Miller contributed to this report.

Gas prices predicted to drop

www.chicoer.com By LAURA URSENY - Business Editor

Few in the gasoline industry will guess what drivers might be paying at the gas pumps, but there seems to be an indication it will be lower, even with the latest events of the Middle East.

Some indication that prices would go down came on Thursday when the price of crude dropped. It reportedly went up slightly when news that a handful of Iraqi oil wells were on fire.

Talking about the high spikes of the past month, Warner Petroleum general manager Garth Strick said, "We're thinking around here that gas prices went up because of the expectation of war and a couple of other things." Warner distributes Chevron and CFN gas and products.

An automobile association survey of California's gas prices showed that Chico had about the lowest, at an average of $2 a gallon. In January, the average per-gallon price was $1.47.

Ultimately Strick believes the price will drop, maybe as low as the $1.60 to $1.80 range, but not until the fall because of the expensive conversions to MTBE-free gasoline.

"But we're not going to see it in the double digits like we did last year."

California struggles with gas price influences different than most other states, including high taxes and environmental regulations.

Part of that steep hike was rooted in state regulations that puts an end to use of MTBE, which has been blamed for groundwater pollution.

Nevertheless, while it suffered from the most dramatic leap in prices, Chico still enjoyed the state's cheapest gas prices for several weeks, according to California State Automobile Association.

According to AAA, Chico residents still saw gas prices averaging $2 a gallon, lower than any other city's average, according to AAA.

Though higher than in the past, Strick said he doesn't hear people complaining much about them.

"Higher gas prices is something we're getting used to."

Chico's lower prices than state averages has been attributed to the community's abundance of gas stations.

"I won't even try to guess prices. We just don't do that," said Dave Fogarty, spokesperson for Western States Petroleum Association in San Francisco.

But he noted the price of crude had come down about $9 a barrel.

Fogarty said there was good reason for the escalating gas prices in California, including the expectation of war, the phasing out of MTBE in California and retrofitting for the use of ethanol.

A labor strike in Venezuela, crippling the supply, also has had an impact, he said, as well as refinery maintenance.

Drivers everywhere in the United States are experiencing higher prices for gas, but California's circumstances made the higher prices climb more. Also adding to the cost drivers pay at the pump are California's gas taxes, which amount to about 50 cents a gallon.

"The future? No one knows. What we're watching on our television screens over the next few days will help determine the cost of crude oil," said Fogarty.

While oil wells may be burning, Strick said a quick strike against Iraq and Saddam could produce a faster drop in prices.

Neither man believed that Gov. Gray Davis' investigation into the state's gas prices would have an effect.

"There have been many investigations - about 25, with the most recent released on March 12 - that showed the gas marketplace is competitive and nothing unlawful is occurring," Fogarty said.

As far as lowest pump prices in Chico, Safeway club card holders probably enjoy the distinction.

Safeway club card holders probably enjoyed the lowest price in town at $2.029 a gallon for regular. Lines lengthened at the Mangrove Avenue gas station with drivers attracted to the card price of $2.029 and noncard price of $2.059.

www.wbbm780.com Friday, March 21, 2003, 7:28 a.m. By HERBERT G. McCANN Associated Press Writer CHICAGO (AP) -- Gasoline prices in Illinois have leveled off after rising sharply over the winter on fears of a U.S. attack on Iraq, according to AAA Chicago Motor Club. War has come, and despite the high prices, motorists continued to fill up Thursday, with some saying they will not stop using their cars no matter how high gasoline prices rise. "Like food, you have to pay for it," said CPA Russ Cook as he pumped gasoline at a Loop service station where regular unleaded gasoline cost $1.94 a gallon. "No matter how high gasoline prices go, it won't stop (my) driving." Statewide, the price of regular unleaded gasoline averaged $1.74 a gallon, about 48 cents higher than last March, said Steve Nolan, spokesman for the AAA-Chicago Motor Club. The average nationwide is $1.71 a gallon. Gasoline prices across Illinois varied widely, with regular unleaded averaging $1.78 a gallon in Chicago, $1.59 a gallon in East St. Louis, and $1.62 a gallon in Springfield, according to a survey by AAA-Chicago. Prices in Illinois have been high all winter due to fears of war and because of the cutoff of crude oil production in Venezuela. On Wednesday, U.S. and British forces began bombing Iraqi positions ahead of the movement of ground forces into Iraq. "There is no sign of panic buying by consumers or panic selling by dealers," Nolan said. The AAA and the petroleum industry issued a joint statement Thursday saying the nation's oil and natural gas industry is working hard to ensure supplies of fuel will continue uninterrupted. The statement said gasoline and diesel fuel inventories are adequate to meet normal demand and refinery production remains strong. "Hopefully, the statement would put people at ease," said Nolan. The Organization of Petroleum Exporting Countries sought to calm oil markets by announcing its members will maximize output to make up for any disruption in crude exports from Iraq. Eugene Frimpong, a pharmacy student from Ghana, and a taxi driver for five years, says current gasoline prices are hurting his bottom line. Frimpong also said due to the economic slowdown, he has to work real hard to find customers in the Loop, and a decline in travel has slowed business at Chicago's O'Hare International Airport.