sg.biz.yahoo.com Friday March 21, 7:59 PM

PARIS (Dow Jones)--The International Energy Agency, the energy watchdog of the world's richest nations, said Friday it sees no reason to release emergency crude oil stocks, despite the situation in Iraq and civil unrest in Nigeria.

"There is no event in Iraq that makes us fear about a disruption in oil supply," IEA spokesman Pierre Lefevre said, noting that the outage in Nigeria wasn't significant in terms of volume.

Thursday, soon after the U.S.-allied troops launched an invasion of Iraq, the IEA said increased production from OPEC kingpin Saudi Arabia and key member Venezuela, combined with lower demand for heating oil in the U.S., helped to reinforce confidence demand would be met.

The IEA has said they will allow the Organization of Petroleum Exporting Countries, which has pledged to keep markets well supplied if there is any shortfall, to have first crack at supplying customers before the IEA takes a decision to release stocks.

Iraq's oil exports through the U.N. oil-for-food program, normally around 1.7 million b/d, are now virtually at a standstill following the withdrawal of U.N. staff from Iraq Tuesday.

To date ethnic clashes in the oil-rich Niger delta in Nigeria have disrupted over 250,000 b/d of the OPEC member's 2 million b/d output.

-By David Gauthier-Villars, Dow Jones Newswires; 33 (0)1 40 1717 40, david.gauthier-villars@dowjones.com

www.bayarea.com Posted on Fri, Mar. 21, 2003 By Christina Hoag Knight Ridder

As the United States intensified its military assault on Iraq on Thursday, crude oil prices tumbled again to three-month lows in a day of price swings sparked by reports of oil well fires.

Crude oil futures sank for the sixth consecutive trading session, to $28.80 per barrel, a slide of $1.08 from Wednesday.

But during the day, prices swung between a high of $30.60 and a low of $28, volatility caused by U.S. military reports that three or four oil wells in the southern Iraqi field of Rumaila were ablaze.

The market is pricing based on a best-case scenario of a pristine military operation by U.S.-led forces,'' said John Kilduff, energy-risk management analyst at Fimat USA. But the volatility is incredible.''

Experts warned that although the market still anticipates a quick victory for the U.S.-led coalition, oil field sabotage and shipping lane disruption could easily cause prices to skyrocket. Because of that, motorists will see no immediate relief at the gasoline pump.

Gasoline prices remain at near record levels.

Looking better

Things are looking a lot better,'' said Lawrence J. Goldstein, president of the Petroleum Research Industry Foundation. The market is sensing that and we're seeing a reduction in prices, but there will be a lag before we see that in the gasoline on the street.''

Over the past week, the so-called ``war premium'' that has added $5 to $8 to oil prices since last fall has been almost wiped out.

Prices have plunged 28 percent since hitting a 12-year high on Feb. 27 of $39.99 despite the loss of almost all Iraqi production of 2.5 million barrels a day. The United Nations shuttered its Food for Oil program Monday.

``The irony of the situation is that Iraq's exports have been cut off,'' said John Kingston, global director of oil for Platts, an energy information provider.

A similar price plunge occurred in January 1991 when U.S.-led forces launched air raids on Iraq. Oil plummeted by a third from the pre-war escalation that jacked up prices to $41.15 in October 1990 when Iraq invaded Kuwait.

This time around, analysts say other factors besides anticipation of Saddam's easy defeat are softening prices.

OPEC's pledge

The market has been reassured by OPEC's pledge to goose output should supplies be disrupted for a prolonged period, and by the extra one million barrels a day from Saudi Arabia.

The Saudis also said this week that they are harboring a 50 million-barrel emergency reserve. And both the United States and Europe are showing more flexibility about releasing their strategic supplies.

Demand will also start dropping as the Northern Hemisphere moves into spring, and Venezuela's output is ramped up after a crippling workers' strike.

In other good news, U.S. crude stocks, which reached record lows as refiners were drawing down inventories rather than buying supplies at a premium price, are also starting to swell, although they remain at uncomfortably low levels unseen since the 1970s.

Sabotage outside Iraq is also a threat, analysts said. That danger pervades the Persian Gulf, above all at oil installations and shipping terminals.

Muslim fundamentalists can do anything to cut off production in another country,'' said W. David Montgomery, energy expert with Charles River Associates in Washington. Saudi security is really important, there are a lot of internal threats.''

www.kansas.com Posted on Fri, Mar. 21, 2003 Eagle staff and news services

Wichitans expecting to wake up Thursday to higher gasoline prices because of the war with Iraq got a pleasant surprise.

Prices at the pump actually came down some as the price of crude oil dropped.

The average price for a gallon of regular unleaded in Wichita on Wednesday was $1.667, according to AAA Kansas.

On Thursday, many stations were offering gasoline for less than $1.60.

Amanda Millard, spokeswoman for AAA Kansas, said she drove to work on Thursday in Topeka and noticed prices were down from $1.63 to $1.59.

"I think that's a considerable drop for the changes that went on overnight," she said.

Dennis O'Brien, director of the Institute for Energy Economics and Policy at the University of Oklahoma, started to say that the industry will be "nervous" as the war progresses.

But then he stopped himself.

Nervous, he said, doesn't begin to describe what likely will happen with gasoline prices.

"It's going to go berserk," O'Brien said.

Oil well fires in Iraq will "cause the market to jump around," he said.

Indeed, reports of oil fields burning in Iraq sent oil prices jumping and then falling on the first full day of the war, with traders eventually heaving a sigh of relief that only a few wells had been set ablaze.

By the end of the day, oil prices dropped more than 4 percent -- topping off a decline of more than $9 a barrel in six trading sessions.

"Every bit of news is going to get the market moving one way or another," said Allen Mesch, president of PetroStrategies Inc., a consulting firm in Plano, Texas.

"Until reservoirs are destroyed and irreparably damaged, we're dealing with speculation, we're dealing with uncertainty, and we're dealing with people reacting on the basis of very little information," Mesch said.

Crude oil for April delivery hopped between $28 and $30.60 a barrel during regular trading, before closing down $1.27 to $28.61 on the New York Mercantile Exchange's last day for the contract. Oil for May delivery settled at $28.12 a barrel, down $1.24.

The market's largest concerns have been oil-well fires in Iraq and damage to neighboring Middle East countries that could disrupt oil supplies.

Amid those fears, government and industry officials spent the first day of war trying to reassure markets and consumers that global oil supplies would be adequate.

The Organization of the Petroleum Exporting Countries has pledged to cover any shortfalls from a war, even as Iraq's 1.7 million barrels of daily exports dropped to a trickle this week. Iraq pumped about 3 percent of the world's oil last month.

Saudi Arabia, the world's largest producer, started pumping more oil in January to cover a drop in supplies from the Venezuela strike and meet global demand. "All preparations have been undertaken to ensure the flow of supplies," Oil Minister Ali Naimi said in a statement.

www.freep.com March 21, 2003 BY JOCELYN PARKER FREE PRESS BUSINESS WRITER

Though jitters remain about the U.S. war with Iraq, drivers pulling into metroDetroit filling stations have found solace in at least one thing: steady gas prices.

Even with the conflict under way, gasoline prices in Michigan appeared largely unchanged Thursday as some war fears began to subside.

"I'm relieved," said Mark LaGuire, a Saginaw resident who was pumping gas at an Amoco station on Warren in Detroit, where regular unleaded was $1.74 a gallon. "I really thought it would be $2 a gallon today."

AAA Michigan spokesman Jim Rink said he hadn't received reports of gas price gouging in the war's outset. Monday, when AAA released its last survey, the average price of a gallon of self-serve regular unleaded stood at $1.77, up a penny from last week. The Detroit-area average was $1.72, up 0.2 cent from last week.

Crude oil prices have tumbled in recent days on beliefs that the war would bring a quick victory. Also, the Organization of Petroleum Exporting Countries has promised to maximize production to make up for any disruption in crude oil exports from Iraq.

Rink said that after President George W. Bush's ultimatum to Saddam Hussein on Monday, the price of oil fell below $30 a barrel for the first time in months. Last week the cost of crude was hovering near $40 a 42-gallon barrel, the highest it's been in more than two years, on war fears and a petroleum workers strike in Venezuela.

Crude oil for April delivery closed Thursday at $28.61 on the New York Mercantile Exchange. Experts also say the uncertainty about war is gone now that the conflict has started.

"Like the stock market, oil is also traded, and the thing that traders hate is any uncertainty," Rink said. "War brought a level of that certainty back."

More than half the price people pay at the pump is determined by the cost of crude oil.

Matthew Cordaro, a business professor at Long Island (N.Y.) University, said gas prices are likely to fall in about a month, given the fall in oil prices. But a terrorist attack or other unforeseen event could keep prices high.

While prices have stabilized, some Detroit-area motorists remained incensed about the costs.

"I feel like they're still gouging us," said Lana Frank of Wayne, who pumped gas at a Clark station on Rochester Road in Troy. "It's nice to see it's leveling off, but what's making it $1.67?"

Thursday, Michigan Attorney General Mike Cox warned gas station operators against unnecessary increases in gas prices due to the war. Stations found guilty of gouging are subject to $25,000 in fines. After the Sept. 11, 2001, terrorist attacks, 48 stations were required to refund more than $100,000 in overcharges to consumers.

Contact JOCELYN PARKER at 313-222-5391 or at parker@freepress.com. Free Press staff writer MATT HELMS and the Associated Press contributed to this report.

washingtontimes.com March 21, 2003 Ben Lieberman

     Gas prices have surged, as have the demands for the government to do something about it. But only a few of the factors affecting gasoline prices are within federal control. It is these things — particularly taxes and regulations — that should be, but aren't, the focus of efforts to reduce the pain at the pumps.      One factor that is hard for Washington to influence is the market price of oil, which is set by global supply and demand. Strikes in oil-producing Venezuela and uncertainty surrounding Iraq increased the price per barrel of crude by 50 percent since Jan. 1. Unfortunately, episodes of instability in oil-producing regions are unavoidable, as are the resultant price spikes.      Domestic oil has the advantage of flowing free of foreign tyrants and turmoil, but the supply is currently limited to 42 percent of the nation's needs. Allowing production in the Arctic National Wildlife Refuge (ANWR) and other new U.S. sites would only dent, but not substantially reduce, our dependence on foreign crude.      Government efforts to reduce demand have limits as well. Past federal fuel economy standards for cars and trucks have failed to deliver the predicted declines in energy use. Setting stringent new standards would only hurt consumers by forcing them into smaller, less safe vehicles. And, feasible alternatives to petroleum-powered cars and trucks are still at least a decade away, despite many years of federally funded research.      Thus, the price of oil, which is responsible for about 40 percent of the price we see at the pumps, is largely outside of government control. On the other hand, a good chunk of the other 60 percent can be reduced. The most obvious target is taxes, including the 18.4 cents per gallon federal excise tax, as well as state and local taxes averaging 24 cents per gallon.      But rather than consider gas tax relief, Reps. Don Young, Alaska Republican, and James Oberstar, Minnesota Democrat, just announced a proposal to increase the federal tax by a nickel a gallon.      Beyond direct taxes is the hidden tax of federal regulations. This includes reformulated gasoline (RFG), a specialized blend required by federal law in nine major metropolitan areas. RFG currently costs nearly 15 cents per gallon more than already pricey conventional gasoline.      During the summer driving season, refiners face the dual challenge of meeting higher demand while producing fuel that meets the tougher warm weather regulations designed to combat smog. Assuming the cost of crude remains high over the next few months, this summer could be a record-breaker for gas prices.      Here too, Congress is headed in the wrong direction, adding new gas regulations instead of streamlining the existing ones. For example, the pending energy bill contains provisions requiring the addition of ethanol to gasoline. While a boon for Midwestern corn farmers and ethanol producers like Archer Daniels Midland, an ethanol mandate can only increase the price at the pumps. And Sens. John McCain, Arizona Republican, and Joseph Lieberman, Connecticut Democrat, recently introduced a bill designed to fight global warming that would further boost the cost of petroleum and other fossil fuels.      Oil prices fluctuate over time, but the tax and regulatory burden seems headed in only one direction — up. Since Washington created this burden, Washington can also reduce it. If the federal government wants to get serious about dealing with high gasoline prices, this should be the place to start.            Ben Lieberman is the director of Clean Air Policy with the Competitive Enterprise Institute.