www.sunspot.net By Dan Thanh Dang Sun Staff Originally published March 14, 2003

Forget Iraq. Forget the economy. Never mind all the reasons why. So far as motorists in Columbia were concerned, paying $2.02 per gallon for premium gasoline is highway robbery.

So they didn't. Most of them bought regular gasoline at $1.79 per gallon - which still was 8 cents higher than the national average and about 12 cents higher than the average at Baltimore stations.

It's not as if they had a choice, many of them groused. Walking isn't an option.

"We are definitely getting gouged," said Kathy McKinley, 43, principal at Bonnie Branch Middle School in Ellicott City. On a lunch break yesterday at the Mobil station by Long Gate Shopping Center, she shelled out $26 for less than 13 gallons of premium blend. "It's probably going to get worse."

While there's no evidence of price manipulation to feed conspiracy theories, fuel experts warn that the frustration will probably get worse, as pump prices are expected to continue rising.

In its weekly report on retail gasoline prices, the U.S. Department of Energy said Monday that the nationwide average price for a gallon of regular unleaded gasoline rose to a 21-month high of $1.712 a gallon.

Compared with a month ago, the cost of a gallon has jumped 4 cents in Baltimore and 10 cents nationwide. Compare that with the $1.22 average a year ago and prices are 48 cents higher, according to the American Automobile Association's daily fuel gauge report.

California pump prices for gasoline are the highest in the country, reaching $2.127 a gallon for regular-grade fuel this week, AAA reported. Prices in San Francisco reached a record $2.251 for regular yesterday.

"I was in a conference with oil experts this week, and I didn't hear anyone predicting that prices were going to drop anytime soon," said Deborah DeYoung, a spokeswoman at AAA MidAtlantic. "We're going to be breaking records we've kept since 1974 pretty soon. We haven't seen prices this high since the gas crisis of the '70s.

"It will add about $500 more for gasoline this year for the average driver, or about $42 more a month," DeYoung said. "It's not pretty."

No one needs to tell that to Debi Harvey.

While driving to a swim meet in Joppatowne with her two sons a couple weeks ago, the 48-year-old Mary Kay cosmetics saleswoman had to fill up her Ford Escort wagon at an Exxon station near Mountain Road.

"When we got to the gas station, the price was $1.679 a gallon," said Harvey, who fills up twice a week to see clients in Pennsylvania and on the Eastern Shore. "Five hours later, after the swim competition, it was $1.739. It's scary that in five hours, they raised it 6 cents a gallon."

"I am absolutely getting gouged," she added. Experts say the higher prices are not the result of gouging, it is a confluence of negative factors - a lot of bad things happening all at once.

Even though the strike in Venezuela has been resolved, production levels there are still down. There were recent concerns about a potential Nigerian oil strike. A much colder winter in much of the Northern Hemisphere forced refiners to make more heating oil instead of gasoline to keep pace with rising demand. And continuing fears about war in Iraq will keep influencing prices, said John C. Felmy, chief economist for the American Petroleum Institute.

"It's the perfect storm in the world energy markets," Felmy said. "The second quarter typically has lower demand because temperatures are warming up and it's right before the driving season, so that could reduce pressure on the markets. But the question of Iraq is a complete wildcard. The final unknown is the economy. Prices could go either way.

"One can't really tell at this point."

Marylanders might also brace themselves for a possible gas tax increase. With a crushing deficit to deal with and a need to balance the budget, Gov. Robert L. Ehrlich Jr. and the General Assembly haven't ruled it out.

Kevin Van Workman supports that idea, even though he is spending $150 a month to drive back and forth between Columbia and Gaithersburg to work at the National Institute of Standards and Technology.

"I know I'm not supposed to say it, but I've always been a proponent for raising gas taxes to cut down driving," the 28-year-old chemical engineer said.

As for why gas in Columbia is more expensive than in areas such as Towson, where regular gasoline is 11 cents cheaper, station owners say higher rent in their area and fuel increases dictated by corporate parents dictate pump prices.

Barbara Stigler, manager of Long Gate Mobil, wants people to remember that the price increases are not her fault. She knows her prices are higher than others, and she can hear the groans when the price board goes higher.

"Whenever we have to change the prices on the board, I try to make the owner go outside and do it," Stigler said. "You know, just in case he's got to dodge bullets or something."

www.amarillonet.com Web posted Friday, March 14, 2003 5:10 a.m. CT By GREG ROHLOFF grohloff@amarillonet.com

With the price of diesel fuel rising for the eighth week in a row and setting its fourth straight record high, the trucking industry is feeling a pinch that is costing jobs.

The squeeze is not yet showing up in the Consumer Price Index, which measures inflation, but Bob Costello, chief economist of the American Trucking Association, said rising prices for goods hauled by truck is just a matter of time.

The Energy Information Administration said in its weekly update Tuesday that the nationwide average stands at $1.771 a gallon for diesel fuel, or 1.8 cents higher than a week ago.

The highest prices are on the coasts, with the East Coast particularly hard hit because of lingering winter weather driving up demand for home heating oil.

Costello said refiners have been squeezed two ways - the rising cost of crude oil because of political turmoil in Venezuela and the looming war in Iraq, and the increased demand for fuel oil on the East Coast.

Fuel oil, like diesel, is a distillate refining product. When production of home heating oil rises, diesel production declines.

The average price nationwide for diesel a year ago was $1.10 a gallon, with $1.20 a gallon on the coasts, said Rusty Dillon of Groendyke Transport, chairman of the Texas Motor Transport Association's Amarillo chapter.

The Energy Information Administration said diesel costs $2.001 a gallon on average in New England, while the West Coast price rose to $1.886 a gallon.

The Gulf Coast region, which includes all of Texas, was the only region to see a decline this week, the agency said, dropping about a third of a cent to $1.697.

That provides little comfort to truckers Robert and Jerry Branum, operators of Branum Trucking north of Canyon. The company, in operation since 1973, hauls boxed beef and pork and groceries for Affiliated Foods.

Fuel costs for a typical 500-mile haul have risen $60 since diesel fuel prices started rising eight weeks ago, Robert Branum said.

Branum Trucking has collected a surcharge of 8 cents per mile on its loads, but the fuel price increases work out to about 16 cents a mile.

Robert Branum figures that he can operate his trucks about three more months with the current losses. After that, he says, he will park them until the price of diesel fuel falls.

"Everything is about the fuel," he said.

Such a move, though, would be made not from financial weakness, but from strength, he said.

The last time diesel prices rose rapidly, in spring 2001, Branum Trucking operated 25 trucks. Now, Robert Branum said, the company operates six trucks and contracts with seven drivers.

Weaker independents have folded since the May 2001 peak prices, he said.

Since then, earnings have been strong enough to allow the company to wait out the fuel cost increases.

While he pays for the difference in the fuel surcharge and the actual cost increase for his six trucks, the contract drivers are owner-operators who pay for the costs themselves.

Dillon said the larger companies such as Groendyke, which runs 23 tractors from its Amarillo terminal and 850 nationwide, are able to negotiate better terms for a fuel surcharge than independents.

The effects of rising fuel prices have not been calculated, but Costello said the organization estimates that for every 10-cent increase in fuel price, 1,000 failures occur among companies with fleets of five or more trucks.

The toll could be heavier among independent owner-operators, he said.

www.sfgate.com Verne Kopytoff, Vanessa Hua, Chronicle Staff Writers Friday, March 14, 2003

Gov. Gray Davis ordered an investigation Thursday into soaring gasoline, diesel and natural gas prices, questioning whether the oil industry is engaged in illegal profiteering.

Davis asked the California Energy Commission and the state's Public Utilities Commission to examine what he called unexplained price spikes. He suggested that the sticker shock consumers are feeling at the pump and from their heating bills may actually be due to manipulation and a deliberate withholding of supplies.

"The prices are extraordinarily high and don't need to be," Davis said in announcing the investigations at a meeting in Sunnyvale of the Silicon Valley Manufacturing Group, a technology trade association.

The Energy Commission and the PUC are expected to report back to the governor within 15 days. If the commissions discover anything suspicious, the information could be referred to state Attorney General Bill Lockyer for further investigation and possible prosecution.

The governor's call for investigations into fuel costs coincides with gasoline prices hitting all-time highs across the state. A survey this month by the AAA of Northern California shows that the average price for a gallon of regular unleaded Thursday in San Francisco was $2.25, up 71 cents from a year ago.

Natural gas prices are also spiking. An average Pacific Gas and Electric Co.

customer will pay $69.27 in monthly gas bills for March, about 80 percent more than a year ago.

GOUGING DENIALS

John Felmy, an economist for the American Petroleum Institute, the oil industry trade group, rejected the notion that drivers are being gouged.

Increases in gasoline prices, he insisted, are a consequence of a "perfect storm" of factors ranging from tensions in Iraq to a strike by workers in Venezuela to extra costs associated with California's switch of the smog- reducing fuel additive MTBE to ethanol.

"This is the market at work," Felmy said.

His comments echo what natural gas suppliers are saying. They blame the high prices on a cold winter in the East Coast, in addition to the other factors affecting gasoline.

The rising fuel prices in California elicit obvious comparisons to the state's past electricity crisis in 2000 and 2001, after which suppliers and middlemen were found to have manipulated the market. Davis, who faced stinging criticism for his initial handling of that situation, cast himself as an aggressive consumer advocate this time around.

"As we well know from past experience, many energy companies would rather use Enron-style tricks to fuel their bottom lines, than to fuel California homes and businesses," Davis wrote. "These companies have no qualms about using world events, such as the Venezuelan oil strike and an unusually cold winter on the East Coast, to their advantage."

Felmy, the petroleum industry economist, gave a emphatic response: "It's simply disappointing for the governor to say we're using Enron-style tricks. To lump us in with those well-known problems is unacceptable."

Over the years, the oil industry has been investigated by at least two dozen local and state governments related to price manipulation. Felmy said that it has yet to be found guilty.

On Wednesday, the Energy Information Administration, an arm of the federal Department of Energy, said in a weekly report that it believes the current spike is driven by market forces, not gouging.

Sen. Barbara Boxer, D-Calif., has asked the General Accounting Office to look into the price increases. Other senators have asked the Federal Trade Commission for a similar inquiry.

California is among those governments that have pursued the oil industry. In 1999, Lockyer began an investigation of gasoline price spikes after a particularly strong episode here.

He ultimately reported that California was highly susceptible to a volatile fuel market due to a limited number of companies owning the vast majority of refinery capacity.

He also said that the state's requirement for a special clean-burning fuel blend made gas imports difficult to get in times of need.

No criminal or civil charges were brought against the oil industry by Lockyer. The investigation is still open, according to Tom Dresslar, a Lockyer spokesman.

"We'll be happy to take whatever evidence or information the PUC or Energy Commission come up with as part of their investigation," he said. "We haven't found anything yet, but that doesn't mean it doesn't exist."

Davis vetoed a part of a state Senate bill that would have given the attorney general $1 million to investigate the oil industry in 1999.

Gabriel Sanchez, a Davis spokesman, said the governor merely thought the attorney general's office could do the investigation with existing funds.

"He does want to get to the bottom of things," Sanchez insisted. "It shows that even back in '99, he was just trying to be a very good fiscal manager."

Davis has accepted $1.27 million in campaign contributions from the oil and gas industry since 1997, according to the National Institute on Money and State Politics, a political watchdog group. Lockyer has received $279,562 in similar contributions during that time, according to the the institute.

HARD TO PROVE

At the event in Sunnyvale Thursday, Davis acknowledged that proving an antitrust case against the oil industry will be difficult. But he added that an industry's high prices tend to moderate or go down when that industry is being investigated.

"Do I have proof, any evidence?" Davis said of the possibility of fuel prices being manipulated. "No. But as governor, I have an obligation to do something about it. Prices do not just go down, and that is my goal, whatever the reason."

Robert Pringle, head of antitrust matters for the Thelen Reid & Priest law firm in San Francisco, said of Davis' call to arms Thursday: "It's highly political. If the government doesn't do anything, it looks like they're not doing their job."

One wrinkle mentioned by Sandy Litvak, an attorney for the Quinn Emanuel law firm in Los Angeles, is that drivers will have to wait a long time before even a successful case against the oil industry pays off.

"It's too difficult to prove," Litvak said. "And if it was really the case, it would be decided four years from now -- a lot of good that will do."

Still, consumer groups praised the governor.

''Consumers feel bent over the oil barrel," said Charles Langley, who oversees the gasoline price issue for the Utility Consumers' Action Network in San Diego. "People need to know, are we paying a fair price or not?"

WHAT THEY DO

California Energy Commission: Oversees energy planning and policy. Duties include forecasting the state's energy needs, advocating energy efficiency and keeping historical energy data such as prices, production and consumption.

California Public Utilities Commission: Regulates natural gas, electricity, telecommunications and private water suppliers. Sets rates and rules for utilities; monitors complaints.

E-mail the writers at Verne Kopytoff at vkopytoff@sfchronicle.com and Vanessa Hua at vahua@sfchronicle.com.

www.thestar.com Mar. 14, 2003. 01:00 AM RICHARD VALDMANIS REUTERS NEWS AGENCY

NEW YORK—World oil prices plunged yesterday as wrangling at the United Nations further delayed a vote on a new resolution that could pave the way to war with Iraq.

U.S. light, sweet crude dropped $1.82 (U.S.), or 4.8 per cent, to $36.01 a barrel in New York. London's benchmark Brent crude oil slid $1.44 to $32.47.

Oil prices are still up roughly 12 per cent this year, underpinned by concerns that a war in Iraq, which ships around 4 per cent of world oil exports, could upset supplies from other producers in the Middle East.

A report that Japan, Asia's largest oil consumer, may sell 300,000 barrels per day from its emergency petroleum reserves if U.S.-led forces invade Iraq added to the day's slide, oil dealers said.

Prices slumped after the White House said diplomatic efforts to secure a consensus at the United Nations on a new resolution on Iraq could spill over into next week.

U.S. Secretary of State Colin Powell told a congressional committee there may be no vote at all on the resolution, widely seen as a war trigger. Some see that as a sign Washington fears it may not get enough support at the international body to lead a war against Iraq.

A German government source said in an interview that a compromise on an Iraq proposal was unlikely, even if a vote in the U.N. security council is put off until next week. France has threatened to veto any resolution that would call for military force, and China, Russia and Germany have all expressed opposition.

Further relief from soaring oil prices came from an end to freezing U.S. temperatures that have supported heating oil prices at near-record levels in recent weeks.

Prices had jumped on Wednesday as a fall in U.S. stocks combined with worries that the Organization of Petroleum Exporting Countries would not be able to compensate for lost Iraqi exports in event of war.

The latest U.S. data showed crude inventories at a 27-year low. Sharp drops also hit gasoline inventories, which ought to be growing to accommodate the summer driving season. Analysts say core oil stocks are now 89 million barrels below normal.

"Given the reported ramping of OPEC production and the continued recovery of Venezuelan production, the shortfall is shocking," SG Securities said in a research note.

The OPEC cartel has stepped up output this year to cover the lack of crude from Venezuela, where an anti-government strike brought production to little more than a trickle in December and January.

Venezuela, normally the fifth-biggest exporter, providing about 13 per cent of U.S. oil imports, has since increased shipments of crude and oil products, although rebel oil workers say production is still less than half of normal amounts.

Analysts say timing is now key for a war in Iraq because oil demand is generally 2 million barrels a day lower in the second quarter of the year as spring advances, and the loss of Iraqi crude would not be as acutely felt.

The International Energy Agency, a Paris-based energy watchdog for industrialized countries, has said OPEC probably doesn't have enough production capacity to compensate immediately for the loss of Iraqi and Kuwaiti oil.

OPEC, however, has pledged to guarantee supplies if war breaks out.

Saudi Oil Minister Ali al-Naimi reiterated yesterday that OPEC can deliver more oil in case of war in Iraq.

The Nihon Kezai daily newspaper reported yesterday that Japan will consider releasing oil from emergency reserves with the United States.

www.sun-herald.com 03/14/03

NORTH PORT -- The rise in gas prices has led to troubled budgetary times for some local charities.

Dan Dunn, executive director of the All Faiths Food Bank said that his charitable organization, which drives supplies to churches and other nonprofit food pantries throughout Sarasota County, allotted $900 for fuel in February and spent $1,200.

Dunn said the spike in gas prices, exacerbated by the oil strike in Venezuela and the potential war with Iraq, has left the charity in the unenviable position of having to mount fund-raising efforts at a time of widespread economic downturn.

"In a budget crunch, you either increase revenue or cut services," Dunn said. "In our business, you can't cut services. We have to deliver food to hungry people."

Patsy French, spokeswoman for Goodwill Industries-Manasota said that charity spent $55,000 on fuel, including gasoline and diesel fuel, in 2002. Through February, she said the organization has seen a 20-percent rise in fuel costs compared to the first two months of 2002.

"If we're looking at that over a year, that could increase our prices by $10,000 to $12,000," French said. "That's a lot of program money."

French said at Goodwill, all programs and operational costs, such as fuel, are self-funded. Because of this, when more money goes to fuel costs, she said there is less funding for the organization's housing, educational and job training and placement programs. She said so far this year, donations are up six percent over the same time period last year, but the increase is not nearly enough to cover the rise in gas costs.

John Wrublevski, president of North Port's Friends In Service Here said gas costs have further aggravated that charitable organization's shortage of volunteer drivers. Wrublevski said FISH, which chauffeurs local residents who cannot drive themselves to doctor's appointments and grocery stores, has had to do some budget tightening to keep serving the community. He said the group has had to ask drivers to volunteer one day a week without any reimbursement, cut mileage reimbursement from 25 cents a mile to 15 cents a mile, and informed the residents the volunteers can only transport them to one doctor's appointment each week.

"The gas thing has presented a serious problem," Wrublevski said. "Right now, people are telling us that it costs them more for gas than we are paying them. We've lost a few drivers who say they can't afford this."

While Meals on Wheels volunteer drivers do not see any mileage or gas reimbursement, the directors of the Venice and North Port chapters said they have not seen fewer volunteers because of the rising gas costs. Norman Miller, executive director of the Venice Meals on Wheels said that chapter currently has 140 drivers. But Miller said the U.S. military build-up around Iraq, a portent of a war which could drive gas prices higher, is a cause of concern.

"If we have a war over there, we'll have a problem," he said.

Charities may be contacted at the following phone numbers:

North Port Goodwill (941) 423-0987 North Port FISH (941) 426-4114 All Faiths Food Bank (941) 379-6333 North Port Meals on Wheels (941) 426-4628 Venice Meals on Wheels (941) 488- 1889

You can e-mail Chris Curry at ccurry@sun-herald.com By CHRIS CURRY Staff Writer