www.ohio.com Posted on Thu, Mar. 06, 2003

Last time I checked, the highest gasoline price in the country was in Kailua Kona, Hawaii.

The lowest price was in Tacoma, Wash.

The average across the United States was $1.71.

Our local price is hovering around a buck-sixty, and this is one instance when I'm perfectly fine with Akron being slightly below average.

Now, I have never been to Kailua Kona, but I imagine it is a very sunny place.

I have been to Tacoma and Akron, and both are very cloudy places.

So, based on this admittedly incomplete research, I'm proposing a trend: You live in a place with nice weather, you pay more for gas. You live in a place with lousy weather, you pay less.

I would like to prove this theory, but my request for a fact-finding mission to Kailua Kona was denied.

And of course I realize it doesn't hold any water. Logic says that the quality of the weather has nothing at all to do with the price of a gallon of regular.

But when you're talking about gas prices, logic doesn't seem to be part of the equation.

Depending on whom you ask, the spike is the result of the political unrest in Venezuela. Or it's the prospect of war with Iraq. Or it's the unusually harsh winter. Or it's good old-fashioned gouging.

If it were summer, they'd say it's the vacation driving season. When it's winter, they blame the cold.

The fact that there are so many different answers suggests that there is no real answer. Gasoline is a mystery to most of us, falling into that category of Mysteries We Can't Control that also includes long- distance rates, telemarketers and the kid in second grade who ate paste.

I don't know how to fight back, but I also know I don't have the stomach to pay $30 for a tank of gas. So I just keep buying half tanks twice as often, on the theory that some other mystery will sweep in and bring the prices back down before my next fill-up.

This theory has thus far proved unsatisfying.

I keep getting the little orange gas pump-shaped light on the instrument panel, taunting me like the Venus flytrap in Little Shop of Horrors: ``Feed me.''

So I pull into the station, swipe my card and stand there in that oily slush, my collar turned up against the cold, watching the dollar numbers on the pump run laps around the gallons numbers. When I get to half a tank, I quit, fooling myself that I have beaten the system.

It's an old story that we are victims of our own progress. Automobiles have made vast improvements in our lives, but they also have made themselves indispensable. Same goes for the Internet, cell phones and premium cable channels.

Every month we get bills for these things, reminding us that we are in a vicious cycle. We have to work harder to pay for all the things that were supposed to give us easier lives.

Slowly, they whittle away at us. Collectively, they're like the tiny orange gas pump on the dashboard. We try to ignore them, but at some point, we have to cave in and pay the price or we're not going anywhere.

I have heard people say that the minute we start dropping bombs on Iraq, gasoline prices will fall. I have heard others say just the opposite. Neither prospect makes me feel very good about dropping bombs on Iraq.

But something will happen, and the world will settle down. And when it does, gasoline prices will follow.

Then we'll be left with a new set of questions:

Do we quit worrying and go back about our business?

Or do we realize for once that we have gotten too comfortable with lives that are dangerously complicated by ``mysteries''?

I'm not sure I want to know the answer. But I wouldn't mind a few weeks in Kailua Kona to figure it out.

David Giffels' column appears Tuesday, Thursday and Sunday. He can be reached at 330-996-3572 or at dgiffels@thebeaconjournal.com.

www.detnews.com Thursday, March 6, 2003 By Mike Hudson / The Detroit News WASHINGTON -- The Federal government may have helped drive oil prices up $10 per barrel last year by hoarding millions of barrels for the Strategic Petroleum Reserve, said a Senate subcommittee report released Wednesday. Oil industry experts questioned those findings. President Bush ordered the U.S. Department of Energy to begin filling the nation's oil reserves in early 2002 to prepare for a possible war in Iraq and to deal with the general uncertainty in world oil markets after Sept. 11, 2001's terror attacks. The government created the reserve in the 1970s to stockpile oil in case of supply disruptions overseas. But in the process of stockpiling oil last year, Bush created a shortage on world markets that helped push prices up, said U.S. Sen. Carl Levin, D-Mich., who chairs the subcommittee that published the report. "The government established the (Strategic Petroleum Reserve) to protect U.S. consumers from a major oil shortage and the damage caused by high oil prices," Levin said. "But in the past year, the Department of Energy's management of (the reserve) has inflicted a lot of pain on U.S. consumers." Indeed, oil prices have soared during the past four months, jumping from $26 per barrel in November to more than $36 per barrel today. Levin's report said the Department of Energy's policy cost American consumers between $500 million to $1 billion in higher energy costs. But oil analysts say the Levin report vastly overstates the impact of the Strategic Petroleum Reserve and its effect on global prices. Fadel Gheit, oil analyst for Fahnestock & Co. in New York, said the labor strike among oil workers in Venezuela, cold weather in the Midwest and Northeast and tensions in the Middle East are the culprits in higher petroleum prices. The United States consumes 20 million barrels of oil per day out of the worldwide production of 70 million barrels per day, Gheit said. The Strategic Petroleum Reserve is limited to adding only 100,000 barrels per day making it insignificant to global oil prices, he said. "The (reserve) adds 100,000 barrels a day, which is a drop in the bucket," Gheit said. "A traffic jam for a few hours in New York can eat up almost as much as what they add to the reserve." Furthermore, the DOE decided to halt additions to the reserve when the Venezuelan oil strike began in early December. So any impact on prices is already being addressed, said Chip Hodge, oil analyst and managing director in the Bond and Corporate Finance Group of John Hancock Financial Services in Boston. You can reach Mike Hudson at (313) 222-2293 or mhudson@detnews.com.

www.lumberjackonline.com Terra Cole March 06, 2003 Gas prices have been climbing a mountain-a mountain that has the potential to be as lofty as Mount Humphreys. The U.S. average retail price for regular gasoline rose for the 10th straight week Feb. 20, increasing to the highest price since early June 2001. The 10-week increase was more than 30 cents per gallon. Between Feb. 3 and Feb. 10, the U.S. average retail price for regular gasoline rose by 8 cents per gallon, tying the largest weekly increase, since the Energy Information Administration began surveying in 1990. The retail price is now 54.5 cents per gallon higher than a year ago, according to the Energy Information Administration. According to the Department of Energy, the drastic price increase is due to a decreased supply of petroleum. The Organization for Petroleum Exporting Companies has lowered production, which affects gas, diesel and residential heating prices. Along with OPEC’s lower production, a labor strike decreased Venezuela’s production in early December, which was the fourth-largest exporter of crude oil to the United States in November. Worries over the possible war in Iraq have also sparked lofty oil prices, according to the Department of Energy. Cesar Lizarraga, the owner of Texaco on Milton Avenue for 15 years, has noticed a trend in gas consumption during a war. “To the best of my knowledge, when war breaks out, prices get worse,” Lizarraga said. He remembers gas prices rocketing to $1.99 during the Gulf War, he said. With the anxiety of war, gas prices are not expected to get better, according to the Energy Information Administration. Crude oil inventories in the United States are now at their lowest level since 1975, and the United States has its lowest average inventory of barrels per day since January 2000. Jeff Irwin, the manager of Varsity Gasser on Milton, is not concerned increased prices will hurt his business. “Gas prices could go up $4 and people would still buy it,” he said. Irwin, who once lived in Hawaii where some residents paid more than $2 per gallon, said price does not seem to affect consumption. “It (higher prices) didn’t stop them and isn’t going to stop them,” Irwin said. Fisher said she agrees higher gas prices do not necessarily mean less demand. “The people who can afford it, will,” Fisher said. “They’ll probably continue to fill up their snowmobiles and yachts too. I think as long as there are gas and humans on the planet, we will use (gas) ‘til the last drop is gone, or until we are all dead fighting for it.”

www.stltoday.com By Patrick L. Thimangu Of the Post-Dispatch updated: 03/06/2003 06:47 PM

The average price of gasoline in St. Louis jumped more than 8 percent Wednesday, in sync with the volatility that has rocked U.S. energy markets for the last month.

The average price of a gallon of self-serve unleaded regular in the metro area rose to $1.68, from $1.55 on Tuesday, according to AAA Missouri.

Gasoline prices have been rising in the last year nationwide, but they shot up last month when crude-oil prices came close to $40 a barrel. The run-up was sparked by worries about war in Iraq and low production in Venezuela, a major oil exporter that has had labor and political problems.

Demand for energy to heat houses and businesses also has been high, because of the cold winter.

The spike in crude-oil prices also showed up at gasoline pumps in St. Louis, where a gallon of regular unleaded rose to $1.72 on Feb. 13. Gasoline had never been that expensive in the region at this time of the year, said Mike Right, who compiles a regular survey of prices at gas stations in south and west St. Louis County for AAA.

Area gasoline prices reached the record high, $1.77 a gallon, on May 17, 2001, he said.

In some parts of the nation, gasoline prices passed $2 a gallon last week. On Wednesday, a gallon of gasoline was selling for an average of $1.97 in California and $1.50 in Georgia, according to GasBuddy Organization Inc., a nonprofit group that tracks gasoline price trends across the United States and Canada.

Jason Toews, co-founder of GasBuddy, said prices in St. Louis have mirrored trends in other U.S. cities in the last few weeks.

He said crude-oil prices are falling - crude oil for April delivery closed at $36.69 Wednesday on the New York Mercantile Exchange - but that doesn't mean prices at the pump will drop immediately.

In fact, the increase in retail prices now could be the result of last week's futures run-up, Toews said.

"We are seeing prices go up all over the country," he said.

Toews said gasoline prices are likely to remain volatile in coming weeks because many refineries have started switching to summer blends. The change temporarily squeezes the gas supply.

While gasoline prices may seem high in the St. Louis region and the rest of the nation, they are cheaper than two decades ago if inflation is taken into account. Gasoline also is more affordable than in Europe.

According to the American Petroleum Institute, a trade group, average gasoline prices in the United States are 39 percent lower than the 1981 inflation-adjusted high of $2.70 a gallon. The institute estimates the real cost of gasoline to consumers has fallen $1.05 a gallon in the last two decades.

The Energy Information Administration, the data-collection arm of the Energy Department, said the average price of premium gasoline in the Netherlands was $4.92 a gallon, $4.47 in Germany and $4.43 in Belgium during the week ended Feb. 24.

The average price for premium gasoline in the United States that week was $1.84.

Reporter Patrick L. Thimangu: E-mail: pthimangu@post-dispatch.com Phone: 314-340-8320

www.guardian.co.uk Thursday March 6, 2003 12:20 AM

WASHINGTON (AP) - President Bush ordered a rush of oil into the government's Strategic Petroleum Reserve after the Sept. 11 attacks, and the Energy Department stopped its practice of holding off shipments to the reserve when prices got high or supplies got tight.

A report by Senate Democrats Wednesday maintained the decision, which diverted 40 million barrels of crude from the markets into the government-owned reserve last year, helped drive up gasoline and other energy prices.

With markets tight and oil prices high, refiners dipped into their inventories to replace the oil going into the government reserve, said the report produced by the Democratic staff of the Senate Governmental Affairs investigations subcommittee.

``We're confident this had a significant impact on the price of oil in 2002,'' Sen. Carl Levin of Michigan, the ranking Democrat on the subcommittee and its chairman last year.

Energy Secretary Spencer Abraham rejected the notion that the government's decision significantly affected energy prices. He said the amount was too small to have an impact.

``The principal issue here is national security and we believe and continue to believe that enlarging the amount of emergency reserves we have in the strategic reserve is very important to America's energy and national security,'' said Abraham.

A department spokesman, Joe Davis, added that the reason inventories dropped was OPEC's decision to cut production in early 2002, a decline in Iraqi oil exports and losses of oil from Venezuela last December. As for oil that went to the SPR, ``we're talking about a drop in the bucket,'' said Davis.

Some critics also have said taxpayers have lost million of dollars because of oil acquisitions for the reserve during periods of high prices. While the government does not technically buy oil, it accepts oil in lieu of royalty payments on oil pumped from federal land.

At 100,000 barrels a day, filling the reserve when crude was selling at $30 a barrel rather than $20 a barrel cost taxpayers $1 million a day in lost royalties, the Levin report said.

During 2002, when oil was diverted steadily into the strategic reserve, oil prices climbed steadily from the low $20s early in the year to over $30 a barrel by September. After easing a bit, prices soared again toward the end of 2002, remaining largely above $30 a barrel as crude inventories tightened. War jitters have caused prices to continue their climb this year, recently passing $37 a barrel before retreating modestly.

The department reversed course on filling the reserve last December, with Venezuelan oil production halted and commercial inventories extremely low, and suspended delivery of oil to the SPR from December through March. On Tuesday, it said April deliveries also would be deferred.

Levin said such a decision should have been made a year ago, arguing that the reserve already has plenty of oil to meet emergency needs. Currently there are 600 million barrels of crude - equivalent to four months of oil imports from the Middle East - stored in salt caverns on the Gulf Coast.

Before December, oil company requests for deferrals of deliveries to SPR were routinely denied, the report said.

Internal DOE documents indicated that career officials involved in the SPR program cautioned that private oil inventories could suffer, leading to higher prices.

Commercial petroleum inventories are low, retail product prices are high and economic growth is slow,'' said one memo from a senior SPR official in late May of 2002. The government should avoid acquiring oil for the reserve under these circumstance.'' Such purchases ``would be difficult to defend,'' he continued.

A reduction in private oil inventories equal to amounts put into the SPR ``could have a substantial price impact,'' said another memo, obtained by Levin's subcommittee.

John Shages, a director of policy for the SPR program, expressed his concern last June that filling the reserve could significancy impact private crude stocks and force up prices.

He characterized the SPR diversions as potentially a powerful 30 million barrel reduction of private inventory over 10 months'' if the oil is not replaced by OPEC or other producers. Come December ... we will have higher prices, nervous traders, a more confident OPEC...''

Commercial crude inventories declined from 310 million barrels to 280 million barrels during 2002 and another 10 million barrels early this year. Energy economists have cited the low inventories as a key reason for the sharp price increases of crude as well as gasoline and heating oil.

In April 2002, a BP executive repeatedly sought to have a scheduled delivery to the SPR postponed, according to e-mails obtained by the Senate investigators.

Oil prices keep rising,'' wrote James Dyer to Michael Waggoner at the SPR office. As of this morning we calculate a year's deferral would be worth an extra 750,000 to you,'' Dyer wrote, referring to the premium in barrels that BP would agree to pay for later delivery.

But the department said no.

In October, Marathon Ashland Petroleum asked to defer its scheduled shipment to the SPR because a hurricane had kept oil from getting to its Louisiana refinery and it needed all the crude it could get. The refinery had ``nearly depleted all its crude oil working inventory,'' wrote Marathon Ashland's Daniel Pears to Waggoner.

His request was also denied. ^--- On the Net: Strategic Petroleum Reserve: www.fe.doe.gov Senate Governmental Affairs investigations subcommittee: www.senate.gov