www.suntimes.com March 3, 2003 By Brad Foss

If history is any guide, consumers should brace for even higher gasoline prices, which are already above $2 a gallon in some places.

The wholesale price of gasoline has risen between March and May every year since 1985, according to an analysis by Cameron Hanover, an energy risk management firm based in New Canaan, Conn. Pump prices have tended to follow suit, statistics kept by the Energy Department show.

''We're expecting a further round of price increases at the retail level,'' said Jacob Bournazian, an analyst at the Energy Information Administration, the statistical arm of the Energy Department. ''It could be anywhere from 4 to 8 cents.''

The national average retail price for regular unleaded last week was $1.66 per gallon, 54 cents above year-ago levels. In the Chicago area, some pump prices, spurred by state and local sales taxes, topped $2.

The springtime pattern of rising gasoline prices coincides with the period when 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.

Whether the 18-year seasonal trend is extended--or ended--in 2003 depends on factors ranging from a possible war in Iraq to the supply of fuel from Venezuela, whose oil industry strike has resulted in sharply reduced exports to the United States.

If U.S.-led military action against Iraq proceeds quickly and without any disruption in the flow of Middle East oil, analysts believe, the price of crude, now close to $37 a barrel, could drop quickly, bringing today's high gasoline prices down, too.

''That could kill the (seasonal) trend,'' said Ed Silliere, an analyst at Energy Merchant LLC in New York. The ability of refiners in the United States, Europe and elsewhere to make up for the expected shortfall from Venezuela could also tip gasoline prices in one direction or the other, Silliere said.

Still, Silliere and other analysts said all signs point to the annual trend being magnified by geopolitics and the current supply-demand imbalance. Nationwide inventories of gasoline are nearly 3 percent below year-ago levels, and with Venezuela's refineries running far below capacity, analysts said the situation could get worse.

Peter Beutel, president of Cameron Hanover, said the confluence of outside factors makes it difficult to predict what will happen in gasoline markets this spring, but his advice to clients in a recent report was this: Don't make large bets prices will fall.

''We have to ask ourselves if we want to fight these kinds of odds,'' he said.

In 16 out of the last 18 years, June gasoline futures trading on the New York Mercantile Exchange rose between March 1 and May 15. In 1993 and 1998, the June contract rose between March 1 and May 1, before falling two weeks later. Gasoline for April delivery was up 2 cents to $1.04 a gallon Friday on the Nymex.

The monthly average for retail prices, excluding taxes, was higher in May than in March in 15 out of the last 18 years. Pump prices declined slightly over that period in 1986, 1997 and 2000.

www.boston.com By Andrew Caffrey, Globe Staff, 3/2/2003

The long cold winter has been unusually tough on New Englanders' pocketbooks. Geopolitics - a potential war in the Middle East and the political crisis in Venezuela, a major US oil supplier - have combined with unusually cold weather and low fuel inventories to send prices skyrocketing. Heating oil prices hit a three-year peak during one snap in February, and natural gas utilities are seeking rate increases for Massachusetts customers of as high as 36 percent.

Boston Globe reporter Andrew Caffrey talked with David L. O'Connor, commissioner of the Massachusetts Division of Energy Resources, about whether fuel suppliers will take steps in the coming months to avoid a repeat of the high prices and low inventories that have plagued us this winter.

Q. What's the outlook for next winter?

A. On natural gas, for example, we have a somewhat lower level of production from wells in the United States. The overall US production is likely to stay flat or even decline a bit over the year, and therefore suppliers would be looking for Canadian sources. In New England we want to be sure utilities put enough in storage over the summer. The utilities have done a good job in their planning for how much they have in storage. Those storages will be almost completely depleted. So one of the things we're going to see is more aggressive buying to make sure by next winter, we've got the most appropriate amount in storage. That is the most stabilizing factor in prices for consumers.

Q. So can we expect higher levels of gas storage than normal next winter?

A. Probably not. This year the volatility we've seen in prices is related to tremendous demands because of the weather. For the most part it's a necessary risk utilities take and the consumer takes that risk as well. We have been encouraging the gas companies here to enter into what we call hedging contracts - financial instruments that try to provide a hedge against this volatility. Last year the state Department of Telecommunications and Energy approved the use of those financial instruments for the first time.

I think the combination of the approval of the department and the winter we just had is going to encourage a lot of companies to take a harder look at these financial arrangements that would mitigate the volatility of short-term prices.

Q. And oil suppliers? Can we expect them to build larger inventories?

A. No. Wholesale oil suppliers would argue they have used good professional judgment - that everyone got the oil they needed, but the prices were a reflection of high demand and scarcity because of the lack of production from Venezuela.

Q. Why wouldn't they buy more for next winter just to be on the safe side?

A. As you start into the winter, if you have that outlook, ''Gee, last winter prices got really high,'' you could end up with way too much on hand at the end of the winter, and therefore absorbing significant losses and needing to charge more later. So it's a balancing act, where they've got to buy the right level.

Probably the single most important influence will be the decisions made by retail customers to enter into contracts with suppliers. I've been encouraging consumers to shop around for contracts. I think it's in the consumers' interest, and in the dealers' interests.

Q. Isn't there a risk to customers locking in because oil prices can change quickly, downward, too, especially if a war against Iraq ends quickly?

A. There is some risk, no question about it. Yes, there is a scenario where prices could be high in the summer, and then it turns out the war ends quickly, and prices fall. People under contract could pay more, but I think the chances are more likely to be the other way around.

This story ran on page C2 of the Boston Globe on 3/2/2003.

www.tribnet.com Roy Gallop | THE News Tribune BARBARA CLEMENTS; The News Tribune

Andy Green looked up at the reader board and sighed.

The price for premium gasoline at this Fife Chevron station had just inched over the $2-a-gallon mark.

"I can't believe this," Green grumbled as he filled his tank with $1.95 medium grade fuel.

"I used to shop around, but now I don't," Green said. "Every sign is beginning to look like the ones around here."

Down the street at a Texaco station, gas cost $2.12 for premium, stair-stepping down to a "low" of $1.92 for regular unleaded - ranking the outlet among the highest-priced gas stations in the South Sound.

Local and national experts in the gasoline and crude oil industry disagree over whether the relentless price climb at the pump has leveled off - or is just catching its breath before spiking upward once again.

Some believe prices will fall once war starts with Iraq and commodities traders are assured the oil supply will continue to flow. Others fear that a war will mean $3 a gallon gas at the pump.

They also disagree on the cause of this winter's price spikes. Is it just war jitters? Some say so. Others point to oil exporter Venezuela's political instability or the East Coast's heating-oil demands.

But since Washington state refineries get more than 90 percent of their crude oil from Alaska and Canada, why should a labor strike in Venezuela affect us? Or a war in Iraq or the deep freeze in New York, for that matter.

Conversations at pumps around the South Sound last week eventually turn to the question: Who is profiting from this?

Spokesmen from the oil companies, refineries and gas stations each say it's not them.

Refinery and oil representatives say they aren't making a big profit on the recent price increase, which hit all-time highs in the Seattle area last week at $1.82 a gallon for regular unleaded. That broke a record set in October 2000.

On Friday, Tacoma's gas prices set a new record at $1.73 per gallon for unleaded regular, according to AAA, formerly known as the American Automobile Association, which tracks pump prices nationally.

"In many parts of the country, prices are beginning to level out," said Janet Ray of AAA. "But we're going up (in this region), while others are coming down."

What pushes prices Oil company representatives say that they are feeling the pinch at the pump like everyone else, and no, their companies are not gouging the U.S. consumer under the guise of pending war.

"The price of crude is simply higher," said Bill Hickman of the American Petroleum Institute in Washington, D.C.

Institute reports show that crude oil prices on the worldwide market are 70 percent higher than a year ago. This last week, crude oil prices tickled the $40 a barrel mark, the highest level in 12 years.

"The price of crude has just been skyrocketing," concurred Marcia Nielsen, spokeswoman for U.S. Oil and Refining Co. in Tacoma, the only refinery in the state south of Anacortes.

A small refinery which produces about 30,000 barrels of product a day, U.S. Oil does not set the price of gasoline in this state, Nielsen said.

That's established by crude oil prices and by the four larger refineries located in Skagit and Whatcom counties, near the Canadian border.

"We're not a price leader, but a price follower," Nielsen said.

Gasoline and crude supplies in the United States also are at record lows, according to the Energy Department and the petroleum institute.

While about 98 percent of this state's oil comes from either Alaska or Canada, for the nation as a whole there's a different scenario in play, the petroleum institute's Hickman said.

About 60 percent of U.S. crude comes from overseas - from countries such as Canada, Saudi Arabia and Venezuela.

The oil flow from Venezuela, which provides the United States with 8 percent of its crude, stopped in early December due to a labor strike, which was finally settled late last month. But it may take months for the crude oil shipments to return to their normal levels, said Energy Secretary Spencer Abraham.

Even with the crude delivery from Venezuela on line again, there is fear of war interrupting supplies from the Gulf states, Hickman said.

Although the United States receives only 2 percent of its oil from Iraq, about 33 percent of the U.S. oil supply comes from OPEC and countries in the Persian Gulf, according to the Department of Energy.

"The oil market is really a worldwide market now," said Frank Holmes of the Western States Petroleum Association. "Things happen anywhere in the world, the market reacts instantly."

International worries aside, a cold snap along the eastern U.S. seaboard also has refineries producing more heating oil than gasoline, thus reducing the overall supply of gasoline in the nation, Hickman said.

Still, he acknowledges that his friends and family give him the hairy eyeball over gas prices at the pump. "I even get it from my kids," he said.

Hickman adds there have been dozens of congressional probes into price gouging by oil companies, but not one investigation has resulted in an actual criminal charge.

But two years ago, an investigation by The Oregonian newspaper in Portland found that BP Amoco bumped up West Coast oil prices by exporting its Alaskan crude to Asia for less than it could have sold it in U.S. refineries.

Gas dealer skepticism Tim Hamilton said there's no doubt in his mind that oil companies are making huge profits from the recent price bumps.

Hamilton is an energy consultant and executive director of the Automotive United Trades Organization, an association representing 500 independent gas dealers in Washington.

Oil companies both pump the crude and refine the viscous liquid into gasoline at refineries they own, he said.

"It really doesn't cost any more to bring it out of the ground," Hamilton said.

The recent price hikes have nothing to do with the cold snaps back East, strikes in Venezuela or a pending fight with Iraq, he contended.

The oil companies are simply ramping down the production of gasoline to drive the price up, he said.

This comes at time when the oil industry is adopting "just-in-time" production schedules. While this practice, adopted about three years ago, saves the industry money, it creates an instant shortage if crude does not arrive as planned, industry experts said.

Given this, prices topping the $2 a gallon mark now - well before the summer driving season - worry Hamilton.

"If there is a single burp in the refinery system between now and then, we could see $2.50 to $3 a gallon at the pump in a matter of a week," he said.

Even if Saddam Hussein blows up his country's oil fields, as he did in the 1990 Persian Gulf War, it's doubtful that would have a direct effect on oil prices, he said.

"The Saudis replaced that production in a matter of hours," Hamilton said.

Once the gulf war started, prices at the pump dropped, Hamilton and other experts noted.

AAA figures back this up. In April 1990, the average price for unleaded gas in the United States was $1.06. When the gulf war began in late summer, the price jumped to $1.42. But it dropped back to $1.06 in March 2001, after the war ended.

Hamilton stressed that the station owners aren't getting rich off the almost hourly price increases drivers have seen over the last 12 weeks.

Most owners have been losing $4,000 a month because price increases have gobbled up any profit margin they receive on the gasoline.

"Typically, station owners don't make any money on gasoline," Hamilton said. "They hope you'll fill up, and then go and buy that higher-priced Twinkie.

"The station owners are the people taking the heat for these increases by the customers, not the oil executives."

If there is any solace for beleaguered station owners or consumers such as Green, it may be that other states are feeling the bite worse than Washington.

Last week, California posted the highest average price for unleaded regular gasoline in the nation, at $1.99 a gallon. The average price for premium: $2.15.

The Associated Press contributed to this report Barbara Clements: 253-597-8652 barbara.clements@mail.tribnet.com

State and local gas prices reach record levels Over the last 12 weeks, gas prices rose to record levels in the United States as well as in Washington state and the Seattle-Tacoma area. Seattle's gas prices hit record levels in mid-week.

On Friday, the price for regular unleaded gasoline set records in the state and in Tacoma.

The state's prices came in at $1.77 on Friday. In Tacoma, the price at the pump for regular unleaded was $1.73, which also broke the record set in 2000, according to AAA, which tracks gas pump prices nationally. (Published 12:30AM, March 2nd, 2003)

www.kinston.com Story ran : 03/02/2003 By Sandy Wall Staff Writer

With the price of regular gasoline hitting $1.60 per gallon and higher, most Eastern North Carolina motorists are looking for easy ways to conserve the near-precious commodity.

Mechanics and automobile experts say the best ways to save gasoline is to follow the maintenance schedule in your vehicle's owner's manual, to keep your car's engine in good shape and to drive sensibly.

Following that simple advice can save up to four or five miles per gallons, mechanics say. But failing to follow those tips can cost money - both in wasted gasoline now and in more expensive repairs later.

"People just need to do the routine maintenance on their vehicles. That's the bottom line," said Kinston mechanic Jim Snader.

Uncertainty about a possible war with Iraq coupled with political strife in oil-rich Venezuela have caused a spike in the price of motor vehicle fuels in recent weeks.

Some in Lenoir County have resorted to extreme means to keep gas in their cars. According to law enforcement reports, Kinston police responded to at least six reports late last week of motorists driving away from gas stations without paying for fuel.

Mechanics say there are far less drastic things motorists can do to save fuel and money. A tune-up is a good start.

The first thing to look for? Make sure your car's spark plugs are functioning properly.

"If you got one that's missing on one or two cylinders, you're losing up to four or five miles per gallon," said John Mewborn, owner of Plaza Exxon in Kinston.

Most of today's automobile engines rely on computers to determine how the correct mix of fuel and air. The computer in turn rely on information gathered from various sensors.

If those sensors become clogged with carbon residue or are not functioning correctly, the computer can cause the engine to brun too much gas, mechanics say.

"If they're not working properly, it'll tell the engine to put in too much fuel," Mewborn said.

Tuning up an engine is a usually a sure way to improve your car's gas mileage.

But the days of simply replacing the plugs and points and setting the timing are over, said Greg Williamson, general manager of the Firestone Tire and Service Center in Kinston.

" Tune-up doesn't have the same meaning it did 25 years ago," he said.

Mechanics say today's tune-ups can be complex affairs, with computer diagnostics and high-priced emissions-control equipment to look after.

Full-service tune-ups and other repairs such as the replacement of oxygen sensors can cost upwards of $250 to $300, mechanics say.

But there are also some low-cost fixes you can try, such as replacing your car's air filter.

Williamson said it's important not to forget your car's tires. Properly inflating your tires and ensuring they have good tread can improve gas mileage, he said.

Driving sensibly is also a good way to increase your car's gas mileage. Automobile experts say you can improve your gas mileage about 15 percent by driving at 55 mph rather than 65 mph.

The U.S. Environmental Protection Agency has other tips drivers can use to save gas.

They include:

• Go easy on the brakes and gas pedal. Avoid quick starts by accelerating gradually whenever possible. Also, anticipate stops to avoid sudden braking.

• Avoid long idles. Turn off the engine if you anticipate a lengthy wait. Instead of idling at a drive-up window, park the car and go in. Idling burns more gas than restarting the engine. Limit car warmups in winter.

• Avoid carrying unneeded items in the trunk. Extra weight decreases gas mileage. Also, reduce drag by placing items inside the car or trunk rather than on roof racks.

• When warm weather arrives, use your air conditioning only when necessary.

Roll down the windows or open the air vents to keep your car comfortable on not-so-hot days.

Sandy Wall can be reached at (252) 527-3191, Ext. 251, or Sandy_Wall@link.freedom.com.

www.paknews.com Updated on 2003-03-01 13:23:15

KARACHI, Pakistan: Mar 01 (PNS)- Federal Minister for Petroleum and Natural Resources, Chaudhry Nouraiz Shakoor Khan has said that escalating world oil prices have also been affecting Pakistan's oil market and badly impacting country's import bill.

This he said while responding to newsmen about a query on the increase in the petroleum prices announced by the Oil Company Advisory Committee (OCAC) here Friday.

He said that oil prices in international market had risen to $ 40 a barrel Friday and this was 12-year high in wake of possible US attack on Iraq.

Elaborating the continuous upward trend in world oil prices, the Petroleum Minister said that the prices had increased primarily because of fears in the international market that Iraq was round the corner.

Not only that, the supply from Venezuela has been disrupted for the last three months because of a strike there. These factors have resulted in reduction of oil stocks of many countries and a source of continuous increase of oil prices in the world market, he observed.

Nouraiz Shakoor said that the government fully understands The problems of common man and it will provide prompt relief to them in case of any sign of downward trends in the international oil market.

The End.