Fox. Friday, April 18, 2003 By Kelley Beaucar Vlahos

WASHINGTON — While victory in Iraq may have increased the likelihood for stability in the Persian Gulf and freed up oil from Iraq’s previously sanctioned markets, policy experts say the new circumstances probably won’t change the energy debate on Capitol Hill.

“We're moving forward business as usual,” said Marnie Funk, communications director for the Senate Energy and Natural Resources Committee, which is in the process of marking up its long-awaited energy package.

Asked whether any changes to the package have resulted as a result of the war, Funk said, “Absolutely none.”

One House Energy and Commerce Committee aide who asked not to be named said it's uncertain whether the war will have any impact on the final legislation passed by Congress.

“After a few months, who knows how the war will influence it?  Right now it’s too early to know,” the aide said.

The House passed its energy package 247-175 on April 10. It closely resembled the bill passed by the House last year that eventually died during negotiations with the Senate.

Among other provisions, the House bill includes a proposal to drill for oil in the Alaska National Wildlife Refuge, a measure lacking support in the Senate and the source of intense bickering last legislative season.

The ANWR provision is popular among Republicans who say the country needs to reduce its dependence on foreign oil. Opponents agree on the goal, but say regulating  fuel efficiency standards for automobiles and pursuing alternative sources of energy like hydrogen fuel cells are better methods of getting there than drilling in the nation's protected wilderness.

The expected debate on the measure is unlikely to change because of the victory in Iraq and the corresponding drop in oil prices, energy experts said.

“It’s not as if the end of the war made the arguments change,” said H. Sterling Burnett, a senior fellow with the Center for Policy Analysis in Dallas, Texas.

“The conservatives interested in national security issues and the oil link, they will still say we need to be less dependent on those sources,” Burnett said. “The liberals are still going to say we need to produce alternative sources.”

Myron Ebell, an analyst with the Competitive Enterprise Institute in Washington, D.C., said the fact remains that the greatest need lies in changing domestic manufacturing and distribution processes.

Ebell said the energy infrastructure comprised of antiquated and inadequate oil refineries, gas pipelines and electricity transmission sources is in desperate need of an overhaul. At the same time, massive consumption of energy has left the country in need of more and more practical  uses for natural resources in the future.

None of that will be changed by the availability of Iraqi oil, he said.

“I don’t know how the Iraq situation is going to color our energy policy,” Ebell said. “We’re for more energy production here in that it creates more wealth for America.”

The House bill passed in April addresses some of those domestic concerns, including $6.7 billion in tax incentives for conservation methods such as solar heating equipment and more efficient appliance purchases. The bill also calls for $31.7 billion in research and development involving renewable energy drawn from nuclear power, oil and gas.

Debate is also expected over an electricity deregulation measure in the House bill, which is opposed by both Republicans and Democrats in the Senate.

The House and Senate bills do include $18.7 billion and $15.7 billion in tax incentives respectively, the bulk of which would be directed at the oil, gas, nuclear and coal industries.  The credits are virtually unchanged from the bills in the last congressional session.

Daphne Wysham, an energy expert with the Institute for Public Policy in Washington, D.C., said the return to tax motivators is exactly the “business as usual” that Funk described.

“Basically, these incentives are an invisible hand manipulating the market in favor of traditional  dirty automobiles and reliance on old sources of energy rather than in favor of the new, cleaner sources of energy,” Wysham said.

“There are a host of economic, social and political reasons why we should be using that invisible hand of the market to steer our country toward sources of energy that  will make us more self-reliant,” she added.

Nobody expects the opening of the Iraqi oilfields to stop the Bush administration from pursuing other oil sources -- both foreign and domestic -- outside of the Middle East. Currently, the United States imports about 55 percent of its oil from foreign sources, the bulk of which comes from Venezuela, Mexico, Saudi Arabia and Canada.

If anything, Burnett said, the war might make the domestic drilling question less urgent, at least for the current Congress.

“I don’t think [the debate] will go away, but [ANWR] may not make it into a final energy bill.”

The war has led to a drop in oil prices to around $30 a barrel, and prices are expected to fall to a more historically average rate of around $18 a barrel, said Ebell.

This will result in lower prices at the pump, but it won’t eliminate all the problems in the market. Nor will it solve domestic consumption pressures, he added.

“I think in a rational world, the debate is the same today as it was a month ago, but you know how Congress is. We’ll see.”

Published on: 2003-04-17 <a href=www.fayettevillenc.com>Fayetteville By Al Greenwood Staff writer

Gas prices are putting a damper on some people's Easter travel plans.

On the East Coast, the average price for a gallon of gasoline is $1.561, up 12 percent from $1.373 in December, according to the U.S. Energy Information Administration.

As a result, Randall Reeves of Wilmington will spend less time fishing at Town Creek this Easter. His boat uses a lot of gasoline, he said.

Reeves was talking about gas prices Wednesday at the BP gas station on Cedar Creek Road in Fayetteville. He works for System Design & Integration Inc. of Wilmington, a company that installs electrical controls for customers in Fayetteville and other cities in North Carolina.

Gas prices have been so high for so long that System can no longer absorb the increase, said Dean Krause, who also works for the company. System Designs is passing the increased costs to its customers.

Unlike Reeves, Krause has no plans to travel during Easter, he said. ''As hard as I'm working, I'm staying home.''

Bill Spurr of Wake Forest was also buying gasoline at the BP station. He said price increases have not affected his travel plans. He was driving to Charleston, S.C., with his grandparents. He returns Friday and said he plans to stay in Wake Forest during Easter.

Throughout the country, Easter is not a big travel day, said Tom Crosby, spokesman for AAA Carolinas.

But many of the soldiers at Fort Bragg travel during Easter weekend because they have a training holiday Friday and because Easter falls in conjunction with spring break, said Jackie Thomas, Fort Bragg spokeswoman.

Soldiers filling up their cars will notice that gas prices are down from an average high in February of $1.663 a gallon, according to the Energy Information Administration.

Trend uncertain

That drop, however, is not enough to encourage people to get in their cars and travel, Crosby said. And this week's average price for gasoline is still nearly 10 cents higher than last year, according to the Energy Information Administration.

There's no telling if gas prices will continue to decrease or if they will begin to rise again, said Ed Erickson, an economics professor at N.C. State University who specializes in energy.

Prices could continue dropping because the war in Iraq is winding down and the downturn in the world economy has caused demand for gasoline to drop, he said. Strikes have ended in Venezuela, a major oil exporter, but Venezuela is not at full production, Erickson said. Also, prices usually increase as Memorial Day approaches, which is a big travel day.

Refineries are still producing heating oil, and not all of them have switched to gasoline, he said. Gas inventories in the United States are low.

''The fundamentals are still gritty,'' he said. ''It could change for the worse anytime.''

Staff writer Al Greenwood can be reached at greenwooda@fayettevillenc.com or 486-3567.

April 16, 2003, 9:19PM HoustonChronicle.com-Reuters News Service

NEW YORK - Oil prices fell today after the U.S. military said Iraq's oilfields could be pumping at two-thirds of pre-war levels within weeks.

Crude oil for May delivery fell 11 cents, or 0.4 percent, to $29.18 a barrel on the New York Mercantile Exchange. Prices still were up 11 percent from an intraday low of $26.30 reached on March 21, the second day of the Iraqi invasion. In London, the June Brent crude-oil futures contract fell 14 cents, or 0.6 percent, to $25.02 a barrel on the International Petroleum Exchange.

Oil prices have slumped by 30 percent in a month, as Middle East oil flows have suffered less disruption than feared from the war in Iraq and U.S. ally Saudi Arabia has pumped up exports to cover for lost Iraqi supply.

Colonel Michael Morrow, adviser to U.S. forces chief General Tommy Franks at Central Command in Qatar, told Reuters that Iraq's oilfields would be in a position to pump 1.6 million barrels per day (bpd) within eight weeks.

"Our job is to fix it, get it pumping and let the new Iraqi government decide how to handle the exports," Morrow said.

The resumption of exports could be delayed by uncertainty over who will have the legal authority to issue contracts under the United Nations oil-for-food program, which has overseen Iraq's crude exports since 1996.

"That will take a political decision," Morrow said. "And that's way above my pay grade."

Before the war, Iraq was producing 2.5 million bpd -- 1.7 million bpd from its southern fields and 800,000 bpd from the north.

Iraq's northern Kirkuk oilfield was virtually untouched in the war, while the southern fields suffered some sabotage. The U.S. military said on Tuesday that the last blazing oil well had been snuffed out.

A fall in oil prices was kept in check by expectations that the Organization of the Petroleum Exporting Countries, which controls more than half the world's crude exports, would cut output at a meeting scheduled for April 24.

OPEC producers who were able to do so, chiefly Saudi Arabia, have raised their output to compensate for recent outages from Iraq, Nigeria and Venezuela.

The cartel is now pumping about 2 million bpd above its agreed ceiling of 24.5 million bpd.

OPEC now fears further price falls in the second quarter, as demand tails off at the end of winter in the northern hemisphere and the war in Iraq winds down with the country's oil infrastructure largely intact.

"I believe there is a glut in the market," said OPEC President Abdullah al-Attiyah. "The surplus is two-plus million barrels per day."

The International Energy Agency Wednesday urged OPEC to be cautious in reducing oil supply to the West, saying prices were still too high for companies to rebuild low stocks.

"I just think OPEC should be very cautious before taking strong decisions on output," said IEA chief Claude Mandil, adding that he did not expect Iraqi oil exports to resume within the next few weeks.

"Our view is there is no tidal wave of crude threatening to drown the market," Mandil said.

U.S. crude and refined product stocks last week held at lower-than-normal levels in the run-up to summer vacation driving demand, a government report said today.

U.S. crude oil stocks rose just 100,000 barrels to 277.2 million during the week ended April 11. Energy market analysts polled by Reuters had forecast a build of 2.5 million barrels.

Crude stocks are still just 3 percent above 26-year lows hit earlier this year. Gasoline stocks fell 300,000 barrels to 201.9 million and are 6 percent below last year's level ahead of summer.

By MIKE BRANOM <a href=www.heraldtribune.com>HeraldTribune.com-Associated Press

Oil prices are in a steep drop thanks to the quick success of coalition forces against the Iraqi regime, U.S. Energy Secretary Spencer Abraham said Tuesday, but he added that fallout from last year's turmoil in Venezuela could create a gas crunch this summer. "According to our own agency's outlook that we prepared last week, things look like they're quite a bit better now than they appeared just a few days before that," Abraham said. On the New York Mercantile Exchange, crude oil futures have dropped almost 25 percent over the past month. Prices topped out at $37.83 a barrel on March 12, a week before the war began. A barrel was selling at $29.02 at noon Tuesday. Such drops were showing up at the pump, as the current average price for a gallon of unleaded gas is $1.60, according to AAA. That's down more than 12 cents since from its peak March 18. "I'm happy to say that for the fourth week in a row, we saw gasoline prices, on a national basis, come down," Abrahams said. However, Abraham added, a two-month general strike in petroleum-rich Venezuela has crimped America's oil supply. Production dropped below 200,000 barrels a day during the walkout, which began in December. "It's meant that our inventories are lower than we'd like them to be," Abraham said. "And when we come into the driving season, particularly after Memorial Day, we could start to see some strain in the marketplace." The Venezuelan government fired 17,000 of the state oil company's 40,000 workers and gradually restarted paralyzed oil refineries. On Sunday, the nation's energy minister said oil production has risen to 3.2 million barrels a day - the highest level since before the strike. Venezuela's production capacity is 3.4 million barrels a day. Gas prices are closely watched in Florida, where a tourism-dependent economy relies on visitors to fly and drive into the state. "When we have a war, when we have an Orange Alert (for homeland security) and we have high gas prices, that devastates our economy on a temporary basis," said U.S. Rep. Ric Keller, R-Orlando, who accompanied Abrahams. "No doubt, our economy will be hurt a little bit in the short term." But Keller added that he thinks people will feel safer traveling and gas prices will drop, because of the success in the war against terrorism and the military's success in Iraq. "I think we'll have a temporary surge, at least with respect to the next couple of weeks, of boosting up our economy," Keller said. Last modified: April 15. 2003 2:49PM

<a href=www.newsday.com>NewsDay.com Henry Gilgoff April 13, 2003

The major automakers don't have a lock on zero-percent financing. Petro, the nation's biggest home heating oil dealer, has sent an interest-free payment plan offer to many customers.

Petro says it seeks to accommodate any customers who found it difficult to cope with this winter's surge in oil prices. For customers not on a "budget" plan, to spread out payments through a heating season based on estimates of purchases, Petro offered "an interest-free payment plan." It could cover the current balance plus future deliveries this heating season.

Under the plan, explained in a letter last month, there were to be up to five equal monthly payments, from March through July. A modified version is still available, according to John Ryan, Petro's regional manager. Ryan said Petro has about 100,000 customers in New York City and Long Island. Of approximately 70,000 not on a budget plan, nearly 2,000 have signed up for the extended plan. The offer was included in a letter offering Petro's explanation of the heights prices reached during the heating season, citing "the coldest winter since 1994," an oil workers strike in Venezuela and uncertainty surrounding energy prices as war approached.

Kevin Rooney, chief executive of the Oil Heat Institute of Long Island, said dealers try to work with customers who report a hardship. "We're aware of the fact that people incurred greater expense than they might have normally," Rooney said.