www.kolotv.com 02/25/03 by Ed Pearce, ed.pearce@kolotv.com

RENO -- Gas prices are still on the rise.  While some analysts say pressure for them to continue rising may be easing a bit now that the oil strike in Venezuela is over, there is still little hope they'll go down any time soon.

These hikes affect all of us, but some of us are feeling it more directly than others.

The news at the pump has been getting worse for some time.  Two months ago regular was a $1.31 per gallon at a Stop-and-Go station in Reno.  By two weeks ago, it was 35 cents higher.  Last week added a nickel.  Yesterday, it was six cents higher, then hours later it rose again by two cents.

Few of us fail to notice the difference when we fill up the tank every week or so. No one watches it more closely than the area's cab drivers.

"It's up above $1.80," laments cabbie Scott Williams.  "Right there, it rose two cents overnight."

Williams drives for Reno-Sparks Cab, and like other cabbies he buys his own gas every day.  Every day, it hurts a little more.  It adds up.

"My monthly income is down $80 to $90 at a time when the economy is slow to begin with," Williams says.

There's no relief in sight.  Williams can't raise cab rates -- they're set by the state's Transportation Services Agency.  The cab companies would have to apply for an increase.  Drivers like Williams are caught in between, and every new hike in gas prices comes right out of their personal profit margin.

At a busier time of the year, the loss would be easier to absorb, but things are always slow in Reno in late February.  This year, a daily trip to the pump makes it seem all the more so.

"What are you going to do?  You have to put food on the table," Williams says.  "Things will get better.  They have to.  In this business, I can't see it getting worse."

www.casperstartribune.net

By DUSTIN BLEIZEFFER Star-Tribune energy reporter Wednesday, February 26, 2003

GILLETTE -- Natural gas producers are enjoying the high side of the ebb-and-tide pricing market now nearing the $4.50 per thousand cubic feet (mcf) of gas mark at Wyoming trading hubs, according to Enerfax Daily. Cold winter weather in the eastern portion of the U.S. has helped boost prices for all producing areas, including the Rockies -- an area that was slammed this past summer with prices that dipped to $1 per mcf and below. Such seasonal changes are expected in the natural gas pricing market. But in a telephone conference Monday about his company's pending merger with Ocean Energy, Inc., Devon Energy Corp. chairman, president and CEO Larry Nichols proclaimed natural gas prices could remain on the high side for a long time to come. "We have moved into a new era of gas prices," Nichols said. Speaking of natural gas pricing at Louisiana's Henry Hub, Nichols added, "The days of trading at $2 (per mcf) or less are gone forever. Because of the way storage is being depleted, we are going to see some of the highest gas prices in history." Stu Wagner, a natural gas market analyst with Petrie Parkman & Co. in Denver, said he agrees natural gas prices are not likely to dip to this past summer's lows, and there's many reasons to believe prices will remain strong for the rest of 2003. "We'd agree that the era of $2.50 gas is over. That is, at Henry Hub," Wagner said, noting that the Rockies still trails the rest of the nation's wholesale natural gas prices by about $2 per mcf. "We've had a very strong withdrawal from storage as a result of cold weather, and we've had a low rig count for the past 18 months, and we're not replacing production," Wagner said. Cold weather is depleting gas storage -- now nearly 43 percent below one year ago, according to the Energy Information Administration. However, there are other forces at play. Wagner said the price of crude oil has been pushed to the mid-$30 per barrel due to the possibility of war in Iraq and the oil strike in Venezuela. Natural gas pricing follows crude pricing, and both have been on the rise. "If there is war in Iraq and it's settled relatively quickly without a lot of interruption to crude oil supplies, we think you'll see crude oil drop down to the mid- to low $20s per barrel. And we'd expect some sympathy reaction from natural gas," Wagner said. Nichols said Devon Energy's North American operations are focused mostly on natural gas, and that focus will remain given the future pricing climate. "Prices will knock out some demand, but it can't knock out all the demand," Nichols said in the telephone conference. "This year is the first time since 1986 that Canadian imports actually fell. ... We think it's going to be robust for natural gas all year long."

www.nola.com Wednesday February 26, 2003 By John M. Biers Energy writer

For the second day in a row, spot prices for natural gas soared to historic highs on Tuesday, jumping almost 50 percent in what one trader called panic buying to close at $19.38 per million Btu on Louisiana's benchmark Henry Hub exchange.

The price spike has been prompted by the latest stretch of cold weather in the Northeast and Midwest, which is expected to continue a brutally cold winter that already has diminished natural gas supplies. Despite the cold weather and low supplies, the energy industry has been slow to pick up natural gas drilling this winter.

Gas-shortage fears spread through the market this week, as utilities and other buyers purchased their gas for the upcoming month, said Dan Pickering, an analyst for Simmons & International, a Houston investment bank specializing in energy.

"It's obviously panic buying driving this thing and there are some guys hung right now and nobody seems to want to sell it," Brad Florer, a trader for APB Energy in Louisville, told Bloomberg News.

The spike is even more dramatic than the jump two years ago, when prices jumped above $10 per million Btu.

A top regulator with the Federal Energy Regulatory Commission said Tuesday he will review recent trading of natural gas futures, Bloomberg News reported.

Natural gas, widely used for home heating, normally sells for roughly $2 to $4 per million Btu. In recent weeks, however, prices had climbed to the $5-$6 range.

Only about 5 percent of the nation's natural gas is bought on the spot market. Most gas is bought on monthly contracts for future delivery. Futures prices were high Tuesday, but not nearly as dramatic. On Tuesday, the March price was $8.90, while April was $6.40 and May was $5.70. This decline suggests the market anticipates the price spike will be short-lived, Pickering said.

Locally, the price spike is expected to have a limited effect on utility bills -- as long as it is short-lived.

Natural gas prices have been trading well above historical levels this winter. Many locals were shocked at their February heating bills, which were more than double the amount some customers paid in January.

Entergy spokesman Chanel Lagarde said the effects of this week's price surge are "minimal."

"The recent increase in the price of natural gas will affect the gas adjustment of customers' bills," Lagarde said. "However, the increase will not be as dramatic as the increase in the spot market."

Citing proprietary concerns, Lagarde declined to give specifics on Entergy, but said the company purchases "very little" of its gas on the spot market. About one-third of Entergy's gas was bought last summer under a hedging program, in which prices were locked in at then-prevailing rates. Most of the remaining two-thirds was bought under monthly contracts for delivery in early February, when prices stood in the $6 range.

But if the prices stay lofty, much higher natural gas bills eventually would result.

The high prices are also a burden for Louisiana's vast petrochemical industry, which relies on natural gas to run facilities and to serve as a feedstock in some operations. This winter's high prices are having a "very significant" impact, said David Brignac, spokesman for Shell Chemical Co. in Norco.

Natural gas represents more than 70 percent of cash costs for some commodity chemicals, such as ammonia, according to a Lehman Brothers report released Feb. 19 before this week's spike.

Pointing to "natural gas fever," Lehman Brothers chemical industry analyst Sergey Vasnetsov echoed other experts who have pointed to a new, higher "normal" range for natural gas in the $3.50-$4 range through 2006.

"We would love to see the price return to $3 or below, but should not count on relief given the tight U.S. supply and likely prospects of rising demand for natural gas," Vasnetsov said.

While this week's dramatic jump in natural gas prices may shock the public, energy analysts have predicted increased volatility for years, with some even speaking of a possible "train-wreck" this winter.

One central factor is the dilemma faced by energy companies, which encounter pressure from Wall Street to focus capital spending only on giant discoveries. The problem in the United States is that many of the fields already have been tapped, which requires companies to spend more money on lower-yielding fields.

This winter's high natural gas prices have been accompanied by lofty crude oil prices, which are socking consumers at the pump. Despite growing complaints from lawmakers, Secretary of Energy Spencer Abraham on Tuesday told a congressional hearing that the Bush administration would not release oil from the Strategic Petroleum Reserve based on price fluctuations.

Spot crude prices dropped 74 cents Tuesday to close at $35.96 on benchmark west Texas intermediate. The high prices stem from a lengthy fuel interruption in Venezuela and anxiety over a possible war in Iraq.

. . . . . . . John Biers can be reached at jbiers@timespicayune.com or at (504) 826-3494.

www.forbes.com Reuters, 02.26.03, 2:07 AM ET By Jonathan Landreth SINGAPORE, Feb 26 (Reuters) - Oil prices rose on Wednesday bolstered by fears that war in Iraq would cut world supplies already thinned by a Venezuelan strike and strong U.S. demand for winter heating. U.S. data later on Wednesday is forecast to show that heating fuel stocks declined last week, reinforcing the impact of a bout of below-normal cold weather in the world's biggest energy consuming nation. The data is expected to partly offset comments on Tuesday from Washington that it would quickly release strategic oil reserves if a war in Iraq disrupted supplies. Oil markets fear a U.S. attack on Iraq, the world's eighth largest oil exporter, could slash oil shipments from the Middle East, which supplies about 40 percent of the global crude trade. "The market expects a war sooner rather than later," said John Hirjee, senior energy analyst at Deutsche Bank in Melbourne. U.S. light crude was up 22 cents at $36.28 a barrel at 0700 GMT, recovering some of the 42 cents lost in New York on Tuesday. U.S. March heating oil, which rose to a record high of $1.18 a gallon on Tuesday, was up 0.98 cent at $1.1324 compared with New York's close. New York oil prices have risen some 45 percent since November after a strike stunted exports from key oil supplier Venezuela and cold temperatures eroded domestic fuel supplies. Iraq offered U.N. arms inspectors on Tuesday documents on past arms programmes, but U.S. President George W. Bush pressed his case for nothing less than full disarmament. Bush emphasised he would bypass the United Nations and attack Iraq if necessary, saying approval of a new U.N. resolution was not essential. U.S. government supply data is expected to show distillates stocks fell last week by 2.6 million barrels, or about 2.5 percent. "Feeding supply fears is the cold weather in the United States," Hirjee said. Heating demand could continue to bolster fears of supply shortages since temperatures in the U.S. Northeast, the world's biggest heating-oil market, are forecast to be below seasonal norms this week. However, U.S. Secretary of Energy, Spencer Abraham, said the U.S. would quickly release stock from its 600-million-barrel strategic oil reserve if supplies were disrupted by a war in Iraq. "We will and can act quickly to use the Strategic Petroleum Reserve to fortify efforts by producers to offset any severe disruption, if it is needed," Abraham told lawmakers at a Senate Energy Committee hearing. Wednesday's inventory report also is expected to show a small drop in gasoline supplies and a one-million-barrel rise in crude oil stocks.

pacific.bizjournals.com 7:24 AM HST Wednesday  Howard Dicus   Pacific Business News

Hawaii gasoline prices are on the rise again after pausing for a day or two in some locales. World oil output, meanwhile, has improved.

The American Automobile Association's retail price survey for self-serve regular unleaded, in postings for Wednesday morning, showed an average $1.84 a gallon in Honolulu, while the Hilo average rose to almost $1.98 and the Wailuku average topped $2.12. Some more remote locales had still higher prices.

But there was good news late Tuesday on world oil supplies when the Venezuelan state oil company announced that ChevronTexaco was to load 270,000 barrels of crude on a tanker at the western port of Bajo Grande this week. Until now only eastern port international loadings had been reported since the general strike began in Venezuela in December.

Venezuela, an OPEC member, supplies a large amount of the foreign oil used in the United States, and ChevronTexaco owns one of the two refineries on Oahu. Tesoro Corp. owns the other.