washingtontimes.com      From combined dispatches      Energy Secretary Spencer Abraham yesterday said the Bush administration was ready to act quickly to release emergency oil reserves if necessary to offset any disruption to Middle East supplies in the event of war with 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," Mr. Abraham told lawmakers at an Senate Energy and Natural Resources Committee hearing.      Crude-oil prices have in recent weeks risen to two-year highs on fears that a war in Iraq, the world's eighth-largest oil exporter, could slow supplies from the Middle East, which pumps a third of the world's oil.      The United States has said it will disarm Iraq by force if necessary, despite widespread international opposition to war and concern that rising energy costs could smother a weak world economy.      The U.S. emergency oil stockpile was created in 1975 and currently has about 600 million barrels of crude oil stored in deep underground salt caverns in Texas and Louisiana.      It can be drawn at a rate of 4.3 million barrels a day for 90 days, before the rate drops as storage caverns are emptied. The government sold 17 million barrels of oil from the reserve in January 1991 at the start of the U.S. offensive in the Gulf war.      The 1991 release helped pull oil prices down to near $20 a barrel, but analysts warn that oil inventories are so low that prices would not fall as far this time in the event of a release.      U.S. crude-oil stocks have fallen to their lowest level since 1975 as a decline in imports from strike-bound Venezuela has drained supplies while sustained cold weather has stoked demand.      Heating oil and natural-gas prices have recently hit all-time highs, and analysts are warning of big jumps in gasoline prices as summer vacation driving demand heats up.      New York oil prices fell after Mr. Abraham's comments, but soon recovered to close at $36.06 a barrel.      "People are being pinched like never before by soaring gasoline and other energy prices," Sen. Ron Wyden, Oregon Democrat, told Mr. Abraham, adding that consumers "are getting hosed because they're not getting any protection."      Mr. Abraham said that any decision on releasing oil reserves would be made in consultation with fellow members of the International Energy Agency, adviser on energy for 26 industrialized countries.      But he added that the government oil stocks were established "to provide energy security ... ."       "We do not believe it should be used to address price fluctuations," he said.      The head of the IEA said earlier yesterday that strategic reserves in major oil-consuming nations will only be used should producers fail to make up any supply shortfall.      "I believe the producers should act first. Reliance on strategic reserves should be a last resort," said Claude Mandil, executive director of the Paris-based IEA.      Producers in the Organization of the Petroleum Exporting Countries oil cartel have told the IEA they have enough spare capacity to meet any stoppage of Iraqi exports if there is a war.      Iraq oil exports remained steady at 1.7 million barrels per day in the week ended Feb. 21, U.N. officials said.      The IEA's Mr. Mandil said its members will expect a commitment from OPEC to cover any shortage very quickly, but could wait for weeks for firm evidence of the extra output.      Members of the IEA, formed after the Arab oil embargo in the 1970s to protect consumer nations' interests, include the United States, Germany and Japan. The IEA holds four billion barrels of reserves, equivalent to about 115 days of net imports.

www.dailytelegraph.co.uk By Simon English in New York  (Filed: 26/02/2003)

New York motorists are furious that petrol prices have risen above $2 a gallon in the city and are accusing the oil industry of profiteering from the Iraq crisis. 

Gas gripe: New Yorkers pay about 34p a litre for petrol - an 'absurd' price, said one

The American Automobile Association claims the price rises have little to do with a change in the costs to big oil companies, which it says are exploiting "fear and speculation".

At $2.04 for a US gallon of regular unleaded, New Yorkers are paying 53 cents a litre, or 34p, compared with about 77p charged in Britain.

Yesterday's New York Post claimed in a front page headline that motorists are being "hosed", while interviewees described the cost of petrol as "absurd", "crazy" and "price gouging". Across America, petrol prices are at the highest since June 2001, rising by more than 50 cents since the start of the year.

Oil companies say a strike in Venezuela and higher crude oil prices are responsible for the strife of the American motorist and warn that further bad news is likely if a war begins. Rising fuel costs are just one factor behind a slump in the confidence of US consumers, who account for two thirds of all spending in the world's largest economy.

Figures from the Conference Board yesterday show that confidence is near a 10-year low, with the consumer sentiment index falling to 64 in February from 78.8 in January. Conference Board director Lynn Franco said the readings "paint a gloomy picture", suggesting little prospect of an improvement in the economy.

By early afternoon in New York the Dow Jones had lost another 74 points to 7784.

boston.com By H. Josef Hebert, Associated Press, 2/25/2003 18:16

WASHINGTON (AP) The government's emergency oil stocks will not be used to dampen soaring energy prices, Energy Secretary Spencer Abraham told senators Tuesday, but the Bush administration will move quickly to draw on the reserves if severe supply shortages appear.

The emergency stocks ''should not be used to address price fluctuations,'' Abraham told senators, worried about soaring fuel costs.

''We will and we can act quickly to use the Strategic Petroleum Reserve ... to offset any severe disruptions if it's needed,'' Abraham told a Senate hearing. He said, however, the 600 million barrels held in the reserve on the Louisiana-Texas coast would be used only ''to provide energy security.''

''We do not believe it should be used to address price fluctuations,'' Abraham said.

Appeals for government intervention grew louder Tuesday as spot prices of natural gas briefly soared to nearly double the record high of two years ago, in the midst of the California energy crisis, and the price of gasoline lingered at over $2 a gallon in many parts of the country. Heating oil supplies remained tight and prices high.

''People are being pinched like never before'' by soaring gasoline and other energy prices, Sen. Ron Wyden, D-Ore., told Abraham. Wyden said consumers ''are getting hosed because they're not getting any protection.''

Likewise, Abraham dismissed a request by a group of New England heating oil companies that the government make available some of the 2 million barrels of heating oil kept in a Northeast reserve. ''Two million barrels is not a lot,'' he said, and it should be kept in place ''unless there's an emergency situation in terms of supply.''

Abraham said it may be two to three months before Venezuelan oil shipments to the United States return to normal levels, although he suggested the political crisis bedeviling oil production in the South American country has passed. Venezuela has been a leading source of U.S. imports, accounting last year for about 1.5 million barrels a day. Most analysts place part of the blame for the low supplies of crude and petroleum products on the loss of Venezuelan oil imports.

Abraham, appearing before the Senate Energy and Natural Resources Committee, said he understood that ''the crisis that has essentially shut down production (in Venezuela) has passed,'' but it would take 60 to 90 days before the country's imports would return to normal levels.

At a separate hearing later Tuesday, senators expressed dismay about the sudden spike in the price of natural gas, which is used widely across much of the country for heating and for producing electric power.

Natural gas prices have increased by nearly 40 percent since the first of the year and jumped dramatically this week. Contracts for gas delivery in March closed Tuesday at $9.58 per 1,000 cubic feet, an increase of almost $3 from last week.

Spot prices took an even sharper jump.

Guy Caruso, head of the Energy Information Administration, told senators the spot price of natural gas at the Henry Hub, a benchmark delivery point in Louisiana, soared briefly $18 and $20 Tuesday before dropping back to $12.20, the same as on Monday. The spot price two years ago, in the midst of California's energy crisis, reached a high of about $10 per thousand cubic feet.

Only a small fraction of the natural gas sold, between 5 percent and 10 percent, is bought on the spot market. Most gas is contracted in advance at lower rates. Still, the run-up caught energy analysts and industry executives by surprise.

''A lot of this is people speculating,'' Keith Rattie, president of Questar Corp., a natural gas producer based in Salt Lake City, told the senators. He added that much of the speculation is being triggered by higher than expected demand and low natural gas inventories in storage.

The EIA, the statistical arm of the Energy Department, reported last week only 1,168 billion cubic feet of natural gas were in storage as of mid-February, 27 percent lower than the five-year average at this time and 43 percent below what was in storage a year ago.

On the Net: Energy Information Administration: www.eia.doe.gov

www.zwire.com By Amanda Lee, Macomb Daily Staff Writer February 25, 2003

Macomb Daily photo by Ray SkowronekA Mount Clemens service station reflects a slightly lower price than the week's going rate. The inexplicable drop in gasoline prices this week is causing some analysts to scratch their heads while motorists scramble to fill up their tanks. "You don't know how long it's going to last so I'm going to take advantage of it," said Sid Hawking, 56, of Mount Clemens. "I kept expecting prices to go up and up so when I saw on the news last night they were down I knew now would be a good time to get a full tank. "I'm going to run home and get my wife's car after this and fill her up, too," he said. Michigan pump prices surprisingly dropped 5.1 cents this week, according to AAA Michigan, to a new level of $1.702 per gallon. The metropolitan Detroit average was down 4.4 cents to $1.673 per gallon. "We don't really know why they dropped," said Jim Rink, spokesman for AAA Michigan. "Usually there's plenty of reasons to say why gas goes up but the only time it goes down is when there's a drop in crude oil prices." Rink said he checked local market figures and crude oil prices Monday morning -- but prices had not fallen. "I really don't know why," he said. "It could just be a short term adjustment." Gasoline prices had jumped to their highest levels since the Sept. 11 terrorist attacks amid fears of a war with Iraq and concerns about an ongoing oil strike in Venezuela, a large world oil producer. In addition, a refinery fire in New York late last week was cause for additional concerns. "I did see an item that said that the (refinery fire) would not be a major disturbance," Rink said. "I don't know what to think." Despite the unexpected drop, however, the statewide average now stands at 55.6 cents more per gallon than at the same time in 2002. "It's still high, but it gives me hope that this is a sign that prices are going to go down again," Hawking said. "Everyone kept saying they were going to go above $2 (a gallon), but I think the powers-that-be have seen that we won't put up with that." Trilby Lundberg, a national gas analyst, expects the upward pressure on gasoline markets to yield soon due to increased production in Venezuela, the approach of warmer weather and the reopening of various U.S. refineries that had been idled for annual maintenance. "They have excuses for everything," Hawking said. "In the summer it's because the gas is more expensive to refine, now in the winter those refineries are closed, what I want to know is when does it all stop?" The decline in Michigan prices reflects the volatility of the market, said Ed Weglarz, executive director of the Service Station Dealers Association of Michigan. "Sometimes the gasoline pricing changes every day," Weglarz said. "The gasoline market tends to be like the stock market -- when in doubt, raise the price."

news.moneycentral.msn.com February 25, 2003 3:46:00 PM ET

NEW YORK (Reuters) - Volatile oil prices pulled back from two-year peaks on Tuesday after the United States said it would act quickly to release oil from strategic reserves if needed to offset any supply disruptions in the event of war with Iraq.

The remarks by Energy Secretary Spencer Abraham prompted a retreat from large gains triggered by huge demand for heating oil in the United States, where cold weather and low inventories have pumped fuel prices to record highs.

U.S. light crude for delivery in April fell 42 cents to $36.06 -- still some 70 percent above prices at the same time last year. London's Brent crude dropped 83 cents to $32.32 a barrel after earlier setting a fresh 27-month high at $33.94.

Abraham said the United States was ready to act quickly to release emergency oil reserves if necessary to offset any disruption to Middle East supplies -- which account for 40 percent of the world's oil exports -- in the event of war with Iraq.

He said Washington could release supplies on its own, but any decision would be made in consultation with Washington's partners in the International Energy Agency, the Paris-based energy watchdog for industrialized countries.

The IEA said earlier that the strategic reserves of its members would only be used as a last resort should war break out and producers fail to take up any supply shortfall.

Earlier, March U.S. heating oil prices surged to a record high of $1.18 a gallon and U.S. natural gas futures set all-time peaks as frigid conditions prevailed over the U.S. Northeast, stoking demand for heating fuels.

A 12-week strike in nearby Venezuela has run down U.S. oil inventories. U.S. stocks of distillates, which include heating oil, are running more than 30 percent below year-ago levels. Analysts predict further declines when the government releases its weekly fuel report on Wednesday.

Oil prices are expected to hold strong as traders remain reluctant to sell oil ahead of any attack on Iraq, which normally exports around 4 percent of internationally traded oil.

The United States, Britain and Spain submitted a new draft resolution to a polarized U.N. Security Council on Monday that said Iraq had missed a ``final opportunity'' to disarm peacefully and avoid war.

No vote is expected for two weeks, but the resolution opens an intensive period of diplomacy and its adoption would be a green light for war.

France and Germany have come out strongly against the U.S.-British draft and have circulated a rival proposal to the United Nations that would extend weapons inspections for at least four months. Russia and China back the French proposal.