boston.com By Rebecca Gomez, Associated Press, 2/21/2003 17:12

NEW YORK (AP) A massive explosion at an ExxonMobil Corp. oil storage facility sent shock waves through an energy market already roiled by fears of war, pushing crude oil prices up more than a dollar in trading Friday. Heating oil and gasoline futures also surged.

The explosion occurred midmorning when a barge stocked with 100,000 barrels of unleaded gasoline was being unloaded at the Port Mobil terminal, a storage facility that holds 2 million barrels of oil products, on the tip of Staten Island. The cause was under investigation.

Prices eased somewhat after analysts and traders realized the loss of gas supplies on the barge and thousands of barrels of heating oil at the terminal in Staten Island would pose only a short-term problem for the Northeast.

''This is two million barrels and that's an important size for Staten Island and the region,'' said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York. ''Heating oil is extremely tight right now in the East. We can't be losing this quantity at this time.''

Even though the barge was carrying gas only, the fire damage makes it nearly impossible to retrieve the heating oil from the facility, hurting regional supplies.

''It could have an effect for a couple of weeks, a little more tightness in heating oil,'' said Tom Kloza, chief oil analyst with the oil price information service. ''Much more significant is whether it's cold in the Northeast in the next few weeks.''

The national oil market is not likely to suffer as a result of the fire, analysts said.

Still, crude oil for April delivery rose $1.15 to $35.95 a barrel on the New York Mercantile Exchange, after news reports of the fire. It finished the day at $35.58 a barrel, up 84 cents for the day. Earlier, in London trading, Brent crude from the North Sea finished at $32.27, up 71 cents.

The fire broke out as U.S. crude supplies are already at their lowest level since 1975 and crude, gasoline and heating oil inventories are all below what the industry considers essential for smooth operation, the government reported last week.

The United States has not been getting the massive supplies of imported crude oil from Venezuela because of political turmoil and a nationwide strike there that began in December.

Prices also have been sensitive to worries about a war with Iraq and Middle East oil supplies.

As a result, analysts said, any news about the oil markets will cause rumbles, regardless of the long-term impact.

''There's this heightened effect on the market,'' Silliere said. ''Everybody is ready to jump on the latest news.

Elsewhere on the Nymex, March heating oil contract rose 4.98 cents, or 5 percent, to $1.10 a gallon, while the March unleaded gasoline gained 4.7 cents, or about 5 percent, to trade at $1.01 a gallon. Natural gas for March delivery surged nearly 7 percent, or 44.4 cents, to $6.606 per 1,000 cubic feet.

''The market shot up when they thought it was a refinery fire and perhaps there was some other concerns that it could have been terrorist related,'' said Kloza.

A fire at an oil refinery, rather than a storage facility, would have had a far greater impact, analysts said. Refineries contain much more oil than terminal facilities, such as the Port Mobil, and they house expensive manufacturing equipment.

One person was killed in the explosion, another was critically injured and a third was missing, officials said.

The destruction of the facility quickly affected wholesale oil prices in local New York markets. In Albany, independent heating oil distributors increased their prices by 7 cents to $1.20 a gallon, said Silliere, who tracks the spot market. Small businesses getting supplies of heating oil Friday morning would have seen a quick pop in prices.

The Port Mobil facility is a vital link to oil supplies for the Northeast. It stores oil products taken off the Colonial pipeline, which brings supplies to the region from refinery centers in Louisiana and Texas. The Port Mobil stores the oil product in tanks, then it is loaded into barges that ferry the gas and heating oil to regional distributors.

The fire knocked the Port Mobil out of commission. ''Oil products are trapped there for some time because the only way out is barge and barging capabilities are destroyed,'' Silliere said.

abcnews.go.com Feb. 21

— NEW YORK (Reuters) - U.S. crude oil futures soared more than $1 a barrel early on Friday after a fuel barge caught fire and exploded near an oil storage terminal off New York's Staten Island.

The blast in the Arthur Kill waterway between Staten Island and New Jersey sent plumes of black smoke and flames into the sky and prices on the New York Mercantile Exchange soaring.

NYMEX April crude oil jumped to an intraday high of $35.95 a barrel, surging $1.21 a barrel. By 12:29 p.m. EST, prices had slipped back to $35.44 a barrel, up 70 cents on the day.

Erroneous reports that the blast had hit an oil refinery also strengthened the initial gains. Prices fell back as it emerged that only an oil storage facility was affected.

Law enforcement officials said there were no initial indications the blast had been caused deliberately, but the initial surge came on fears that the explosion may have been not have been an accident, traders said.

The U.S. government has already put the country on the second-highest level of terror threat alert.

Oil prices have already been trading at their highest level for 29 months amid growing fears of war in Iraq, the world's eighth biggest oil exporter. An 11-week strike in Venezuela has further cut down U.S. winter fuel supplies.

Heating oil futures also surged, hitting a session high of $1.12 cents a gallon, a gain of 2.07 cents on the day, before slipping back to $1.106 a gallon.

money.cnn.com February 21, 2003: 2:50 PM EST By Chris Isidore, CNN/Money Senior Writer

NEW YORK (CNN/Money) - With gasoline prices rising across the nation to a near record high, cries of gouging are rising from consumer groups and public officials, although petroleum officials argue that pump prices are justified by the rise in crude oil prices.

Unleaded gas prices averaged $1.663 a gallon in a survey by the American Automobile Association, up 13 percent from $1.469 just a month ago, and up nearly 50 percent from a year earlier. The current prices are near the survey's record high of $1.718 reached in June 2001.

Even without the start of a war between the United States and Iraq, those prices were poised to go higher as an oil storage facility fire in Staten Island, N.Y., sent gasoline futures more than 2 percent higher on the New York Mercantile Exchange, even though the fire seemed to involve a propane barge, not a gasoline refinery.

The AAA said it is concerned that the prices are being driven by speculation about the threat of war or terrorism, not merely rise in costs.

"While it is true the continuing loss of oil and gasoline exports from Venezuela and recent cold weather in much of the country have affected fuel inventories, nothing fully justifies the dramatic increase in gasoline prices experienced across the United States in the last month," an AAA statement said.

High gas prices are igniting calls for an investigation into possible gas gouging. CNNfn's Lisa Leiter has more on the rising gas prices.

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Florida Attorney General Charlie Crist and U.S. Sen. Charles Schumer, D-N.Y., have asked the Federal Trade Commission to look into the recent rise in gasoline prices. But while FTC spokesman Mitchell Katz said the agency is monitoring the situation, it does not have authority to act on price gouging problems, only on price fixing between competitors.

Crist said he doesn't know if there is gouging or price fixing going on, but he said that's the reason an investigation is needed.

"We want to have an examination," he said. "How can they find out if they're being anti-competitive if they don't give it a look? The oil companies aren't going to rush out and tell them they're being anti-competitive."

Crist said he has invited the major oil companies to send representatives to his office next Tuesday to discuss the gas prices. So far only ConocoPhillips (COP: Research, Estimates) has agreed to attend, he said. Related stories Police: Accident caused oil fire Oil prices soar Big Three slam fuel standards

American Petroleum Institute (API) CEO Red Cavaney has written to the AAA, criticizing the group for it allegations.

"Implications that the petroleum industry is engaged in price gouging and intentionally engaged in creating a gasoline shortfall are clearly false," Cavaney's letter said. "Current statistical data and historical industry trends belie such inflammatory claims."

While average gas prices are nearing an absolute high point, they still are below some historical spikes when adjusted for inflation. API figures show the high point in gas prices during the Iraq occupation of Kuwait in 1990 and 1991 was $1.86 a gallon in current dollars, while the all-time high was in 1981, during the Iran-Iraq war, when prices hit the equivalent of $2.70 a gallon in current dollars.

John Felmy, the chief economist for API, an industry group representing oil producers, said most gasoline prices are set by station owners, not the industry, based on their costs and local market prices.

"We can't speak for each of the 170,000 gasoline stations nationwide," Felmy said. "But it's clear that gasoline prices are up 29 cents a gallon because crude oil prices are up about 29 cents a gallon during the same period."

Oil analyst Fadel Gheit of Fahnestock & Co. said crude oil prices have actually risen much faster than pump prices over the last year, causing oil companies to lose money on the refining and marketing side of the business.

"All the refining and marketing operations in the United States last year lost money, huge money, hundreds of millions of dollars. Would they have done that if they could fix prices and gouge consumers?" he said. While the AAA survey shows pump prices up nearly 50 percent in the last year, crude prices have nearly doubled during that time. Crude prices are up the equivalent of about 24 cents a gallon in the last few months.

Gheit and Felmy also point out that the majority of the nation's gas stations are owned by independent businessmen who have the franchise, not the oil companies themselves. Gheit said that even the gas station owners have been squeezed by wholesale prices rising slightly faster than pump prices.

But the public officials have their doubts about the legitimacy of the prices.

"I don't know if they're gouging, and I don't want to pre-suppose anything," Crist said. "But the circumstances are certainly odd and the prices are historically high."

reuters.com Fri February 21, 2003 11:11 AM ET (The following statement was released by the ratings agency)

NEW YORK, Feb 21 - Standard & Poor's Rating Services said today that it has affirmed its ratings on Lyondell Chemical Co., including its 'BB' corporate credit rating, and removed the ratings from CreditWatch following indications that business disruptions related to reduced crude oil deliveries from Venezuela to one of Lyondell's affiliates, 58.75%-owned Lyondell-CITGO Refining LP, would be limited in terms of the potential affect on Lyondell's credit profile. The current outlook is negative.

Standard & Poor's said that at the same time it revised its outlook on Houston, Texas-based Equistar Chemicals LP, which is 70.5%-owned by Lyondell Chemical Co., to negative from stable. Standard & Poor's affirmed its 'BB' ratings on the company.

"The ratings affirmation follows Lyondell's announcement that it has restored operating rates at Lyondell-CITGO to near-normal levels," said Standard & Poor's credit analyst Kyle Loughlin. "Earlier this year, Lyondell-CITGO's business was disrupted by a lack of crude availability from Venezuela's state owned oil company, PDVSA, related to a general strike against the Chavez administration. While cash distributions to Lyondell are expected to fall short of earlier expectations, despite Lyondell-CITGO's recent ability to obtain and process crude from alternative sources, it now appears that other credit concerns, such as the risk that Lyondell would find it necessary to use its credit capacity to support Lyondell-CITGO, will be resolved satisfactorily."

Standard & Poor's said that the Equistar outlook revision follows disappointing fourth quarter results, which underscore the ongoing challenges faced by petrochemical companies in the current operating environment. Equistar's operating profits declined sharply from the previous quarter as rapid increases to raw material costs eroded margins, while demand showed some weakness due to seasonal issues and economic malaise. "These results raise concern that anticipated improvements to the financial profile may be delayed further, particularly if geopolitical turbulence forestalls recent efforts to expand margins in the face of raw material pressures," said Mr. Loughlin. Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Fixed Income in the left navigation bar, select Credit Ratings Actions.

www.wmtw.com Friday,February21,2003,7:55 AM

UNDATED (AP) -- The middle of winter is looking more like summer at gas stations nationwide. That's as fuel prices surge past two dollars a gallon in some places and motorists grumble about being gouged.

Political instability in Venezuela and the prospect of war in Iraq are triggering price hikes that normally don't kick in until the peak driving season. And experts warn prices could shoot up even more as the political situations and the weather heat up.

The average retail price for a gallon of regular unleaded has risen 22 cents since the beginning of the year. But because wholesale gas prices have increased just 14 cents over the same period, some consumers suspect oil companies are trying to cash in.

Democratic Senator Charles Schumer of New York is calling on the Federal Trade Commission to investigate industry practices.

In a letter, Schumer wrote: "It appears as if price gouging is taking place across the country."

AAA supports Schumer's request, but stops short of using the word "gouging."