<a href=news.mywebpal.com>The Jeffersonian.com 04/03/03 By Bob Allen

Even though gasoline prices are up more than 25 percent in Maryland and the Baltimore area from a year ago, AAA Mid-Atlantic says it hasn't seen signs that people are rethinking travel plans.

"I don't think we've gotten there yet," Deborah DeYoung, AAA Mid-Atlantic's manager of public and government relations, said Tuesday. "The 200 travel agents we work with are telling us that people are still switching from airline to driving trips."

With pump-side gasoline prices in Maryland around $1.66 per gallon for regular (only about 6 cents short of a record high) and $1.65 nationally (down a cent or two from last week's record high), DeYoung said the average driver is spending about $42 more a month than a year ago.

Rick Gordon, owner of Gordon's Citgo at 7101 Reisterstown Road in Pikesville, says he's heard a lot of complaints about prices, "but I haven't seen any changes" in buying habits.

In agreement are an attendant at Caton Texaco at 3300 Washington Boulevard in Lansdowne as well as Adrian Hughes, owner of Hughes's Shell on York Road in Timonium.

"People are more or less switching from premium to plus or regular gas," he added. "But that happens all the time when prices go up."

But Mike Dechelman, owner of Randallstown Getty at 9901 Liberty Road, said his sales have declined since prices rose. "Even though we always take a 'cheapest-on-the-street' approach, our sales have gone from 2,000 gallons a day to 1,200 or 1,300 gallons a day since prices went up."

Dechelman said he's unsure why sales have dropped or where people are buying the gas they used to buy from him. He speculated that people may also be bargain hunting for gas.

"It's very upsetting to buy gas at these prices," Dechelman admitted.

He said that on a recent trip to Ocean City, the prices varied greatly. "It was $1.74 a gallon in Easton, $1.49 in Cambridge and $1.49 in Ocean City," he recalled.

And prices remain high even though crude oil prices have dropped from nearly $40 a barrel a couple weeks ago to around $25.

Industry analysts predict that market volatility due to the war, the shut-down of Nigerian oil fields, ongoing shortfalls in Venezuela's production due to political unrest and the increased demand for gasoline by summer travelers will keep pump prices high for the short term.

Industry analysts with whom AAA confers also predict that crude oil prices will probably not drop below $20 a barrel or rise above $40 in the foreseeable future.

"Experts feel that the president would have to dip into the 600 million gallons in the Strategic Petroleum Reserve" if prices did go above $40, said DeYoung.

"Any recession we've ever had has been preceded by a spike in oil prices," she added. "Beyond the prices we're paying at the pump, that's the bigger picture."

Regardless of market conditions, gasoline prices typically rise in the late spring in anticipation of increased demand by vacation travelers.

Summer prices are also impacted by the added costs of pollution-reducing additives required for blends of gasoline used in the warmer months.

Still, DeYoung doubts current prices will dampen many travel plans. "The price of jet fuel has also risen," she said. "And if you look at specifics, like, for instance, the additional cost of driving (from Baltimore or Washington, D.C.) to North Carolina's Outer Banks is only about $20. So it's not prohibitive. At least not yet."

Plus, she insists, "People are stressed out these days. Between the snow and war and the economy they need their vacations."

Posted on Thu, Apr. 03, 2003 By Gary Richards Mercury News California motorists can expect wild increases in gas prices for years to come -- and the state says it's not because big oil is gouging us.

Motorists in the state are consuming 3 percent more gas every year, and that added demand is outstripping the 1 percent increase that California refineries can realistically be expected to produce annually, said William Keese, chairman of the California Energy Commission.

The state issued a report Wednesday stating that the record run-up in pump prices is caused by market conditions, not manipulation by major oil producers. The report indicated that prices probably will fall below $2 a gallon statewide soon, mainly because crude oil prices continue to ease.

But the long-term prognosis, Keese suggested, is not promising.

California burned 14.2 billion gallons of gas in the first 11 months of 2002, the result of an increase in sales of gas-guzzling sport utility vehicles, longer commutes and a growing population.

Increasing that demand just 3 percent means that roughly an extra 420 million gallons are consumed annually, an increase likely to lead to more wild spikes at the corner gas station.

You're going to need a steady flow of imports, or $2-a-gallon gas is going to be an annual event out there,'' said Mark Mahoney, who tracks fuel prices on the West Coast for Oil Price Information Service. Because you pretty much can forget about building new refineries.''

To offset the state's growing dependence on oil, the Energy Commission is expected to recommend the creation of a gasoline reserve that can be tapped when inventories drop.

Clearly, conserving gasoline is not only important for saving money,'' said Jennifer Mack of the state auto club. It's going to be very important for reducing overall demand in the future. . . . But we also have to learn ways to reduce fuel consumption now.''

The state is considering attempts to reduce the growing consumption by increasing gas taxes and fees and offering rebates and incentives for hybrid cars, which operate partly on electricity. The proposals will be presented to the state Legislature and Gov. Gray Davis in June.

The latest study blames the current spike on several factors, including the doubling of crude oil prices because of uncertainty about war in the Middle East and production interruptions in Nigeria and Venezuela.

However, Keese added, the change from MTBE to ethanol has had little impact on current prices. He said about 80 percent of gas sold in the state is now free of MTBE.

Self-serve unleaded gas was selling for $2.16 a gallon statewide on Wednesday, down 2 cents from the record high of $2.18 set on March 22. San Francisco again had the most expensive gas in California at $2.26 a gallon, while San Jose's average stood at $2.15.

Wholesale prices have dropped about 42 cents a gallon since March 15, but retail prices are falling at a much slower pace -- just a couple of pennies.

But by next Monday they should fall significantly,'' Keese said. We expect prices under $2 in most parts of California by the end of this week. If they are not, we'll be concerned.''

Crude oil fell to $28.50 a barrel on Wednesday, on expectations the war in Iraq would soon end. That's down 28 percent from a 12-year high of $39.99 a barrel in February.

In addition, U.S. crude-oil imports were the highest recorded by the Energy Department since it began compiling weekly figures in 1990.

Contact Gary Richards at grichards@mercurynews.com or (408) 920-5335.

<a href=news.ft.com>Financial times By Nerma Jelacic in London Published: April 3 2003 11:21 | Last Updated: April 3 2003 11:21

Brent crude prices continued their downward correction on Thursday after some surprisingly strong oil stocks data from the US and as coalition forces registered further victories in Iraq.

By 0945 GMT, IPE Brent for May delivery was 23 cents lower at $24.98 per barrel, exending the previous session's fall of more than a dollar per barrel.

The sharp revision in the commodity started on Wednesday as fears of supply disruption receeded after US-led forces moved closer to Baghdad.

The advance continued on Thursday with US forces reported to be within six miles of the outskirts of the capital.

Iraq moved Republican Guard units, President Saddam Hussein's best-equipped and most loyal fighters, to the south of Baghdad to face the thousands of US troops approaching the city.

The fall in crude prices was intensified by the release of the latest stockpile figures from the US on Wednesday.

US crude oil inventories rose by a larger-than-expected 2.5 per cent to 10.36m barrels per day of oil last week as a surge in supply from Saudi Arabia and Venezuela pushed imports to their highest level on record, the Energy Information Administration said.

Gold prices fell to a two-week low on news of US advance in Iraq. Bullion was trading at $325 an ounce down from the previous session's fix of $328.90 an ounce.

Investors pulled out of the traditional safe haven over the past two days returning to the dollar and equities instead. The yellow metal has lost some $11 an ounce since the start of this week.

PressTelegram Article Published: Wednesday, April 02, 2003 - 7:50:02 PM PST

The state's Energy Commission did not find any evidence of price gouging by the oil industry in connection with recent record-high gasoline costs. Fine, but we're hardly relieved.

Simply because the commission didn't find evidence doesn't mean it didn't happen. The fact that gas prices tend to go down once the state probes begin a pattern that appears to be repeating itself here is highly suspicious.

And, even if we accept that there was no gouging, California's oil and energy markets are so ripe for manipulation that it could happen at any time.

Gasoline prices hit a $2.14 average in mid-March, a record high for the state. Prices began to drop by a few cents last week.

Certainly there are market factors at work, such as the unrest in Venezuela, the higher costs of adding Ethanol to gasoline instead of the more toxic MTBE (by federal mandate), and others. However, refinery production increased while prices were going up, so tighter supplies can't be blamed here.

Much of the problem is a lack of competition. California is so isolated from other gas-producing states that it is highly vulnerable to price increases. It doesn't take the kind of overt collusion that caused the energy crisis companies can just watch each other's pump prices and keep raising them along with competitors in a vicious circle. It may not be as evil as what Enron did, but it's still wrong.

Evidence or no evidence, the state needs to keep a constant and vigilant eye on the oil and energy industries to protect consumers from price gouging.

<a href=www.nytimes.com>The New York Times By NEELA BANERJEE

The price of oil fell 4 percent yesterday, as traders took heart that supplies might be growing soon because of the recent progress of coalition forces in Iraq and increases in oil supplies in the United States.

Oil for May delivery was down $1.22, to $28.56 a barrel, at the end of trading yesterday on the New York Mercantile Exchange.

The price of oil has fallen nearly 8 percent in the last two days alone. But oil traders and industry experts cautioned that the decline was the latest swing in a market that would remain volatile for weeks because of political conflict in several major oil-producing states.

Oil exports from Iraq have been suspended. Ethnic conflict in the oil-rich Niger Delta has compelled three Western oil companies to forgo nearly 800,000 barrels a day of oil production in Nigeria. And though exports have risen from strike-torn Venezuela, many industry experts question how sustainable those shipments are.

"There are still so many balls in the air and none have come down yet," said Eric Bolling, an independent oil trader and member of the Mercantile Exchange's board. "We still have Iraq. We still have Nigeria. We still have Venezuela."

The oil markets are reacting to news from Iraq, more than anything, traders said.

So far this week, the markets have been buoyed by several reports that seemed to reinforce the sense that the United States-led forces have gained the upper hand, including the rescue of a prisoner of war Tuesday and victories on the road to Baghdad, Mr. Bolling said.

"There's this schizoid view of progress in Iraq," one Houston crude oil trader said. "The first few days, people thought the war would be over in a day. Then, last week, people thought it would take a year, and prices spiked. And now, there's a more positive view again."

Prices also fell because oil long promised by Saudi Arabia to compensate for the loss of Iraqi exports arrived in the United States, according to weekly data published by the Energy Department. Oil prices rose through much of the winter because inventories of crude oil and petroleum products like gasoline fell to alarmingly low levels because of the strikes in Venezuela and the prolonged cold weather.

But Energy Department data showed that stocks of crude oil for the week ended Friday increased 6.8 million barrels, far more than the 5 million barrels or so that many traders had expected, Mr. Bolling said. Imports of crude oil rose to an average of 10.4 million barrels a day last week, according to the data.

"The markets are now in a show-me mood," said Lawrence J. Goldstein, president of the Petroleum Industry Research Foundation. "They now see the presence of large crude oil imports for the last two weeks. So they believe that for time being, the worst is over for crude oil."

But because all the world's oil exporters are producing flat-out to compensate for the export suspensions in Iraq, Nigeria and Venezuela, there is little room for any other malfunction in the system, experts and traders said. "There is still volatility going forward," Mr. Goldstein said. "You could have unscheduled refinery problems. Things could deteriorate in Nigeria or even Venezuela."