www.forbes.com Reuters, 02.09.03, 6:10 PM ET NEW YORK, Feb 9 (Reuters) - U.S. average retail gasoline prices made their biggest jump in 11 months during the past two weeks, as crude prices hit 26-month highs on fears that war in Iraq could upset Middle East oil supplies, according to a nationwide survey on Sunday. The national average for self-serve regular unleaded gas shot up 11.24 cents to $1.5975 a gallon in the two weeks ended Feb. 7, according to the Lundberg survey of 8,000 gas stations. New York crude oil futures jumped above $35 a barrel last week on concerns an attack on Iraq, the world's No. 8 oil exporter, could come before a strike ends in Venezuela, leaving supplies dangerously thin during the U.S. winter. "On top of the war premium already built into crude oil prices, the Venezuelan oil strike of Dec. 2 removed oil from world supply," said Trilby Lundberg, editor of the survey. "Also since then, war jitters have become war preparations." The U.S. Energy Information Administration said Friday the average price for U.S. crude oil is expected to stay above $30 a barrel this year, potentially hindering an economy struggling to rebound from recession. Fears of a shortfall in gasoline supplies ahead of the summer vacation driving season are rising as refineries in Venezuela, normally a big gasoline supplier to the United States, remain well below capacity because of the strike. Low supplies sent U.S. heating oil futures skyrocketing to $1.11 a gallon on Friday, a level not seen since December 1979, after rising 20 percent in the last week.

Web posted Saturday, February 8, 2003 4:33 a.m. CT www.amarillonet.com

TULSA, Okla. (AP) - Fallout from Venezuela's two-month oil strike prompted one agency Friday to downgrade Citgo Petroleum's credit rating from speculative to highly speculative.

Fitch Ratings cited the strike's impact on the financial flexibility of the Tulsa-based company and its parent in cutting Citgo's senior unsecured debt rating from BB- to B+.

The company also assigned a B+ rating to Citgo's proposed $550 million bond offering.

Citgo is owned by PDV America, a subsidiary of the South American country's state-owned oil company, Petroleos de Venezuela.

The agency said the downgrade reflects Citgo's tight liquidity as well as the potential use of proceeds from the proposed bond offering to help pay PDV America's maturing debt in August.

Fitch is concerned about the ability and willingness of Citgo's parent to pay the maturity of the notes in the absence of a return to normal oil operations.

The strike ended earlier this week in every industry but oil. The disruptions in oil exports from Venezuela forced Citgo to buy oil on the more expensive spot market.

www.heraldsun.news.com.au By Nigel Wilson 10feb03

OIL prices raced to a new two-year high of more than $US35 a barrel at the weekend, raising concerns about their effect on global economic growth. Analysts expect crude oil prices to continue rising because of the increasing US bellicosity against Iraq and demand for heating fuel caused by the severe northern hemisphere winter. Crude oil rose 4.8 per cent in New York last week, closing at $US35.05 a barrel in New York – its highest price since November 2000. In London, March Brent crude oil futures contract rose US90c, or 2.9 per cent, to $US32.34 a barrel. Brent is the benchmark for most of the world's traded oil.

The price spiral in the past two months has prices outside OPEC's target range of $US22 to $US28. It puts the organisation under more pressure to lift production just 10 days after a 1.5 million barrels increase aimed at easing supply problems.

President George W. Bush's remarks on how the UN Security Council should deal with Iraq's Saddam Hussein were influencing the market, but analysts said the Venezuelan strike and the weather were also having an effect.

US oil inventories have fallen to their lowest levels in about 27 years because of a general strike that crippled exports from Venezuela, a key supplier to the US market.

But the real spark behind the market's latest moves is heating oil, supplies of which have suffered their biggest weekly fall in nine years.

It comes as storms blanket swaths of the eastern US in snow. The US is considering releasing two million barrels of heating oil held for emergencies.

The new head of the International Energy Agency, Claude Mandel, said on Friday the risk of an oil crisis resulting from a war with Iraq could be managed. Iraq's oil reserves of 120 billion to 200 billion barrels of oil are second in size only to Saudi Arabia's.

Economists at Goldman Sachs warned that a prolonged oil price rise could hurt the world economy severely. A $US10 rise in the price of a barrel of oil can cost US consumers $US50 billion a year.

If prices stay high for 12 months, global economic growth targets could be cut by more than 1.2 percentage points, Goldman Sachs said.

In a shock decision, BP said yesterday it was delaying development of the $US2.2 billion Tangguh liquefied natural gas project in Indonesia because of poor profit forecasts.

Tangguh won a contract with China after the project lost out last year to the North West Shelf to supply $25 billion worth of LNG to Guangdong.

www.signonsandiego.com By Frank Green UNION-TRIBUNE STAFF WRITER February 8, 2003

Gasoline prices in San Diego County and elsewhere in the United States are spurting like a new well, pumped up by refinery glitches, war talk against Iraq and production cutbacks in strike-torn Venezuela.

In the past two weeks, area motorists have seen the cost of a gallon of unleaded regular gas spike by 6 cents a gallon, to about $1.71, according to the Utility Consumers' Action Network's survey of 550 service stations.

That's 40 cents higher than the price of gasoline in San Diego County a year ago.

"Crude oil is now in the $32-to $33-a-barrel range, about $10 higher than this time last year," said Paul Langland, a spokesman at Arco parent BP.

Langland attributed the price surge for crude oil to production problems last week at a ChevronTexaco refinery in El Segundo and jitters about developments in Iraq and Venezuela.

Meanwhile, the Automobile Club of Southern California said yesterday that its survey of San Diego County stations indicated the average price of fuel has jumped to $1.74 a gallon. The club does not check prices at as many outlets as UCAN's survey.

"Gasoline markets have reflected war fears among traders, and that continues to send prices higher," auto club spokeswoman Carol Thorp said. "Gasoline refinery activity is down because of tight supplies of crude oil worldwide."

An outbreak of hostilities and the possible loss of Iraqi oil on world markets could cause further gasoline price spikes, Thorp said.

Already, there were indications yesterday that prices may have risen beyond the levels in the latest UCAN and auto club surveys.

Some Chevron and Unocal 76 stations in San Diego yesterday were charging $1.87 a gallon for regular, while some Arcos – usually the low-price brand in California – were selling fuel for $1.77.

Gas at membership warehouse Costco was going for $1.67.

Independent dealers, who typically help stabilize prices in the market with relatively low prices, complained yesterday that they are getting squeezed as surplus fuel supplies dwindle from the 10 corporate-owned refineries in the state.

Joe Balistrieri, owner of North Park Service Center, said his cost for a gallon of unleaded regular jumped from $1.04 on Jan. 28 to $1.16 yesterday.

He nevertheless is trying to hold his pump price at $1.69 a gallon to compete with surrounding corporate-owned stations.

"When taxes are figured in, I'm making only about 4 cents a gallon right now," Balistrieri said. "I've had to bite the bullet."

Oil industry executives yesterday said a gallon of gasoline – even at current prices – still costs consumers less than a gallon of bottled water. When inflation is factored in, gasoline costs about the same as it did 30 years ago.

However, San Diego County motorists continue to pay far-higher prices than their counterparts nationwide.

The U.S. Energy Department said this week that the average price of regular gas climbed by 5.4 cents in the last week, to $1.53 – 18 cents or so less than the average price here.

Oil companies have long contended that San Diegans pay more at the pump because of the relatively small number of local stations per capita and the high cost of doing business in the area, among other factors.

U.S. crude-oil prices will average $32.36 a barrel this year, up 24 percent from last year, as inventories stay below normal levels and the nation prepares for a possible military assault on Iraq, the Energy Department said yesterday.

The department raised its estimate for U.S. crude-oil prices by 5.8 percent from last month's forecast.

Venezuelan crude-oil production, which has been curbed by a strike, is estimated at about 1.4 million barrels a day in February, up from last month's forecast of 1 million barrels a day, the department said.

Venezuela was producing about 3 million barrels a day before the strike began Dec. 2.

The department said it will take several months for production to return to pre-strike levels.

Global spare capacity is estimated at about 2 million barrels a day as the Organization of Petroleum Exporting Countries ramps up production by 1.5 million barrels a day in March, as agreed at its meeting last month, the Energy Department said.

Oil inventory levels held by member countries of the Organization for Economic Cooperation and Development could reach five-year lows by spring, the department said.

www.seacoastonline.com By Associated Press

BOSTON - Massachusetts Sens. John Kerry and Edward Kennedy called on President Bush Friday to release oil from the Northeast Home Heating Oil Reserve, to cope with increasing oil prices in New England.

"We write today to urge immediate action in addressing the dramatic increase in oil prices currently plaguing New England," Kerry and Kennedy said in a letter to Bush, adding that wholesale oil prices in Massachusetts had increased by 35 percent from last year.

In the letter, the senators wrote about the ongoing winter storm and below-freezing temperatures for more than two weeks that have increased emergency assistance requests by 20 percent from last year.

Oil prices were rising because of the effects of a nationwide strike in oil-rich Venezuela, uncertainty about war in Iraq and increased demand in the winter, the senators said.

About 69 percent of the nation’s 7.7 million households using heating oil are in the Northeast, Kerry and Kennedy said. They also asked Bush to release $100 million in Low Income Home Energy Assistance Program funds, on top of the $200 million released two weeks ago.

"That’s exactly why we worked to create the reserve, to help New England families through times just like this," Kerry said.

"With oil prices climbing by 35 percent, an exceptional cold winter and a stumbling economy, Massachusetts’ families are facing an emergency," Kennedy said, adding that the oil release would be "crucial to the health and safety of these families."