biz.yahoo.com Valero Energy Corporation Responds to Moody's Announcement Friday January 31, 2:30 pm ET

Currently, U.S. Gulf Coast gasoline margins are $7.20 per barrel, which is extraordinarily high for this time of year. And, based on the forward curve, the gasoline margin for the year is currently $5.20 per barrel, which is the highest gasoline margin in the last 15 years. It is also higher than the gasoline margins in 2002 and 2001 (which were $4.72 per barrel and $4.97 per barrel respectively) when Valero achieved record earnings.

"And, gasoline margins should remain strong, supported by tightening inventories, strong demand and the impact of the Venezuelan strike," said Greehey. "Gasoline inventories fell 3 million barrels last week and inventories are 4 million barrels lower than this same time last year. Meanwhile, gasoline production is down 500,000 barrels per day (BPD) since the first of the year. In addition, the strike in Venezuela has reduced gasoline imports into the U.S. by 55,000 BPD and has reduced exports to other countries (primarily Latin America) by another 175,000 BPD. This in turn has resulted in increased U.S. exports to Latin America. And, European barrels that would have typically been imported to the U.S. are now going to Latin America. At the same time, demand is up more than 4% over the last four weeks compared to the same period last year."

cnews.canoe.ca

FREDERICTON (CP) -- The New Brunswick government has drafted a new corporate plan for the province's power utility, hoping to avoid the kind of deregulation horrors that have haunted places like Ontario and California.

New legislation introduced Friday will split NB Power, the provincial Crown utility, into four subsidiaries to handle generation, transmission, distribution and nuclear power.

The subsidiaries will remain publicly owned, but they are designed to operate at arm's length from the provincial government.

"People in Ontario were not ready for it (deregulation)," said Energy Minister Jeannot Volpe. "We have decided to take a more prudent, step-by-step approach in New Brunswick."

Premier Bernard Lord stressed he is not privatizing the power utility.

However, opposition politicians attacked the Conservative government for giving away control of the province's largest public asset.

"This legislation will wipe out any kind of clear, public capacity to make significant decisions about our energy future," charged NDP leader Elizabeth Weir.

Lord denied the accusation.

"This is like a bad episode from Fear Factor," Lord told the legislature, referring to a TV show that forces contestants into risky competitions.

"What we're doing is re-regulation... We want to maintain fair, affordable rates for ratepayers and, at the same time, limit the risk to taxpayers."

The International Brotherhood of Electrical Workers, which represents 2,800 workers at NB Power, warned the province is following a risky path.

"We fear this is simply a longer stroll toward the same road other jursidications have followed, without success," said union spokesman Ross Galbraith, referring to Ontario and several U.S. states.

Ontario recently reversed its decision to sell Hydro One, its huge electrical-transmission utility, under pressure from deregulation opponents.

Facing a consumer revolt, Premier Ernie Eves capped retail electricity prices last November after deregulation of the generation market led to soaring power bills.

Lord said that despite the problems in other jurisdictions, New Brunswick cannot maintain the status quo.

NB Power's $3-billion debt will be divided between the subsidiaries, but the people of New Brunswick are still on the hook for the money.

Nevertheless, divvying up the debt between the new corporations will improve the province's bottom line, the energy minister said.

"This has a direct bearing on our credit rating, which in turn has an impact on the province's cost of borrowing funds in the capital markets," Volpe said.

The average New Brunswicker won't notice any change in the operations of the utility, the government said.

Only the three municipal power companies in Saint John, Perth Andover and Edmundston, and 42 large industrial customers will have a choice of who they buy power from, or generate their own.

However, they'll be hit with an exit fee if they unplug from NB Power.

Lord said the province will not sell the Point Lepreau generating station, Atlantic Canada's only nuclear power plant, although it's looking for private investors to help with a possible modernization of the Candu reactor located on the Bay of Fundy shore.

"It's a nuclear power plant," Lord said, adding that for regulatory and safety reasons, it should remain publicly owned. "We could lease it, if conditions are right."

Still, the province is willing to sell the Coleson Cove generating plant near Saint John, N.B., and is currently negotiating with a potential buyer.

Lord would not say whether the talks are aimed at full or partial sale of the oil-burning plant, the largest single generating station in New Brunswick.

asia.reuters.com Fri January 31, 2003 10:33 AM ET

SAN FRANCISCO (Reuters) - ChevronTexaco Corp. CVX.N , the No. 2 U.S. oil company, on Friday reported a quarterly profit, reversing a year-ago loss but posting results that were hurt by a drop in production and fell well short of analyst estimates.

The San Francisco company -- which owns 26.5 percent of troubled Dynegy Inc. DYN.N -- reported fourth-quarter net income of $904 million, or 85 cents a share, compared with a net loss of $2.52 billion, or $2.38 a share, a year ago.

However, excluding charges for special items and the company's merger, it reported earnings of $1 a share, or about 22 percent below consensus estimates on Wall Street.

Shares of ChevronTexaco, which fell 4 percent in the fourth quarter, were down as much as 3 percent in early trade.

Chairman and Chief Executive Dave O'Reilly in a statement called results for both the fourth quarter and the full year "unsatisfactory" adding that the company "operated under weak global market conditions in our refining and marketing sector and recorded a number of special charges against income."

As with much of the industry, robust oil and gas prices boosted the company's upstream exploration and production results, which rose 125 percent from a year-ago to $1.2 billion.

But the rise in profit was marred by concerns about ChevronTexaco's failure to increase its oil and gas production -- a key measure of future prospects for oil companies.

Hurt by factors such as OPEC quotas and tropical storms in the Gulf of Mexico, worldwide oil and gas production in the quarter dropped 6 percent to 2.6 million barrels a day,

The company also said earlier this week that capital spending this year will fall to $8.5 billion, 17 percent lower than before Chevron bought Texaco in 2001.

About three-quarters of the money -- or $6.4 billion -- will be invested in worldwide exploration and production, while refining and marketing investments will total about $1.3 billion. The remainder will go toward chemicals and other businesses.

Even so, Fadel Gheit, an analyst at Fahnestock & Co., was not fazed by the company's results and has a sanguine outlook.

"All in all, they missed earnings, but when you see why, most of the reasons are not irreversible things," he said. "There is no problem with their operations. They just happen to be the victims of circumstance."

DYNEGY TROUBLES

Charges for the most recent quarter included $52 million for the company's stake in Dynegy. ChevronTexaco has been under pressure because of its stake in the Houston-based energy company, which set a restructuring plan last fall and is struggling to reduce debt following credit downgrades.

Chevron has held a stake in Dynegy since 1996.

In the quarter, benchmark oil prices increased by more than 40 percent from a year earlier, amid fears of a potential war in Iraq and on the effects of a prolonged general strike in Venezuela, one of the largest crude exporters in the world.

While that helped its exploration and production earnings, the high commodity prices hurt refining, marketing and transportation, which posted a $151 million operating loss.

Revenue rose to $27.06 billion from $21.46 billion in the prior-year quarter.

Shares of ChevronTexaco were down 85 cents, or 1.32 percent, to $63.35 in Friday morning trade on the New York Stock Exchange after it missed the Thomson First Call consensus estimate of $1.28 a share in quarterly earnings. Shares fell to an earlier low of $62.30.

www.centralmaine.com Friday, January 31, 2003 By DEIRDRE B. FULTON, Special to the Morning Sentinel

WASHINGTON — In an attempt to reduce national dependence on foreign oil, improve the environment and aid consumers plagued by rising gasoline costs, Sens. Olympia J. Snowe, R-Maine, and Dianne Feinstein, D-Calif., vowed Thursday to fight to close the "SUV loophole" and increase fuel efficiency.

Reintroducing legislation Snowe described as a "practical and attainable goal to address a national emergency," the senators held a Capitol Hill press conference to outline their proposal.

By requiring light trucks and sport utility vehicles to adhere to the same tougher fuel standards — laid out in the 1975 Corporate Average Fuel Economy (CAFE) standards — as passenger cars, the legislation would save 1 million barrels of oil every day, reduce oil imports by 10 percent and prevent damaging emissions into the atmosphere, Feinstein said.

Snowe and Feinstein introduced the same legislation last year, but deferred to an even more ambitious proposal offered by Sens. John McCain, R-Ariz., and John Kerry, D-Mass. That bill failed to win approval, but Feinstein said she was optimistic about this year's attempt.

"I think now there's much more concentration — there are television spots on it, there are articles done on it all the time, there are people becoming much more aware," she said. "I think there may also be a feeling of guilt over the Congress for not moving when they know the science and technology are there."

The changes could be particularly beneficial for Maine, said Snowe press secretary Dave Lackey.

"Maine generates very little in emissions but we suffer disproportionately because pollution is transported by the jet stream to our state. That has an impact in a variety of ways — from CO2 and ozone to mercury in our lakes. Cleaner emissions result in better air quality," he said, adding that Maine residents would also benefit from lower gasoline prices.

When CAFE standards were first designed, light trucks were much less common and were given a less stringent fuel efficiency standard, creating the loophole that benefits SUVs and similar vehicles that make up 50 percent of today's road traffic. The proposed legislation would require these vehicles to increase their gasoline mileage per gallon gradually over the next eight years.

Snowe pointed to unstable oil sources like Venezuela and Iraq in asserting that the United States needs to reduce its dependency on foreign oil. Both senators stressed the negative economic impact of rising costs at the pumps.

"Not only do we have a national security issue when it comes to energy dependency from abroadÏ. We're talking about an environmental situation and we're also talking about stability of prices," Snowe said.

According to projected increases, the United States could depend on foreign sources for 70 percent of its oil by 2025, the senators said.

"If that isn't an emergency situation, I don't know what is. I don't know what has to happen to inject a sense of urgency," Snowe said.

The Bush administration announced its own fuel efficiency plan last December, proposing to increase CAFE standards for SUVs and light trucks to 22.2 miles per gallon by 2007. Snowe and Feinstein said they would pick up where the Bush effort left off. By increasing standards by approximately 1.3 miles per gallon per year after 2007 under the Snowe-Feinstein plan, SUVs would have to average 27.5 miles per gallon by 2011.

Brownie Carson, executive director of Maine's Natural Resources Council, said he appreciated the extra effort by Snowe and Sen. Susan M. Collins, a co-sponsor of the bill.

"Maine's two senators really understand the importance of a different kind of energy policy than has been proposed by the administration," Carson said, referring to the Bush initiative.

U.S. automobile manufacturers have to make the effort to experiment with new technology, Carson said, something Snowe and Feinstein say is possible.

"This legislation is carefully crafted, based on good science, and it contains increases which are technologically feasible," Feinstein said. "We have the technology to do this, we don't have the will."

Citing a 2001 National Academy of Sciences study, the senators emphasized that U.S. auto manufacturers could use existing technology to make new models of SUVs, minivans and light trucks more fuel-efficien

www.theleafchronicle.com By JILL NOELLE CECIL The Leaf-Chronicle

GAS RATES

Natural gas rate comparison after local 20 percent increase (based on 100 cubic feet monthly usage)

• Clarksville -- $69.26
• Greater Dickson Gas Authority -- $79.76
• Springfield Gas -- $69.93
• Nashville Gas -- $83.50
• Knoxville Utility Board -- $95.33
• Middle Tennessee Natural Gas -- $70.10

Natural gas will cost an average of nearly $12 more per month in Clarksville after a 20 percent rate increase approved Thursday takes effect Feb. 1.

The city's cost of buying the commodity has increased 130 percent since a year ago, City Gas Manager Tae Eaton told members of the City Council's Gas, Water and Sewer Committee Thursday.

With the increase, Clarksville's natural gas prices will remain lower than other Tennessee cities, Eaton said.

The average household uses 100 cubic feet of natural gas in the month of February. The price for that amount in January was $57.71. In the coming month, the same amount will cost $69.26.

Many other cities change their rates monthly to follow commodity prices.

The committee reluctantly approved the increase, which does not require any further approval.

"Can we get by with 15 (percent increase)?" asked Councilwoman Margie Clark.

Based on current projections, the department would end the fiscal year with about a $300,000 deficit if the increase were 15 percent, said Barbara Harris, comptroller for the Gas, Water and Sewer Department.

Clarksville, along with utilities nationwide, is experiencing the highest natural gas prices since April 2001, said Gas, Water and Sewer General Manager Dwight Luton.

Luton said the department fended off raising rates as long as possible with the hopes that the commodity prices would stabilize.

"We can't control it," Luton said. "If we knew what the market would do, we'd probably work on Wall Street and make lots of money."

Fluctuation has led to two rate increases and two decreases during the last few years. The department raised natural gas prices 20 percent in July 2000 and again by 35 percent in December 2000. It lowered rates 10 percent in February 2002. In June, it restructured the billing tiers, creating a 6 to 8 percent decrease for customers, Harris said.

Luton said it is possible the rates will be decreased as early as the end of the fiscal year, June 30, depending on the natural gas market.

Eaton said several factors are responsible for the recent price spike. Demand for the commodity is higher now because of the bitterly cold winter.

Oil prices are also at play, Eaton said. A strike in Venezuela and concerns about a possible war with Iraq are driving up per-barrel prices.

Higher oil prices translate into higher natural gas prices because several industries switch to natural gas when other fuels get pricey, he said.

Councilman Marshall Ross, who is not on the committee, attended the meeting because of his interest in the market and its effect on the city.

After he studied a chart reflecting the climbing prices charged to the Gas Department, Ross said the rate increase is unfortunate but necessary

"The city's price went up 40 percent since Dec. 10," Ross said.

Jill Noelle Cecil covers city government and can be reached at 245-0262 or by e-mail at jillcecil@theleafchronicle.com.