sg.biz.yahoo.com Saturday January 25, 12:43 AM By Erik T. Burns Of DOW JONES NEWSWIRES

DAVOS, Switzerland -(Dow Jones)- The Organization of Petroleum Exporting Countries Secretary General Alvaro Silva-Calderon said Friday he is worried about the current high level of oil prices, but said there was no shortage in supplies.

"We believe that the problem is not the supply - the market is well-supplied," Silva told Dow Jones Newswires at the World Economic Forum's annual meeting. Even so, "OPEC is worried about the level of prices," he said.

"At present, the problem is the threat of the war (in Iraq), the nervousness in the market, and the situation of Venezuela also," Silva said, referring to the seven-week strike that has crippled Venezuela's oil industry and reduced exports to a trickle.

But Venezuelan output is increasing, he said. The country is currently producing around 1.2 million barrels a day, and expects to increase that to 2.0 million b/d by the end of February. Venezuela's capacity is around 2.7 million-2.8 million b/d, he said.

"The current situation (in Venezuela) is a transitory situation," Silva said.

He added that a "war premium" in the crude oil price based on fears of disruptions to Iraqi oil exports in the event of war was more difficult to address.

"That is out of our control," Silva said.

Silva also said OPEC is concerned about the possibility of oversupply in the market going into the second quarter, following its Jan. 12 decision to raise its output ceiling by 1.5 million b/d, effective Feb. 1.

Oversupply in the second quarter, when warmer weather traditionally leads to lower demand, "could cause a violent drop of the price," Silva said.

Asked about non-OPEC producers, Silva said cooperation with them is getting better.

"They share with us the concept of the stabilization of the market," Silva said.

-By Erik T. Burns, Dow Jones Newswires; +351 917 265 020; erik.burns@dowjones.com

www.zwire.com by Paul Menchaca, Western Queens Editor January 23, 2003

The threat of a war with Iraq has many Americans worried about what it could do to oil prices. Regular unleaded gasoline at this Whitestone Mobil station is nearly $1.60 per gallon, which is average for New York City. (photos by Anthony Correia   In a controversial television advertising campaign paid for by the non-profit group Americans for Fuel Efficient Cars, a link is made between driving a sport utility vehicle and supporting terrorism, with the tagline “What Is Your SUV Doing to National Security?”

   The idea is that the gas-guzzling vehicles are supporting terrorism through their over- abundant use of oil that comes from the Middle East. In one spot, a group of SUV drivers make casual admissions such as, “I helped hijack an airplane,” “I helped our enemies develop weapons of mass destruction” and “I helped teach kids around the world to hate Americans.”

   The campaign is a response, and also a parody, of a similar advertising campaign from the Bush Administration that linked buying drugs to supporting terrorism. Both campaigns have drawn criticism for selling misconceptions, and some stations, including WABC in New York, have refused to air the advertisements from Americans for Fuel Efficient Cars.

   America’s reliance on oil from the Middle East has resonated as a topic of great discussion in the aftermath of the terrorist attacks on September 11, 2001. As the country teeters on the edge of a war with Iraq, the issue continues to be the source of analysis and controversy for Americans.

   The issue of foreign oil is not a debate over whether or not the United States should rely so heavily on the supply in the Middle East. The political instability in that region, and the ongoing tension with Iraq, assures almost unanimous support to diminish a reliance on this region’s oil output.

   But two issues have generated intense scrutiny: Finding an alternative energy source and taking steps to combat a potential oil price hike in the event of a war with Iraq.

   For Queens residents, the risk of an oil crisis looms large. This is a commuters’ borough where—more so than in Manhattan—people rely on a car to get themselves from point A to point B. An oil price increase would also make it costlier to heat our homes.    Many analysts have discounted the possibility of a massive oil crisis if the United States goes to war with Iraq. Others think back 30 years ago when an oil embargo triggered a major international shortage, sparking a global recession that they believe can happen again.         Fueling The Fear    Experts studying the potential fallout from a U.S.-led attack on a country from which it imports oil, invariably bring up the energy crisis of 1973, when the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, placed an embargo on its shipment of crude oil to Western countries, particularly the United States and the Netherlands.

   Global oil prices rose to four times the level they were before the embargo, and the result was a recession and economic slump that matched the impact of the Great Depression for much of the world. In the United States, people were only able to fill up their cars with gas on alternate days based on whether their license plates ended in odd or even numbers. Lines for gas stations stretched for blocks in some areas.

   The energy crisis made many Americans aware for the first time of just how dependent the United States is on the Arab world for its crude oil supply. Thirty years later, renewed fears have again risen to the surface.

   After the energy crisis, automakers responded by making a move toward building smaller, more efficient cars, foregoing the large automobiles that had been built up to that point. However, as the crisis became a distant memory, and oil prices dropped and stabilized, large vehicles reappeared on the market.

   Congressman Anthony Weiner, who represents the 9th Congressional District in Queens, believes the obsession with big cars by many Americans points to a contradiction on the oil issue that exists in this country.

   “We, as a country, have always been schizophrenic on this issue,” he said. “We’re a country that is protective of the environment and concerned about oil prices, and at the same point we’re addicted to big cars.”

   He is also troubled by what he believes is the lack of a clear approach to energy by the United States.

   “The energy policy has been inconsistent to say the least,” he said. “It’s not only the Bush administration, but previous administrations as well. We have to find a way to reduce consumption. We cannot continue to be on the path that we’re on.”

   Weiner wants to see the government ask the American people to make sacrifices in order to help cut down the consumption of foreign oil.

   “Our leaders don’t ask us to sacrifice enough,” Weiner said. “During World War II, Americans were asked to conserve scrap metal and rubber, and it wasn’t because there was necessarily a shortage on these items, but there was a sense that we had to bring the country together. If you drive a car or buy a plane ticket, you are part of the (energy) conflict. We are not doing enough to improve fuel efficiency in our cars.”

   Some analysts doubt that there will be a crippling energy crisis that mirrors the one in 1973. For one, many believe that an invasion of Iraq would be swift, making any kind of disruption in oil exportation a minimal one.

   Furthermore, not everyone is convinced that Iraq is as important to oil production as it once was. Although Iraq has the second-largest known oil reserves—an estimated 112 billion barrels of crude oil, which is below the estimated 264 billion amassed by Saudi Arabia—its output accounts for only about 3 percent of the world’s supply.

   Experts point to other markets in the world—especially Russia, which is second to Saudi Arabia in oil production—where the United States can turn to for a new supply, weakening any threats from Baghdad of a potential oil embargo.

   However, for some Queens residents, the possibility of a severe oil price hike is a legitimate concern, especially because they are already feeling the effects of higher bills.

   “I think the prices are getting too high and I don’t think it’s right, especially for people on a fixed income,” said a 66-year-old Middle Village resident who gave her name only as Jessica. “(The home heating bill) has gone up quite a bit already, and when you are on a fixed income, you have to make things stretch. I also feel sorry for the young people too, because with these bills, combined with the high property prices, they can’t even afford to buy a house, and that’s not fair.”

   A Rego Park woman, who asked that her name not be used, said that the cold winter this year in New York has taken its toll on her heating bill as well.

   “It’s gone up quite a bit,” she said. “The last bill I got (in January) went up $300 from the previous month’s.”

   A recent report by Oil Price Information Service, a New Jersey-based publisher of petroleum data, indicated that heating oil has risen by 20 percent in New York, while gasoline prices have seen a 30 percent jump. The report further noted that while heating oil prices are expected to stabilize, gasoline prices are expected to see a hike by this spring.

   Although many oil experts believe a war with Iraq would only result in a temporary oil price hike, United States Senator Charles Schumer from New York believes that an invasion opens the possibility for long-term problems.

   “If a potential war goes bad and no additional oil reaches the market, even conservative estimates say gas prices would not just hit the roof, but shatter it,” he said.         Searching For Solutions    If gasoline prices do “shatter” the roof, what can Queens drivers do to cope? One solution could be to carpool.

   The College Point-based non-profit alternative transportation organization, CommuterLink, offers drivers the opportunity to meet other commuters who work and live in the same areas in order to form a carpool. The 13-year-old company also offers mass transit commuting itineraries to best reach a destination, trip reduction strategies and parking management programs.

   Although the company offers services to all five boroughs, Jennifer Covello, marketing manager for CommuterLink, noted that the majority of the clients are Queens residents. A person looking to enter a carpool will fill out an application and the company will use a specialized matching service to find other commuters with similar work schedules and destinations.

   “We find that people who carpool, like it,” she said. “If the person they are carpooling with pulls out of the program, we find that a majority of them will come to us looking for someone else.”

   Covello also indicated that a lot of the clients get involved with the carpool service in order to save money.

   “They want to save money because gas prices are so high,” she said. “Even if you do it two to three times a week, you are cutting your gas payments in half.”

   CommuterLink was started as part of the 1990 Clean Air Act. The company states its goal promoting and encouraging “ridesharing and other modes of alternative transportation, thereby reducing congestion and improving air quality and mobility.”

   Finding long-term energy solutions for the United States is more complicated. Chris McCannell, Congressman Joseph Crowley’s chief of staff, does not believe the government is investing enough money in alternative energy sources in order to make them cost efficient.

   He also believes that the Bush Administration should look more closely at other regions from which to import oil. Although the flow of crude oil from Venezuela has been disrupted because of political turmoil, McCannell believes the region—which is responsible for the fourth largest oil exportation to the United States—should be considered for a new supply source.

   “We don’t think the administration is exploring (other areas) as soundly as they should be with such a focus on the war on Iraq. We are not going to be able to reduce our dependence on foreign oil, but it is about being a little smarter about it.”

www.forbes.com Reuters, 01.24.03, 11:24 AM ET 

NEW YORK, Jan 24 (Reuters) - NYMEX crude futures jumped late morning on Friday as the United States pressed for more credible interviews of Iraqi scientists by U.N. arms inspectors to see if Iraq is keeping banned weapons.

At 11:15 a.m. EST (1615 GMT), NYMEX March crude was up 41 cents at $32.66 a barrel, off the session peak of $32.75. It hit a session low of $32.11 earlier.

"There's new length buying going on," said a NYMEX trader, referring to the opening of long positions.

In early trade, prices moved sideways near unchanged with sellers prompted by news of rising Venezuelan oil exports.

In London, Brent March crude was up 33 cents at $30.05 a barrel, reversing higher with the NYMEX market.

The United States continued to make its case for war on Friday, saying it had evidence Iraq has maintained a program to produce weapons that have been banned since the 1991 Gulf War.

The White House said Iraq's refusal to allow scientist to be interviewed without minders was "unacceptable," Such interviews should be allowed without delay, it said.

The United Nations will get its report from weapons inspectors on Monday and U.S. President George W. Bush will address the nation the following day.

Opposition to the U.S. stand has mounted, with China and Russia joining France, Germany and Canada on Thursday in urging that U.N. weapons inspectors be given more time in Iraq.

Two U.S. Navy vessels including a hospital ship sailed along the Suez Canal on Friday, heading for the Red Sea and on to the Gulf amid a military build-up for a potential war against Iraq, shipping sources said.

And a British ship carrying arms and ammunition would arrive at the Mediterranean city of Port Said at the entrance of the Suez Canal on Saturday, also headed to the Gulf, the sources added. In Caracas, shipping data showed that Venezuelan oil exports jumped 62 percent in the week to Friday to 688,000 barrels per day, or 25 percent of capacity, as the government struggled to break a 54-day-old strike in the world's fifth largest exporter, shipping data showed on Friday.

The recovery in exports adds weight to reports of rising flows at the wellhead in the OPEC member state, where a bitter political conflict is being played out in the oil industry, a key supplier to the United States.

Venezuela exported 2.7 million bpd before the strike, which is intended to force President Hugo Chavez from office, and exports have averaged 519,000 bpd over the past four weeks.

On Friday, striking oil workers said Venezuela's oil output had risen to 812,000 barrels per day (bpd) -- equivalent to 25 percent of capacity.

Earlier in the week, NYMEX crude hit a two-year high of $35.20 on fears of a U.S.-led war on Iraq.

U.S. oil inventory data released Thursday showed an unexpected rise in crude oil stocks in the week to last Friday, defying expectations that supplies would fall below 270 million barrels for the first time since 1975.

NYMEX February heating oil was up 0.27 cent at 91.80 cents a gallon, trading between 90.85 and 92.70 cents.

Gasoline futures were up as European oil traders are shipping gasoline to Venezuela to make up for its scarce fuel supplies during an eight-week general strike, dealers said on Friday.

NYMEX February gasoline extended gains, trading 1.29 cents higher at 91.10 cents, moving within a 89.90-91.40 cent range.

foxnews.com Friday, January 24, 2003

LONDON — Oil prices held steady on Friday after two days of sharp declines, following evidence that strike-bound Venezuelan production is beginning to recover.

U.S. light crude added seven cents to $32.32 a barrel and London Brent gained three cents to $29.75. U.S. crude hit a two-year high of $35.20 earlier this week.

President Hugo Chavez raised the stakes in Venezuela's bitter oil industry conflict on Thursday by announcing 3,000 oil company executives were sacked and saying oil output was rising faster than expected.

Chavez is using troops and replacement crews to break a seven-week-old strike aimed at driving him from office. He still faces huge problems restarting refineries and persuading foreign shippers to resume exports.

Latest shipping data released on Friday showed exports rose to 688,000 barrels a day this week, 25 percent of pre-strike flows and up 60 percent on the week.

Anti-government oil workers concede crude output has risen but say 85 percent of its workforce remain out.

Opposition data lags government estimates but both figures show a steady recovery over the past fortnight.

Oil markets are not betting on any swift increase in Venezuelan output.

"For the oil markets, a definitive end of the strike does not translate into an immediate return to pre-strike output levels," said Michael Rothman of Merrill Lynch.

"Reliable indications suggest it may take 30-45 days to get production back to the 1.5 million barrel a day mark with 45-60 days to necessary to elevate production by an additional million." Pre-strike output was 3.2 million bpd.

OPEC on Friday made clear that it is already doing all it can to fill the Venezuelan gap with cartel Secretary-General Alvaro Silva saying he saw no shortage on world markets.

"What can we do more? I do not agree there is a lack of oil," he told reporters in Davos on the sidelines of the annual World Economic Forum. "The problem of the price is the threat of war."

Signs are that higher shipments from leading OPEC member Saudi Arabia are flowing in to the United States to blunt the impact of the Venezuelan disruption.

U.S. government figures on Thursday showed crude oil inventories up 1.5 million barrels to 273.8 million during the week to Friday.

The increase defied predictions that inventories would fall below 270 million barrels for the first time since 1975.

Fresh signs that the United States is willing to face down international opposition to an attack on Iraq made little impact on the oil market.

On Thursday, Washington shrugged off vocal opposition to what some allies see as a rush to war as China and Russia joined France, Germany and Canada in urging the United States to give U.N. weapons inspectors more time in Iraq.

U.S. Secretary of State Colin Powell said Washington would find other supporters if it decided to launch military action.

"I don't think we'll have to worry about going it alone," Powell said in Washington after talks with Britain's supportive Foreign Secretary Jack Straw. He said Washington had made no decision on whether to seek an additional U.N. resolution to authorise use of force to disarm Baghdad.

Dealers said a war on Iraq was now priced into the oil market and cited predictions that any stoppage in Iraqi production could prove short-lived.

The Pentagon said it would make no sense for U.S. forces to hit oil facilities and oil companies said they were expecting only a brief stoppage in Iraq's two million barrels daily of exports.

"We are banking on a two- to four-week loss of Iraqi oil and we've covered ourselves," said a senior executive at a major oil company in comments typical of the industry view among companies contacted by Reuters. 

www.washingtonpost.com Friday, January 24, 2003; Page A27 By Thomas W. Lippman

The failure of the Bush administration to articulate a compelling rationale for a potential war with Iraq is having a pernicious global side effect: It is fostering the belief that such a conflict would be a "war for oil" and therefore an exercise in imperialism, not an exercise in security.

This view is widely held in the Arab world, where commentators argue that the United States must be expecting instability in Saudi Arabia to compound the instability in Venezuela, and is therefore looking elsewhere for ensured oil supplies. It showed up in the signs and shouts of the antiwar demonstrators who came to Washington last weekend: "No blood for oil!" "We don't want your oil war."

The oil-industry connections of President Bush and Vice President Cheney reinforce the presumed oil rationale. Some proponents of the oil theory also cite the "Carter doctrine," in which President Jimmy Carter proclaimed that the United States would protect its access to Persian Gulf oil by "any means necessary, including military force." The Carter doctrine, however, was inspired by the Soviet invasion of Afghanistan and was directed against "outside" forces, namely Moscow; it was not about the governance of the Persian Gulf countries themselves.

Even a perfunctory acquaintance with the realities of the global oil market would indicate that the "oil war" theory does not stand up to analysis. As an imagined rationale it doesn't square with the facts; and in the unlikely event that it actually does factor into the administration's thinking, it is a specious argument that cannot justify sending American forces into combat.

First, if the United States felt compelled to increase its access to oil from Iraq, it could do so by getting the U.N. Security Council to lift the economic sanctions that restrict Iraqi output -- no bloodshed necessary. Iraq's oil would flow freely into the global market, contracts already signed with Russian and European companies would increase Iraqi production and, as a beneficial side effect, prices would decline as supplies increased.

Then assume the worst in Saudi Arabia: Militant anti-American extremists seize control of the government. Such rulers might refuse to sell oil directly to the American customers, but it's highly unlikely they would refuse to sell oil to anyone, because the country's other sources of income are negligible. Because the worldwide oil flow -- about 67 million barrels a day -- is fungible in a global market, the effect of such a move by Saudi Arabia against the United States would be minimal. To the extent that the Saudis shifted oil sales to customers in Europe or Asia, those customers would stop buying oil from wherever they get it now, and the United States could shift its Saudi purchases to those other suppliers.

It might be necessary to modify refinery runs to account for variations in oil quality, and shipping costs might increase with distance, but the overall impact would be tolerable.

Moreover, the record shows that even countries whose rulers are hostile to us are willing to sell us oil because they need the money. Saddam Hussein's Iraq itself sells oil to American consumers under the "oil for food" program. If the United States buys no oil from Iran or from Moammar Gaddafi's Libya, it is because we cut them off -- not because they cut us off. Libya would welcome the return of a petroleum relationship with the United States.

Finally, an American takeover of Iraq would not, in the long run, give the United States guaranteed access to Iraqi oil. A democratic Iraq might well decide that its future prosperity would be best served by a supply relationship with, say, China, now an importer of oil with rapidly growing demand. The days when industrialized countries acquired ownership of oil in producing countries are decades in the past. Conversely, a fragmented Iraq, breaking up along ethnic lines, might produce less oil than currently, rather than more.

As the U.S. military buildup around Iraq's perimeter accelerates, the Bush administration is obliged to make a persuasive case for war. It should also make clear what its motives are not.

Thomas W. Lippman, an adjunct scholar at the Middle East Institute, is writing a book on U.S.-Saudi Arabian relations.