www.nytimes.com February 20, 2003 By NICK MADIGAN

OS ANGELES, Feb. 19 — Beyond antiwar demonstrations and troop deployments, gasoline prices that have jumped to more than $2 a gallon in some places seem to many drivers to be the most tangible evidence of the Bush administration's plans for a possible attack on Iraq.

People pumping gas from Los Angeles to Charlotte, N.C., in the past few days surmised that the oil companies were cashing in on the uncertain geopolitical climate, with the effect trickling down to the corner gas station.

"If there's a chance of the oil companies' driving up the prices, they'll do that," said Jeremy Levenson, a doctor who had just paid $30.63 — at $2.09 a gallon, the most he had ever spent — to fill the tank of his Infiniti I30 with high-octane gasoline at a Union 76 station in the Westchester district of Los Angeles.

"Who knows how much of this is artifice and how much is created by the oil companies for their own benefit?" he asked. "It's what the traffic will bear. It's capitalism."

Since late last year, the price of gasoline has risen an average of 29 cents a gallon, according to the American Petroleum Institute, a trade group representing more than 400 oil and natural gas companies.

According to AAA, the motorist club, which assembles a daily compilation of gas prices, today's national average for regular unleaded gas was $1.66 a gallon, a few cents shy of the record average, $1.71, reached on May 15, 2001. Here in California, gasoline costs more than anywhere else in the country, with drivers today paying about $1.89 a gallon for regular unleaded gas and $2.05 for premium, AAA reported. Prices in Hawaii, usually the highest, were just a cent or two less. In New York State, regular was selling today for an average for $1.76 a gallon, with premium at $1.92; in New Jersey, home to many refineries, regular was $1.55 a gallon, while premium was $1.73.

But several factors are in the mix behind rising gas prices, including the possibility of war, said John Felmy, the petroleum institute's chief economist.

"You either believe in conspiracies or you believe in market fundamentals," Mr. Felmy said. "Most consumers just see the price going up and down, but they don't look into why."

Among the main reasons for the rise in prices, he said, was a 78-day strike by oil workers in Venezuela that removed as much as 4 percent of the world's supply for oil from the market. The United States imports 9 percent of its daily oil consumption — primarily crude oil and petroleum products like diesel fuel and asphalt — from Venezuela.

A similar strike in Nigeria has also affected the marketplace, Mr. Felmy said, though on a lesser scale. And the sharply colder weather has increased demand for home heating oil.

Inventories of crude oil are low and refiners have scaled back production accordingly. Typically, they stockpile oil this time of year to produce more gas as the heavy driving summer months approach. But because they are not stockpiling now, prices will probably stay high through the spring.

"There is some nervousness about Iraq," Mr. Felmy said, "and that's created some instability in the markets. Importers, traders and refineries tend to stock up, and so some participants put their prices up. If you don't, you exhaust your supply."

Such explanations seem to be small consolation to consumers.

"My theory is that they're stacking up on profits right now for if we do go to war," said Kathy Reilly, a minivan driver in Seattle. "I think a lot of it is pure greed."

Tim Jones, a computer network administrator from Tucson, recalled that in August 1990, immediately after Iraq's invasion of Kuwait, the price of gasoline soared virtually overnight. "And that fuel was already here, already in the tanks, already paid for," Mr. Jones said. "It's all about money."

Earlier this month, in Ann Arbor, Mich., Kathi Kelley got behind the wheel of her Toyota Rav4 for the first time since breaking her wrist in December and said she was astonished that gas prices had gone up 25 cents a gallon since she was last on the road. Ms. Kelley said she thought there was a direct correlation between the price increases and the mounting talk of conflict.

"With the idea of war looming, prices are not going down," said Ms. Kelley, who commutes 45 minutes each way to work every day to Jackson, Mich.

While some people said they did not want to pay at the pump for war, other consumers were willing to.

"I think the war is probably inevitable and probably necessary, and if higher prices are what we need for more security and safety than I'm willing to pay that," said David Fransko, a stockbroker filling up his Ford Explorer at a Shell station in Ann Arbor.

For some, sacrifice means driving less. In Bothell, a suburb of Seattle, Guy Nguyen and his wife, Diana, both drive to work, he to Bellevue, Wash., and she to Redmond, Wash. They recently returned from a vacation to find much higher gas prices, and decided this week to start sharing one of their two cars; they own a Toyota 4-Runner S.U.V. and a Chevy Tahoe pickup truck, the latter a guzzler with a V-8 engine that gets about 12 miles a gallon on the highway. The more modest Toyota seemed the better choice.

"I've looked everywhere and it's almost two dollars," said Mr. Nguyen, a car salesman, referring to the price of premium gasoline.

AAA reported that the average price of a gallon of regular unleaded gas has increased in Washington State by 18 cents in the past month, to $1.55. In neighboring Idaho, prices for regular have increased nearly 15 cents in the same period, to $1.59 a gallon. "I don't blame the government, I blame the gas companies," Mr. Nguyen said. "They have to find some way to make more profits."

Gasoline station operators are not necessarily happy about the increases, since they tend to strain relationships with customers.

"We got hit with another 4-cent increase yesterday," said Tom Simon, manager of a Union 76 station in Marina del Rey, west of Los Angeles, where full-service, high-octane gas was selling today for $2.29 a gallon. "We're not here for the fast buck, but it just keeps going up."

Paradoxically, Mr. Simon said, sales have risen, as drivers top off their tanks in anticipation of further increases.

"People are still going to buy gas and they're still going to buy S.U.V.'s — at least in this area," he said, pointing to a Ford Expedition and a Cadillac Escalade being filled at the pumps.

"We're all dependent on gasoline — it's like caffeine, or sugar," said Peggy Fisher, a dance teacher who had just spent $16.89 to put almost 10 gallons of the cheapest gas in her Honda Odyssey van. "These are our addictions."

Another customer, a taxi driver, Fred Sam, said he used to be able to fill up his tank for $20. Now, Mr. Sam said, it costs $50.

"At these prices, if you only make $5 or $10 an hour, you keep having to come back and put $5 or $10 worth of gas in the cab," said Mr. Sam, who pays $500 a week to lease his taxi. "I barely break even."

Even people who say that the prospect of a war with Iraq is a pretense to raise prices seem to have adopted an attitude of resignation. Few seemed indignant.

David Elder, a carpenter who was filling up his 1996 Chevy S10 truck on Monday in Charlotte, said he thought the troubles in Venezuela were the main culprit. But if war starts with Iraq, Mr. Elder said, prices "will really go up."

"They are going to get all the money they can out of us," he said.

Thomas Crosby, a spokesman for AAA Carolinas, said the gas price increases were distressing "because the prices are rising at a faster pace than increases in crude oil prices." Oil companies are raising prices on the street well before the prices in crude actually take effect in world markets, he said.

"It's a very typical practice," Mr. Crosby said. "It's a burden on all of us. Iraq gives them a reasonable explanation to offer consumers."

James Dozier, 36, a manager at a janitorial supply warehouse in Charlotte, decided to put just $7 of gasoline in his 1996 Dodge Caravan the other day because of the prices. Mr. Dozier said he also decided not to go out that night to save on fuel costs.

"I'll just stay home and watch television," he said. "It used to be you could put $10 in and go all weekend."

www.arabnews.com Reuters

DUBAI, 20 February 2003 — OPEC member Saudi Arabia will support a temporary suspension of the group’s oil output limits if an attack on Iraq halts exports from the world’s eighth largest exporter, a Gulf source said yesterday.

But even if the Organization of the Petroleum Exporting Countries does not formally suspend its output ceiling, a senior OPEC delegate said exporters with spare capacity would “de facto” pump at will.

“In case there is a war and it seems there will be a shortage of oil to the market, OPEC will carry out its pledged policy of not allowing a shortage to take place and will supply the market with enough oil,” the Gulf source told Reuters.

“If deemed necessary in this situation, the OPEC quotas and ceiling will be temporarily suspended. Such a decision is likely to be supported by the majority, if not all OPEC members, including Saudi Arabia.”

In practice, the burden of shouldering any disruption in Iraqi export flows of some two million barrels per day (bpd) would fall on Saudi Arabia, which holds the majority of the world’s spare crude production capacity.

OPEC, due to hold a policy meeting on March 11, has raised quotas twice this year to cover for an unexpected strike in Venezuela, and most members are now pushed to full capacity.

Saudi Oil Minister Ali Al-Naimi has said Riyadh can lift pumping rates to 10 million bpd within weeks so that major consuming countries need not tap their own emergency stockpiles.

And the senior OPEC delegate said volumes will be boosted in any case to keep world oil markets from suffering a supply shock.

www.theledger.com By DULUE MBACHU Associated Press Writer LAGOS, Nigeria Nigerian officials and leaders of two powerful oil unions opened talks Wednesday on a five-day-old strike threatening crude exports. Delegates reported progress on union demands after the first of two scheduled meetings. Workers were awaiting the outcome of a second meeting before deciding whether to end the strike, said Belema Osibodu, a spokeswoman with Nigeria's Department of Petroleum Resources. More than 800 white-collar workers of the department, which monitors oil loading at export terminals run by multinationals including ExxonMobil, ChevronTexaco, Royal/Dutch Shell and TotalFinaElf, walked off the job Saturday. They were joined Tuesday by about 600 blue-collar colleagues. The strike further roiled the global oil market at a time when possible war in Iraq and a prolonged strike in Venezuela have pushed prices to two-year highs. Nigeria is the world's six-largest exporter of crude, with half of its output going to the United States. Oil companies said the strike had not yet affected loading at their export terminals. The government has sent in replacement workers. The strikers are demanding more than a year in some unpaid wages - including unpaid overtime, expenses and travel allowances. They also want greater autonomy and better financing for the department, which they say is crippled by inefficient bureaucracy. Osibodu said the first meeting, between leaders of the Department of Petroleum Resources and the unions, resolved the pay issues. The second round of talks concerned demands for autonomy, she said. Nigeria produces more than 2 million barrels of oil a day, more than 95 percent of which is pumped by joint ventures between the government and major oil companies.

www.forbes.com Reuters, 02.19.03, 2:56 PM ET BOGOTA, Colombia, Feb 19 (Reuters) - Workers at Colombia's state-owned oil firm Ecopetrol began a 24-hour strike on Wednesday to protest both the firing of a worker for alleged vandalism and a joint-venture with ChevronTexaco Corp. (nyse: CVX - news - people), union leaders said. The stoppage by Workers' Union (USO), whose members make up almost half of Ecopetrol's 7,400 employees, was not affecting production or shipments of crude oil, officials said. The strike began at 6 a.m. local time (1100 GMT) to protest the firing of an employee in the refinery city of Cartagena and Ecopetrol's "Catalina" contract with ChevronTexaco, said Rodolfo Gutierrez, USO's president. USO broke off wage talks with Ecopetrol for the second time on Tuesday, angered by a contract under which the American firm will invest $150 million on Caribbean natural gas deposits to provide domestic markets in Colombia and export to Venezuela. The union believes that Ecopetrol should exploit the gas reserve itself rather than take on a foreign partner. Local television stations on Tuesday broadcast a video showing an employee vandalizing Ecopetrol machinery but Gutierrez said the video "did not provide categorical evidence" to justify his firing. USO strikes generally have little effect on work at Ecopetrol's oil fields or at its two refineries, the 235,000 barrel-per-day Barrancabermeja plant and the 76,000 bpd complex at Cartagena. The union, which went on strike three times in 2002, held a 24-hour work stoppage on Jan. 16 to protest an arrest warrant against its international representative, on charges of connections to Marxist guerrillas. If there is no agreement on a new wage deal by March 22, the government will appoint a compulsory wage arbitration tribunal to resolve the dispute.

www.forbes.com Reuters, 02.19.03, 1:00 PM ET

NEW YORK, Feb 19 (Reuters) - NYMEX crude oil futures hit fresh 29-month highs midday Wednesday, lifted by surging heating oil and gasoline futures, ahead of Thursday's inventory reports forecast to show draws for all three segments. Heating oil in the New York Harbor cash market remained strong on tight supplies, and bolstered futures, traders said. Gasoline futures firmed on Midwest refinery trouble and talk of another similar problem at a Texas refinery, traders said. At 12:50 p.m. EST (1750 GMT), NYMEX March crude was up 28 cents at $37.23 a barrel after soaring to $37.35, the highest for prompt crude since September 2000. It dipped to $36.36 early. NYMEX April crude gained 23 cents to $35.74 ahead of the March contract's expiry on Thursday. In London, April Brent was off 9 cents at $32.45 a barrel. Government oil inventory data to be released Thursday were expected to show that U.S. crude oil stocks fell modestly by 1.0 million barrels, a Reuters survey on Tuesday showed. Analysts also expected a draw of 3.0 million barrels in distillates, including heating oil and a minor decline of 500,000 barrels in gasoline stocks. "Gasoline is up because of expectations that tomorrow's weekly inventory data will show a stock draw as Venezuela seems to be taking the gasoline imports away from the United States," said Ed Silliere, energy market analyst at Energy Merchant LLC in New York. Silliere also cited a downed gasoline-making unit at BP Plc's <BP.L> (nyse: BP - news - people) 420,000 barrel per day refinery in Whiting, Indiana, as supportive. Other traders said there was talk of a fluid catalytic cracker down atthe ChevronTexaco (nyse: CVX - news - people) 90,000 bpd refinery in El Paso, Texas, also fueled buying in gasoline futures. The company said its policy is not to comment on such reports. Heating oil futures were supported by forecasts of colder weather returning to the U.S. Northeast, the biggest consumer of heating oil, by next week. Private weather forecaster Meteorologix said after above-normal temperatures Friday to Saturday in the U.S. Northeast, readings will turn below normal on Sunday. In the next 6 to 10 days, it expects regional temperatures to be much below normal. Traders said the market remains wary as the United States and Britain, despite strong international opposition, are pushing for a new U.N. resolution that would authorize the use of force to disarm Iraq. But the new resolution may not be put to a vote before early March, after another report by chief weapons inspector Hans Blix, diplomats said on Wednesday. Before deciding about launching a military strike against Iraq, the U.S. appears willing to devote a few weeks to getting international support, leading analysts and diplomats to believe a possible attack would not take place before mid-March. Meanwhile, the Nigerian government said an urgent meeting it called on ending a strike by senior oil workers had been postponed by one day, to Thursday, to allow union leaders more time to arrive. Earlier, Nigeria's Labor Minister Musa Gwadabe said the government would ask striking oil workers to call off their action immediately before any negotiations. The strike, launched Saturday, has so far not affected oil Nigeria's oil exports as replacement staff has taken over the striking workers at oil terminals. On Wednesday, OPEC said its oil production rose by 820,000 barrels a day (bpd) to 25.68 million bpd in January from December, as Saudi Arabia, Nigeria and Iran increased output to offset a decline in Venezuelan production. Venezuela, another OPEC member, is struggling to restore crude production curbed by a strike that started Dec 2. It supplied about 13 percent of U.S. daily oil imports before the strike. NYMEX March heating oil was up 2.36 cents at $1.0890 a gallon, trading between $1.055 and $1.093. NYMEX March gasoline gained 0.90 cent to $1.0035 a gallon, trading 98.00 cents to $1.02.