www.thestreet.com By Rebecca Byrne Staff Reporter 02/13/2003 11:40 AM EST

Not long ago, all but the most fanatical bears on Wall Street scoffed at the idea of a double-dip recession. But after a recent surge in oil prices, no one is laughing any more.

Over the last three months, crude oil has risen 44% to its highest level in more than two years amid concern about a war with Iraq, and as a strike in Venezuela reduced supplies from the world's fifth-biggest exporter. Meanwhile, retail gasoline has jumped to $1.60 a gallon -- the highest level since June 2001.

Because energy costs essentially act as a tax on consumers, economists worry that this recent increase could force consumers to tighten their purse strings. That could be devastating to the economy because consumer spending accounts for two-thirds of gross domestic product.

"It seems pretty clear to us that we are experiencing an old-fashioned oil shock," said Merrill Lynch chief U.S. strategist Richard Bernstein. "Nothing destroys consumer purchasing power as effectively."

Bernstein said that every significant oil shock in the last 30 years has caused, or at least contributed to, a recession, and he believes the odds of the same thing happening this time round are "starting to increase significantly."

Already, higher energy prices have had a significant effect on real wage growth, and hence, spending. Although real wages have been steadily increasing for almost 10 years, the rate of increase has slowed sharply since January 2002. Wages grew at a sluggish 0.5% in December, according to Bernstein, and economists say the weakness continued into 2003. In fact, the month-to-month increase in average hourly earnings grew in January at the slowest pace in 10 years.

Real wages are defined as average hourly earnings minus inflation. If inflation goes up because workers have to pay more for energy, then their salaries are effectively being reduced. And lower wages usually lead to lower spending. On Thursday, the Commerce Department said retail sales fell more than expected in January, although sales excluding autos were up a respectable 1.3%.

news.ft.com By Canute James in Kingston Published: February 10 2003 4:00 | Last Updated: February 10 2003 4:00 Trinidad and Tobago is negotiating with several neighbouring countries the terms under which it will supply them with gas through a pipeline that it plans to construct.

The discussions are taking place with its immediate neighbours in the eastern Caribbean, and with the French islands of Martinique and Guadeloupe, said Patrick Manning, prime minister. "We could supply about 70 per cent of their demand for natural gas," he said.

Officials say the gas-rich state also plans to use tankers to offer gas to countries in the northern Caribbean, such as Jamaica, Puerto Rico, the Dominican Republic and eventually Cuba.

The country, located off the coast of Venezuela, has become one of the world's major producers of liquefied natural gas through investments of $3bn over the past four years by European and US companies.

The pipeline, the first phase of which is estimated to cost $500m, will provide a new market for the major players in the country's energy sector, including BP, British Gas and Repsol YPF of Spain.

While the gas pipeline will be mostly state-funded, financing agencies from several developed countries are willing to raise the additional funding, Mr Manning said. He estimated that the pipeline would be completed in about seven years.

The first phase of the venture will be a pipeline running northwards from Trinidad and Tobago, through Martinique and Guadeloupe, to Puerto Rico, with spurs supplying Barbados, Antigua, St Kitts and Dominica.

Feasibility studies indicate that the project will reduce energy costs to the region by as much as 30 per cent, said the prime minister.

A European consortium is finalising proposals to Trinidad's government for an almost five-fold expansion in the production of liquefied natural gas to 14.5m tonnes a year, with investments totalling about $2.5bn.

news.ft.com By Canute James in Kingston Published: February 10 2003 4:00 | Last Updated: February 10 2003 4:00 Trinidad and Tobago is negotiating with several neighbouring countries the terms under which it will supply them with gas through a pipeline that it plans to construct.

The discussions are taking place with its immediate neighbours in the eastern Caribbean, and with the French islands of Martinique and Guadeloupe, said Patrick Manning, prime minister. "We could supply about 70 per cent of their demand for natural gas," he said.

Officials say the gas-rich state also plans to use tankers to offer gas to countries in the northern Caribbean, such as Jamaica, Puerto Rico, the Dominican Republic and eventually Cuba.

The country, located off the coast of Venezuela, has become one of the world's major producers of liquefied natural gas through investments of $3bn over the past four years by European and US companies.

The pipeline, the first phase of which is estimated to cost $500m, will provide a new market for the major players in the country's energy sector, including BP, British Gas and Repsol YPF of Spain.

While the gas pipeline will be mostly state-funded, financing agencies from several developed countries are willing to raise the additional funding, Mr Manning said. He estimated that the pipeline would be completed in about seven years.

The first phase of the venture will be a pipeline running northwards from Trinidad and Tobago, through Martinique and Guadeloupe, to Puerto Rico, with spurs supplying Barbados, Antigua, St Kitts and Dominica.

Feasibility studies indicate that the project will reduce energy costs to the region by as much as 30 per cent, said the prime minister.

A European consortium is finalising proposals to Trinidad's government for an almost five-fold expansion in the production of liquefied natural gas to 14.5m tonnes a year, with investments totalling about $2.5bn.

Business - Saturday, February 8, 2003 Fuel around town costs $1.59 a gallon www.coloradoan.com By Coloradoan staff and news services

NEW YORK -- The retail price of gasoline went up about 6 cents Thursday and Friday, fueled by high oil costs and fears of war with Iraq.

"Traders are afraid that the next barrel they buy will be more expensive than the one they bought today," said Tom Kloza, director of the Oil Price Information Service, a Lakewood, N.J., publisher of industry data.

That fear is contributing to the aggressive buying, he said.

The retail price of gasoline is up 8 percent since the start of the year.

At the pump, the average price of regular unleaded gasoline is $1.53 per gallon, up 11 cents since the year began and 43 cents higher than a year ago.

In Fort Collins, those prices average about $1.59 a gallon for regular unleaded, though a handful of stations are still selling gas for $1.50.9 and $1.51.9.

The price of crude has been above the magic mark of $30 a barrel since mid-December and closed Friday at $34.16 on the New York Mercantile Exchange.

The $30 benchmark goes back to the 1970s when prices crept above that and the country faced massive recession, said Sanjay Ramchander, associate professor of finance and real estate at Colorado State University.

"It's a threshold that spells disaster for the economy," Ramchander said.

"If you look at the long run, prices are about $16 to $17 a barrel. When you're talking $30, that's an 80 percent jump."

Analysts said the main drivers on wholesale markets earlier this week were the latest government supply data and the case made against Iraq by Secretary of State Colin Powell.

Prices rose sharply after weekly Energy Department statistics showed thinning U.S. inventories of gasoline and distillates, which include diesel and heating oil.

Later, prices retreated somewhat as traders determined Powell's presentation had done little to sway key members of the U.N. Security Council that immediate military action in Iraq was needed.

Representatives of China, Russia and France said the U.N. weapons inspectors' work should continue.

Ramchander predicted the price of crude oil would not fall until some of the uncertainty is resolved.

Though war appears imminent, the biggest uncertainty is what the future holds in Iraq, Ramchander said.

"A quick war will actually be better than a prolonged conflict," he said.

If war does break out, neighboring Kuwait could increase the supply, which would help, Ramchander said.

"It all depends on when war begins," he said. "If it begins in March, the question is how long will it be. And once the war is over, what's going to happen in Iraq."

Aside from the threat of war in Iraq, the lengthy political and economic crises in Venezuela also have propped up world oil prices for months.

Venezuelan exports of crude oil and refined products have increased in recent weeks, but not enough to calm U.S. energy markets, analysts said.

Nationwide supplies of gasoline have dwindled by 3.4 million barrels to 209.6 million barrels, or 5 percent below year-ago levels, according to the Energy Information Administration, the Energy Department's statistical arm. That slight shortfall does not fully explain why retail gasoline prices are 40 percent higher than last year, analysts said.

"We've got a market here being driven by psychological influences," said Peter Beutel of Cameron Hanover in New Canaan, Conn.

Analysts said some refiners have reduced output in recent weeks in preparation for the shift from winter- to summer-grade fuel. The annual switch to cleaner-burning gas before the busy driving season requires shutting down equipment, scrubbing it clean and starting all over again -- a process that causes supplies to contract and prices to move higher even under the best conditions.

This year, the impact of these so-called turnarounds is being magnified by the possibility of a U.S.-led invasion of Iraq, analysts said.

"We're probably going to start the summer driving season at higher levels than we have in a long time," said Phil Flynn, an analyst at Alaron Trading in Chicago. "There's a lot of bad news in those inventory reports."

The biggest wildcard is still the Iraq situation, Flynn said. "The general consensus is the sooner we get rid of Saddam Hussein, the sooner oil prices will come down."

Originally published Saturday, February 8, 2003

Saturday, February 8, 2003 www.canoe.ca By CP

Gas guzzlers alert: a war in Iraq will cause a lot more pain at the pump. Canadian drivers and businesses that guzzle lots of fuel are pumped with anger over gasoline prices that are spiking because of war fears and concerns about world oil supply. And experts warn, if war erupts in the Mideast, pump prices here will likely leap even further. "An attack on Iraq will temporary further cause a price shock because everyone will be afraid of what the longer term implication is," said Wilf Gobert, an analyst with Peters & Co. in Calgary. Energy experts are blaming geopolitical events: a looming war in Iraq, a national strike in Venezuela that has affected oil production and a 26-year low in U.S. oil inventories.