www.saljournal.com Posted at 9:35 AM on Thursday, February 20, 2003 By The Associated Press

At Eagle Communications in Hays, rising gasoline prices are boosting the costs of driving the cable television and Internet company's service trucks. But Eagle isn't planning to pass that cost along to its customers.

"We can't cut service," Eagle president and chief executive Gary Shorman said. "Our customers expect a high level of service. The best you can do is be aware of that excess cost."

With a gallon of gas in Kansas now at $1.61 -- about 51 cents more than a year ago -- Eagle and other Kansas businesses are sucking up the extra costs, at least for now. It's not likely to last forever, and people already paying more to fill up their own cars are likely to also face higher prices for goods and services.

Kansas AAA spokeswoman Amanda Millard said the average gas price has climbed 16 cents since President Bush's State of the Union Address on Jan. 28, thanks mostly to rising anxiety concerning a war with Iraq.

Some of the blame also rests with supply disruptions resulting from a strike in Venezuela.

Anticipating a sharp price increase if a war begins, retailers are trying to boost prices slowly over time to avoid a sudden sticker shock to consumers, Millard said.

Shorman said the company can't avoid the cost of fuel; its trucks have to roll. Eagle has a fleet of about 15 vehicles and offers cable, digital cable and high-speed Internet service to a sprawling area in western Kansas, stretching 170 miles from Goodland to Russell.

He said there is no immediate cost to Eagle customers, but a price increase could come if gas prices stay high.

"Eventually, you have to look at all your costs of doing business being paid for by consumers, or else you're going to go out of business," Shorman said.

Mike Fraser, who oversees Salina's municipal vehicles, echoed Shorman, saying the city can't sideline its police cars, fire trucks and trash haulers.

"It does strain the budgets that we have, but there's not a lot that I think we can do," Fraser said.

He also said gas prices often average themselves out during the course of a year and can also be offset by unexpected savings in other budget areas.

But if prices stay high, he said, the city would have to find ways to use less gas.

Connie Blaszak of Hill City, Minn., didn't let the high gas prices stop her from driving to Kansas City, Kan., where she was filling her van's tank at a Shell station.

While she kept the travel plans she already had made, Blaszak said she didn't plan to make any extra trips.

At ABC Taxi in Wichita, owner Jim Elmore said the gas prices don't hurt him or his riders. It's his 40 drivers who are taking the hit because they pay for their own fuel.

www.fortwayne.com Posted on Thu, Feb. 20, 2003 From staff, wire reports

WASHINGTON - The United States recorded a $435.2 billion trade deficit for 2002, the largest imbalance in history, as the weak global economy set back American exports while imports of autos and other consumer goods were hitting all-time highs.

Even in agricultural products, normally a U.S. bulwark, Americans bought more imported wine, cheese and other foods than American farmers were able to sell abroad - resulting in only the second U.S. trade deficit in agricultural products on record.

In another report released today, sharply higher energy prices and increased auto prices pushed wholesale prices up sharply in January.

The Commerce Department reported today the trade deficit for all of last year was up 21.5 percent from the $358.3 billion trade gap recorded in 2001 and surpassed the old record deficit of $378.7 billion set in 2000.

By country, the United States ran up the largest trade gap with China, a deficit of $103.1 billion, marking the third straight year that the United States has recorded its largest trade deficit with that nation. It pushed the former front-runner in this category, Japan, into second place.

In addition to the record for all of 2002, the United States set a new monthly high of $44.2 billion in December, up 10.5 percent from the previous record set in November of $40.0 billion.

The Labor Department reported inflation at the wholesale level shot up a sharp 1.6 percent in January, led by a huge 4.8 percent surge in energy prices.

Excluding the often volatile energy and food prices, wholesale inflation was up 0.9 percent.

January's increases followed declines of 0.1 percent in the overall index and 0.5 percent in the core rate in December.

Most of the increase in energy prices came from gasoline, up 13.7 percent in January after declining 1.2 percent in December. Fears over a war with Iraq and a general strike which cut production in Venezuela, a key oil supplier, drove up oil prices during the month.

Prices for passenger cars and light trucks rose 3.5 percent, as manufacturers cut back on incentive programs. Those prices had fallen 2.1 percent in December.

Wholesale food prices rose 1.6 percent in January, after a 0.4 percent gain in December, mostly because of an 18.2 percent increase for vegetable prices.

In a third report, the government said the number of newly laid off workers filing unemployment claims jumped to a seven-week high of 402,000 last week.

www.taipeitimes.com LIBERALIZATION: The US moved to open certain protected industries to foreign competition, but Latin American nations say there are sticking points

BLOOMBERG Thursday, Feb 13, 2003,Page 12

The US proposed to end duties on apparel, textiles and other manufactured goods from the rest of the Americas as a step toward freeing trade in most of the Western Hemisphere. The tariffs would be removed by 2015.

The proposal, while opening some protected industries in the US to increased foreign competition, doesn't address shields for US sugar, cotton, citrus and peanut producers, which many Latin American countries say must be considered for a Free Trade Area of the Americas agreement to be completed on schedule by 2005.

US Trade Representative Robert Zoellick said the most sensitive agricultural issues must be dealt with globally, in negotiations at the Geneva-based WTO. Today's proposal still shows the US is serious about taking on domestic interests to help move the Americas trade accord ahead, he said.

"The US has created a detailed road map for free trade in the Western Hemisphere," Zoellick said at a news conference.

"We've put all our tariffs on the table, and we now hope our trading partners will do the same." The proposed free-trading area has support from corporations such as Citigroup Inc, Procter & Gamble Co and Kellogg Co that are counting on an expanded market for financial services and consumer goods. Caterpillar Inc, the world's largest maker of earth-moving equipment, said it stands to save more than US$13,000 in duties on each grader it exports to Latin America.

The US proposal calls for 65 percent of manufactured goods to enter the US duty-free upon completion of an agreement. The rest are to be phased in over periods of up to 10 years.

The US, Canada and Mexico have been part of the North American Free Trade Agreement (NAFTA) since 1994. Chile and the US signed an accord this year.

Negotiations on the Americas accord began in 1994 with the aim of eliminating trade barriers and setting trade rules in 34 countries. Only Cuba is to be excluded. The hemispheric market encompasses more than 800 million consumers and a trillion dollars in annual commerce.

Zoellick cited a 2001 study from the University of Michigan that said an average US family of four can expect to save about US$800 a year through tariff cuts if the talks succeed.

Some US trading partners are more apprehensive. So is the US textile and apparel industry, the first to lose protection under the George W. Bush administration's proposal.

Brazil's new president, Luiz Inacio Lula da Silva, has said the US wants to use the agreement to "annex" Latin America.

The US and Brazil are chairing the negotiations.

"Agriculture is the principal obstacle to any trade agreement, because it's really the main thing developing countries like Brazil can sell," Jose Augusto de Castro, president of the Brazilian Foreign Trade Association, said.

US duties on imported textiles and apparel are to end five years after the completion of negotiations on an accord, Zoellick said. Other counties will have to offer the same duty-free access to US-made textiles and apparel.

"This goes to one of the points we hear from our apparel industry," he said. "They're willing to compete if it's a level playing field."

www.wtnh.com

(Washington-AP, Feb. 15, 2003 4:00 PM) _ Suddenly, the Iraq conflict is being blamed for just about everything.

 Rising oil and gold prices. The stagnant economy. The stock market's swoon. Cracks in the NATO alliance. Increasing anti-Americanism. Elevated terrorism fears.

 They all have been laid to war preparations.

 Clearly, the potential for military action is a tremendous weight on consumers, businesses and American institutions. The growing consensus is that things will not get much better as long as the crisis persists.

 But is the opposite true? Would a brief and decisive war _ or Saddam Hussein's exile _ revitalize the economy, spark a market rally and ease world tensions?

 Federal Reserve Chairman Alan Greenspan seems to think so, at least for the economy.

 He told Congress last week that war fears pose "formidable barriers" to recovery, but predicted the economy would rebound with stronger growth once those uncertainties were resolved.

 Greenspan further suggested that new tax cuts _ for instance, those sought by President Bush _ were therefore unnecessary at this time. That statement gave Democrats ammunition and Bush allies anguish.

 Some Wall Street analysts expect a rally once bombs start falling on Baghdad, pointing to other stock surges coinciding with the outset of wars. Markets can cope with war or peace, it seems, but never uncertainty.

 Economists say Iraq is the biggest factor inhibiting a broader recovery, although serious economic problems remain that are not attracting as much attention.

 "When there is one huge dark cloud, it's hard to see if there are any little clouds behind it," said David Wyss, chief economist at Standard and Poors in New York. "My feeling is that Iraq is our biggest problem, but not our only problem."

 Wyss and other economists point to manufacturing overcapacity, the loss of private sector jobs and continuing oil production shortages in Venezuela.

 "It's possible that Iraq is just a metaphor for many of our concerns," said Mark Zandi, chief economist at Economy.com, a nonpartisan consulting firm in West Chester, Pa. "I think if we get by Iraq quickly and it's relatively painless, that should help the economy get into higher gear. But that higher gear may not be high enough."

 The march toward war figured in the administration's raising of its terror alert level to high. The administration alleges links between the Iraqi government and terrorists, seizing on a new purported Osama bin Laden tape urging Iraqis to attack Americans as further evidence of such connections.

 War preparations and Bush's focus on Iraq also may be hurting his domestic proposals, which have run in to heavy congressional resistance, even from members of his own party. His proposals for eliminating taxes on stock dividends, overhauling Medicare and setting up new retirement savings accounts have become particularly hard sells.

 Political analysts note that presidents traditionally endure much flak on domestic initiatives during times of war. There is less cash to go around after national security needs are met and opposition party members unwilling to criticize a wartime president on foreign policy focus their criticism on domestic issues.

 If a war is brief and successful, then Bush "would garner great kudos," said Tom Mann, a political analyst with the Brookings Institution. "But if we continue with sluggish growth, a jobless recovery, growing deficits and competing demands for federal resources, the president is going to find that the further we get away from 9-11 and an attack on Iraq, the more problematic are politics at home."

 For his part, Bush asserts that "this economy needs help" and largely blames the 2001 recession, the Sept. 11 attacks and "a loss of confidence in the markets because of the corporate scandals."

 Meanwhile, his aides find themselves in the awkward position of having to play down optimistic predictions by Greenspan and others that a quick victory in Iraq will spur economic recovery _ in an effort to try to salvage those Bush tax cuts and other "stimulus" measures.

 "As you know, economists don't always agree," said R. Glenn Hubbard, chairman of the White House Council of Economic Advisers. "Geopolitical risks are a key source of uncertainty to the economy, but I don't think they're the only ones."

www.nytimes.com By EDWARD WONG Three leading airlines increased nearly all their fares by $10 each way yesterday.

The move, the most significant attempt at a fare increase since last summer, was an effort to re-establish pricing power as fares have hit record lows. But several industry experts raised doubts that the airlines would be able to keep the higher fares. With the possibility of a war, travel has continued to slump, they say, and the situation will only worsen if the United States attacks Iraq. Advertisement

The three carriers — Continental Airlines, American Airlines and US Airways — will also have to see whether their top rivals decide to match the increase. If those carriers — Delta Air Lines, Northwest Airlines and United Airlines — do not raise their fares, then the three will probably have to back down.

People in the industry are watching Northwest in particular, because it did not go along with several fare increases last year, forcing its rivals to return to lower fares.

Continental, the country's fifth-largest carrier, was the first to put the fare increase into effect yesterday morning .

"Although the airline industry is suffering from overcapacity and weak demand, this fare increase is necessary to get Continental back on the path to financial recovery," the company said.

Continental said the increase was necessary to help offset "dramatically higher fuel expenses."

American soon matched the increase, and US Airways acted by late afternoon, according to Terry Trippler, an air fare expert who works for CheapSeats.com.

Fuel is the second-highest expense for airlines, behind labor costs. In the last year, fuel prices have spiked because of the labor strife in Venezuela and tensions with Iraq, said John Heimlich, an economist for the Air Transport Association, the industry's main trade group. All the big airlines have a certain amount of their fuel hedged in case the price of oil goes up, but they have not been able to avoid paying higher prices on average.

The spot price for a gallon of jet fuel is now $1.20, more than double the 57 cents it was a year ago, according to the trade group. The price for West Texas intermediate crude oil is expected to be $34.25 a barrel this month, compared with $20.65 a year ago.

In December, airlines paid an average of 77.4 cents a gallon for fuel, up from 60.1 cents in December 2001.

The cost of crude oil, and thus jet fuel, will almost certainly go up if there is a war in Iraq.

Even so, there is no guarantee the fare increase will stick, experts said. That will depend on the market conditions for air travel, which are dismal right now. Furthermore, they said, carriers with relatively good cash reserves — Northwest, for instance — can better afford to keep fares lower than some of their competitors.

"The airline industry needs it," Michael Boyd, an airline consultant based in Evergreen, Colo., said of the price increase. "Whether it'll stick is another issue. With war jitters out there and other things, I don't know whether it'll stick."

Just after Christmas, US Airways tried adding a fuel surcharge of $10 each way on round-trip fares. American soon matched the increase, but the two carriers retracted their moves before the end of the year. Frontier Airlines, the low-cost carrier, tried adding a $5 surcharge each way around the same time, but eliminated the increase before the end of January.

TRAVEL ADVISORY; Some Airlines Revise Standby Rules