-Caveat Lector- <A HREF="http://www.ctrl.org/">
</A> -Cui Bono?-
First article is spin-control for the stock market.
Second one gives raw facts and price-watch info.
Dave Hartley
http://www.Asheville-Computer.com/dave
Nobody's flinching as oil prices rise
By Dave Carpenter
Associated Press
Saturday, January 22, 2000
As crude oil prices roared toward $30 a barrel this week, reaching levels
last seen on the brink of the Persian Gulf War, airlines were adding
surcharges to ticket prices and consumers were worrying about heating bills.
Yet inflation remains tame and the U.S. economy has barely blinked.
The reason: Oil simply doesn't lubricate the new, tech-savvy economy the way
it once did.
"Oil's overall impact on the economy is vastly reduced" from years past,
said William Cheney, chief economist for John Hancock Financial Services.
"That's due to the increased energy efficiency of companies that use oil
heavily and the increased importance of industries that are not heavily
dependent on it."
Prices for crude have jumped nearly $5 a barrel in the past week. Heating
oil, spurred not only by oil's surge but a Northeastern cold snap, has risen
50 percent in two weeks.
But even with energy products pushing to a series of new nine-year highs,
many Americans keep shelling out undaunted for gasoline and other petroleum
products.
"It doesn't deter me," motorist Chip Tuttle said at a Boston gas station
Friday as he paid $43 to fill his sport-utility vehicle, an indication that
gas prices are the highest they've been there since Christmas 1990. "The
economy is good."
The era of cheap oil began ending last March when the Organization of the
Petroleum Exporting Countries cut production by 4.3 million barrels a day.
The oil producers were determined to end a world oil glut and push up prices
that fell as low as $11.37 a barrel in February.
OPEC, an often undisciplined cartel, was able to hold down production.
U.S. oil supplies now are at their lowest level in several years and the
International Energy Agency warned Thursday that markets "are tight and
getting tighter."
Since March, crude prices have more than doubled, reaching a nine-year high
in November that was smashed again this week. Oil for February delivery rose
as high as $29.95 a barrel during trading Thursday before the contract
expired. In trading Friday, the March contract briefly rose above $29 before
giving up some ground. The new near-term contract still managed to finish
the day with a gain of 23 cents to close at $28.20 a barrel on the New York
Mercantile Exchange.
Two decades ago, a similarly huge spike in oil prices caused gas lines and
sent the U.S. economy into shock. But in 1999, while fuel oil and gasoline
prices climbed sharply, the "core" rate of inflation -- excluding the
volatile energy and food sectors -- rose at its smallest rate in 34 years,
just 1.9 percent.
What happened to inflation? Where's the recession?
Some economists are still warning of dire consequences, especially if oil's
rise continues unabated. Phil Verleger, economist for the Brattle Group, a
consulting firm in Cambridge, Mass., sees oil headed to $40 by year's end,
prompting several interest rate increases and a recession before the year is
out.
"If it went to $40 a barrel, it would be disruptive," said Bruce Steinberg,
chief economist for Merrill Lynch. "You can't keep going up endlessly
without having an effect."
But America has built up a much better resistance to energy shocks. The oil
price explosions of the mid- and late-1970s helped spawn a new energy
consciousness and the giant steps taken by technology steered the economy
away from manufacturing and toward services and the Internet.
Oil expenditures, which accounted for 8.5 percent of gross domestic product
in 1981, have fallen to about 3 percent, according to the U.S. Energy
Information Administration.
"Oil is still probably the single most important price that affects the
well-being of Americans," said Cheney. "When the price goes up . . . America
is in a sense a little poorer. But we are much better at adapting to it
now."
Adjusting or not, consumers are being increasingly squeezed by oil's rise.
Among the latest consequences of the increase in prices:
* The nation's top airlines said this week they are adding a $20 surcharge
to round-trip tickets because of jet fuel costs that have more than doubled
in the past year.
* Trucking companies are hiking rates by 5 percent to 6 percent.
* Business owners are beginning to pass on to consumers the new, higher
prices charged by shippers ranging from the United Parcel Service to the
post office.
* U.S. gasoline prices are rising again after dipping since hitting a 3
1/2-year high of almost $1.35 a gallon last month. Signs announcing hikes of
as much as 15 cents a gallon have been posted this week.
******
----------------------------------------------------------------------------
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They are saying the worst is yet to come. Read the rest of the story and go
to their link and sign up for their price alert e-mails.
http://biz.yahoo.com/prnews/000123/nj_opis_oi_1.html
Sunday January 23, 5:00 pm Eastern Time
Company Press Release
SOURCE: OPIS Energy Group
Huge Oil Price Increases Imminent for Truckers, Airlines, and Homeowners
LAKEWOOD, N.J., Jan. 23 /PRNewswire/ --
Oil price increases, that in some cases surpass the hikes seen during the
Persian Gulf War, are about to stun homeowners, airlines, and trucking
companies, according to OPIS Energy Group. The New Jersey based publishing
company reports that many retailers have yet to pass on recent wholesale
price hikes of 40-60cts gal that have hit some markets in the wake of record
cold temperatures.
Wholesale prices for many fuels reached all time record levels in the
northeast on Friday, as oil suppliers and marketers scrambled to find oil to
deliver to end-users in the region. Wholesale prices for heating oil at
supply points in New England, for example, soared to over $1.25 gal, an
increase of more than 50cts gal in less than ten days. These prices are four
times the value they fetched in markets exactly one year ago.
Homeowners and commercial buyers who paid well under $1.00 gal for their
heating oil just a month ago now face retail costs of $1.50-$1.75 gal.
Heating oil retailers typically have little inventory and must immediately
pass wholesale increases on to their customers.
The surge isn't limited to heating oil, however. Diesel fuel prices have
soared to similar wholesale price levels as suppliers in Winter-ravaged
states have opted to put fuel normally sold for over-the-road purposes into
the heating oil supply pool. Diesel truckstops, service stations, and fleet
centers in the Northeast saw increases of 25-40cts gal over a three day
period this week. Even areas far removed from the Northeast saw stiff price
hikes of 5-15cts gal during the week as the oil industry struggled to keep
the distribution system moving smoothly in the face of brisk demand and low
stocks.
Stiff retail diesel prices will rear their heads before the month is over.
OPIS' Retail Pricing Director Fred Rozell cited a nationwide retail average
of $1.37 gal for diesel, up less than 1cts gal since January 1. If prices
merely catch up with the wholesale trends, some markets could face increases
of well over 25cts gal.
In Connecticut and Massachusetts, for example, the average price for diesel
stood at $1.39 gal on January 21. Retailers replacing those gallons faced a
cost of over $1.60 gal heading into the weekend.
Jet fuel cost increases were even more drastic. Airlines which could buy
fuel for under 75cts gal just a month ago saw aviation fuel costs soar to
$1.30-$1.35 gal by Friday at major airports in New York, Newark, Boston, and
Philadelphia. Like diesel fuel and heating oil, these costs are about four
times higher than what was commonplace a year ago.
What's ahead? OPIS Publisher Tom Kloza warned that the supply shortfall in
the Northeast might not ease until February. ``Refiners and traders are
racing to get fuel to the market, but the system may not be comfortable for
two weeks or more. Until then, look for price spikes and tremendous
volatility,'' Kloza added.
With more wild price moves expected, OPIS has extended a free e-mail
bulletin service that updates suppliers, marketers, and end-users on price
swings nationwide. Sign up for free OPIS PRICE WATCH ALERTS at
http://www.opisnet.com.
OPIS Energy Group analyzes oil prices and trends for the petroleum and
transportation industries throughout North America. The company tracks
wholesale and retail prices for gasoline and diesel fuel, crude oil, refined
products, feedstocks, and LP-Gas. This year alone, more than 100 billion
gallons of fuel will be purchased pegged to the OPIS Price Index.
SOURCE: OPIS Energy Group
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