- The Washington Times - Tuesday, April 9, 2002

Saddam Hussein said yesterday he will cut Iraq's oil exports for 30 days or until Israel withdraws from Palestinian territories, raising new fears about soaring gasoline prices in the United States.
The price of oil on the New York Mercantile Exchange rose 33 cents to $26.54 a barrel after the Iraqi dictator's announcement.
The international oil market braced itself as Libya and Iran threatened to join the embargo and a revolt continued against Venezuela's state oil monopoly.
The federal government projects that the price of regular unleaded gasoline will average $1.46 a gallon this summer, but that could rise significantly if supplies tighten, officials say.
The average price for regular gasoline reached $1.41 this week, according to an Energy Department survey released yesterday, almost two months before the start of the summer driving season. Prices have jumped at a record rate of nearly 25 cents a gallon during the past month.
Crude accounts for about 40 percent of the cost of gasoline.
Lower supplies also could raise prices for jet fuel and diesel, analysts said.
Iraq produces between 1.5 million and 2.3 million barrels of oil a day, and the United States imports roughly one-third of that, the federal Energy Information Administration says. Iraqi oil accounted for 8 percent of total U.S. oil imports in 2001, according to the agency.
"If none of the other countries step forward, you could lose 45 million barrels of oil in the marketplace over 30 days. If that's not made up, it could drive consumer prices up," said Doug MacIntyre, the agency's senior oil market analyst.
The Paris-based International Energy Agency an organization of 26 industrialized countries, including the United States, that fills supply disruptions for its members said it would make up any difference in an oil shortfall.
IEA members are holding nearly 4 billion barrels of oil stocks that can be used under IEA coordination in the event of supply disruptions.
Oil industry analysts say the effect on prices in the United States will not be clear until it is known whether other countries will help fill the void left by the Iraqi embargo.
An oil analyst, speaking on the condition of anonymity, told the Agence France-Presse news service that the situation would become "very serious" if Iran and Libya followed Iraq's lead.
National Security Advisor Condoleezza Rice said Saddam needs money from oil exports more than the United States needs Iraq's oil.
"We ought to remind them that they're going to have a hard time eating their oil," Miss Rice said in a speech at Texas A&M; University.
Other oil-producing nations should "step up" to counter the Iraqi embargo, Miss Rice said.
The Organization of the Petroleum Exporting Countries and non-OPEC countries have 7 million barrels of excess capacity and should be able to fill the gap, the Energy Information Administration said.
If Iran and Libya join the embargo, the supply will tighten considerably, analysts say. The three countries supply 15 percent of the oil imports to the industrialized world, according to some estimates.
OPEC Secretary-General Ali Rodriguez said he would consult members of the cartel, which supplies one-third of the world's oil. "Nothing has been decided yet," he told reporters in Doha, where he was attending an oil and gas conference.
Meanwhile, the five-week labor slowdown crippling oil production in Venezuela continued yesterday.
President Hugo Chavez had dismissed seven dissident oil executives, moving to crush a revolt against the leadership of the state monopoly. But workers, angry at what they said were political appointments to top company posts, staged a rowdy protest in Caracas yesterday.
The nation's largest oil workers' union agreed to join a nationwide strike today to back a protest by managers at the state-owned oil company, Petroleos de Venezuela.
The South American nation is the third-largest OPEC producer and imports 13 percent of U.S. oil, according to the Energy Information Administration. Venezuela was the second-biggest oil supplier to the United States in January.
"In terms of immediate impact on the U.S., the situation in Venezuela is more significant," said Robert Priddle, executive director of the International Energy Agency. "It's just four or five days sailing time from U.S. markets."
Some analysts said it was a good sign that world oil prices rose only slightly yesterday, given turmoil in the international markets.
"The market hasn't reacted as some people might anticipate. If the market was really worried, you would have seen more of an increase," said Kate Warne, an analyst for Edward Jones & Co. in St. Louis.
The price of oil in New York rose as high as $27.23 a barrel before settling to a closing price of $26.54.
However, consumer-product manufacturers Procter & Gamble Co., Kimberly-Clark Corp., Dial Corp. and Newell Rubbermaid Inc. warned that any lasting increase in energy prices might trim second-half profit growth, investors told the Bloomberg news service.Products such as Procter & Gamble's Tide use oil-based chemicals.
The Bush administration has focused on the effect of oil prices at the gas pump.
Energy Secretary Spencer Abraham said yesterday the government is reactivating a federal hot line for consumers who want to complain about gasoline price gouging. Mr. Abraham said he also will meet with AAA to identify ways to save money.


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