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THE WALL STREET JOURNAL: Oil-News Roundup 24 May 2006

Oil News Roundup

May 24, 2006Crude-oil futures surged by more than $1 to settle north of $71 a barrel on the New York Mercantile Exchange, driven partly by worries about another robust hurricane season in the Gulf of Mexico. Here is today’s roundup of news about oil and energy.

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BIG OIL UNDER ATTACK: Even longtime supporters of the oil industry are turning more critical of giant firms’ record profits. Amid these attacks, Big Oil is launching its most vigorous political offensive since the 1970s, but its current political woes go deeper than the recent surge in pump prices.

CHINA LETS GAS PRICES RISE: Just as it is starting to let its yuan trade with the slightest bit of extra freedom against the dollar, China is also loosening up its price controls on gasoline and diesel fuel. Beijing’s second price increase in two months will allow a 10% gain in the price of gas and an 11% gain in diesel, effective tomorrow. But those won’t likely be enough to quell demand or inspire the adoption of conservation measures, experts say, meaning China will probably keep putting upward pressure on global fuel prices for some time to come. On the bright side, China’s refiners will get a little more money for their efforts.

ETHANOL IPO GETS RICHER: Ethanol maker VeraSun Energy Corp. doubled the size of its IPO to more than $300 million, MarketWatch reports. VeraSun also reported a jump in quarterly profit and revenue — though the numbers are tiny: $13.6 million in profit and $111 million in revenue vs. $1.7 million in profit and $45 million in revenue a year ago. MarketWatch says the stock could debut “within the next several weeks.”

Clinton Calls for Ethanol Spending: Sen. Hillary Rodham Clinton (D., N.Y.) called for spending some $50 billion to expand ethanol use, with a goal of cutting U.S. reliance on foreign oil nearly in half by 2025. Mrs. Clinton is up for re-election this year and is considered a top candidate for the Democratic presidential nomination in 2008.

Booming Russian Oil Profits: OAO Lukoil, Russia’s No. 1 oil producer, said its profit rose more than 50% to $6.44 billion in 2005, thanks to high oil prices. OAO Rosneft said its earnings jumped fivefold to $4.16 billion, thanks to its absorption of Yukos’s main production unit.

ConocoPhillips to Build Saudi Refinery: ConocoPhillips and the government of Saudi Arabia will sign an agreement in the next few days to build a $6 billion refinery in the Red Sea coastal city of Yanbu.

Warning About Gouging Law: Federal Trade Commission Chairwoman Deborah Platt Majoras said a federal law against petroleum-price gouging would be difficult to enforce and could hurt consumers by causing fuel shortages.

Venezuela Seeks More Control: Venezuela’s oil ministry will ask the Supreme Court to repeal a law preventing it from holding a controlling stake in heavy oil projects in the Orinoco River basin.

Pipeline Probe: U.S. officials are investigating allegations that Trans-Alaska Pipeline workers improperly repaired two storage tanks used by the pipeline, putting the structures at risk of rupture. The investigation is also looking into whether oil company and government officials in charge of overseeing the facility falsified records to make it appear the work was done correctly.

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