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With gas prices near or above $3 per gallon, many consumers are looking for ways to reduce their costs at the pump through alternatives to traditional gas-powered vehicles. But the options are dizzying, and many people are still very green when it comes to the various alternative fuel technologies. 

One of the most widely available and popular alternatives to gasoline-powered cars is hybrid technology.  Cars that run on a combination of two or more sources of power are considered hybrid.

According to the Bureau of Transportation, there are almost 200 million vehicleson the road, of which 133 million are passenger cars.  Of these, about 300,000 are hybrids.

Honda and Toyota spearheaded the hybrid market over the past few years, but others automakers have also joined the hybrid race.

Currently there are six viable model options and 10 total to choose from, said Bradley Berman, editor of HybridCars.com.

The choices

Generally speaking, hybrid cars run on rechargeable batteries and gasoline.

The type of hybrid depends on how the two sources of power connect, when each one is in operation and for how long, and finally, what portion of power is supplied by which hybrid component.

There are four types of hybrid systems:

Stop-start: shuts engine off when the car comes to a full stop and would otherwise idle.
Integrated Starter Alternator with Damping (ISAD): has the stop-start feature and an electric motor.
Integrated Motor Assist: The functions are identical to the ISAD but it has a larger electric motor for better performance.
Full hybrid system: cars generally run on electric power at low speeds with the gas engine kicking in at higher speeds.
Incentives

The incentives of purchasing a hybrid car could be philosophical, financial, or environmental. Berman recognizes that not everyone is willing to go completely green right away.

Other Considerations 
Fuel, purchase price, and tax incentives are not the only factors to consider. But other savings and expenses can be difficult to estimate. Insurance costs are generally lower for hybrids. Battery replacement and electricity usage expenses can tip the scale the other way. According to hybridcars.com, however, the hybrid battery packs generally last 150,000 to 200,000 miles.
 
“Everyone should take little steps,” Berman told LiveScience. “Buy the most efficient fuel car. It doesn’t have to be hybrid. If you don’t need an SUV, don’t get an SUV.”

Some car buyers might want to look at the decision from a purely financial standpoint. Here is an example of how one choice might work out:

The average American drives 15,000 miles each year, with 45 percent of that on highways. The traditional Honda Civic costs about $17,110, and it gets about 30 miles per gallon in the city and 40 highway. At $2.92 a gallon, this subcompact car costs $1,296 in gasoline in one year.

At $22,900, the Honda Civic Hybrid will initially cost a bit more, but with an average of 50 miles per gallon, a year of gas will cost $878.

In 10 years, taking into account inflation at 3 percent but not factoring in any possible changes in gas prices, the gas savings of a hybrid reaches almost $5,000.

Finally, a new federal incentive program allows you to receive a one-time $2,100 tax credit for buying a hybrid.

Tally up all the extra costs and factor in the savings—not counting additional incentives offered by some states—after 10 years, this hybrid will ultimately save you about $1,229.

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It runs modern society and fuels serious political tension. But where does oil really come from, and how much is left? The far-out possibilities might surprise you.

Nature has been transmuting dead life into black gold for millions of years using little more than heat, pressure and time, scientists tell us.

But with gas prices spiking more than $1 per gallon in the United States this year and some experts predicting that the end of oil is near, scientists still don’t know for sure where oil comes from, how long it took to make, or how much there is.

A so-called fossil fuel, petroleum is believed by most scientists to be the transformed remains of long dead organisms. The majority of petroleum is thought to come from the fossils of plants and tiny marine organisms. Larger animals might contribute to the mix as well.

“Even some of the dinosaurs may have gotten involved in some of this,” says William Thomas, a geologists at the University of Kentucky. “[Although] I think it would be quite rare and a very small and insignificant contribution.”

But another theory holds that more oil was in Earth from the beginning than what’s been produced by dead animals, but that we’ve yet to tap it.

How it works

In the leading theory, dead organic material accumulates on the bottom of oceans, riverbeds or swamps, mixing with mud and sand. Over time, more sediment piles on top and the resulting heat and pressure transforms the organic layer into a dark and waxy substance known as kerogen.

Left alone, the kerogen molecules eventually crack, breaking up into shorter and lighter molecules composed almost solely of carbon and hydrogen atoms. Depending on how liquid or gaseous this mixture is, it will turn into either petroleum or natural gas.

So how long does this process take?

Scientists aren’t really sure, but they figure it’s probably on the order of hundreds of thousands of years.

“It’s certainly not an instantaneous process,” Thomas told LiveScience. “The rate at which petroleum is forming is not going to be the solution to our petroleum supplies.”

The United States’ latest reminder of its petroleum dependency occurred when hurricanes Katrina and Rita struck the Gulf of Mexico, where the majority of the country’s oil platforms and refineries are located. Many analysts predicted gas prices would surge to $4 and $5 per gallon, but the fears turned out to be overblown. Many of the structures suffered only glancing blows and were operating again soon afterwards.
Still, the average price of regular gas nationwide is about $2.94 a gallon now, according to the American Automobile Association. It was $1.77 at the beginning of the year.

Alternative source

The idea that petroleum is formed from dead organic matter is known as the “biogenic theory” of petroleum formation and was first proposed by a Russian scientist almost 250 years ago.

In the 1950′s, however, a few Russian scientists began questioning this traditional view and proposed instead that petroleum could form naturally deep inside the Earth.

This so-called “abiogenic” petroleum might seep upward through cracks formed by asteroid impacts to form underground pools, according to one hypothesis. Some geologists have suggested probing ancient impact craters in the search for oil.

Abiogenic sources of oil have been found, but never in commercially profitable amounts. The controversy isn’t over whether naturally forming oil reserves exist, said Larry Nation of the American Association of Petroleum Geologists. It’s over how much they contribute to Earth’s overall reserves and how much time and effort geologists should devote to seeking them out.

If abiogenic petroleum sources are indeed found to be abundant, it would mean Earth contains vast reserves of untapped petroleum and, since other rocky objects formed from the same raw material as Earth, that crude oil might exist on other planets or moons in the solar system, scientists say.

Both processes for making petroleum likely require thousands of years. Even if Earth does contain far more oil than currently thought, it’s inevitable that reserves will one day run out. Scientists disagree sharply, however, on when that will occur. And, some say, a global crisis could begin as soon as increasing demand is greater than supply, a possibility that might be measured in years rather than decades, some analysts argue.

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Venezuelan President Hugo Chavez and Iran’s Mahmoud Ahmadinejad said they were ready to spend billions of dollars (euros) financing projects in other countries to help thwart US domination.

The anti-US Presidents whose efforts to extend their influence have alarmed Washington met Saturday in Venezuela’s capital, the first stop on Ahmadinejad’s tour of Latin America that will also see him visit newly elected leftist leaders in Nicaragua and Ecuador.

The oil-rich nations had previously announced plans for a joint USD 2 billion fund to finance investments in Venezuela and Iran, but Chavez and Ahmadinejad said Saturday that the money would also be used for projects in friendly third countries.

“It will permit us to underpin investments … Above all in those countries whose governments are making efforts to liberate themselves from the (US) imperialist yoke,” said Chavez. 

“This fund, my brother,” Chavez said referring to Ahmadinejad, “Will become a mechanism for liberation.” “Death to US imperialism!” he said. Ahmadinejad called it a “very important” decision that would help promote “Joint cooperation in third countries,” especially in Latin American and African countries.

It was not clear if the leaders were referring to investment in infrastructure, social and energy projects – areas that the two countries have focused on until now – or other types of financing.

Before his meeting with Ahmadinejad, Chavez said in his state of the nation address that he had personally expressed hope to Thomas Shannon, head of the US State Department’s Western Hemisphere affairs bureau, for better relations between their two countries.

Chavez said he spoke with Shannon on the sidelines of Nicaraguan President Daniel Ortega’s inauguration earlier this week, saying, “We shook hands and I told him: ‘I hope that everything improves.”’ Chavez – a close ally of Cuban leader Fidel Castro whom Washington sees as a destabilizing influence – has pledged billions of dollars (euros) of help to the region in foreign aid, bond buyouts and preferentially financed oil deals.  ‘Champion of struggle against imperialism’

Iran, meanwhile, is allegedly bankrolling militant groups in the Middle East like Hamas and the Islamic Jihad, as well as insurgents in Iraq, in a bid to extend its influence.

Ahmadinejad’s visit Saturday – his second to Venezuela in less than four months – comes as he seeks to break international isolation over his country’s nuclear program and possibly line up new allies in Latin America.

After Venezuela, Ahmadinejad will visit newly elected leftist governments in Nicaragua and Ecuador that are also seeking to reduce Washington’s influence in the region. Bolivian President Evo Morales, another critic of US policy, said he plans to meet with Ahmadinejad while both are in Ecuador Monday.

Chavez and Ahmadinejad have been increasingly united by their deep-seated antagonism to Washington. Chavez has become a leading defender of Iran’s nuclear ambitions, accusing the United States of using the issue as a pretext to attack a regime it opposes and promising to stand with Iran.

Ahmadinejad, meanwhile, has called Chavez “The champion of the struggle against imperialism.”

On Saturday, he congratulated Chavez on his December re-election and said the Venezuelan people were wise to choose “A person as important on the world stage, a person so wise as Hugo Chavez.”

The increasingly close relationship has alarmed some, and critics of Chavez accuse him of pursuing an alliance that does not serve Venezuela’s interests and jeopardizes its ties with the United States, the country’s top oil buyer. Venezuela is among the top five suppliers of crude to the US market.

Both countries are members of the Organization of Petroleum Exporting Countries, Chavez said Saturday that they had agreed to back an oil production cut in the cartel in order to stem a recent fall in crude prices.

“We know today there is too much crude in the market,” Chavez said. “We have agreed to join our forces within OPEC … To support a production cut and save the price of oil.”

The two governments, which already plan to jointly produce everything from bricks to bicycles and develop oil fields in Venezuela, signed another 11 accords Saturday to explore further opportunities for cooperation in areas like tourism, education and mining.

Ahmadinejad is set to travel to Nicaragua to meet on Sunday with Ortega, a former Marxist guerrilla. On Monday, he travels to Ecuador for the inauguration of President-elect Rafael Correa, another outspoken critic of the administration of US President George W. Bush and Washington’s policies in Latin America.

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Honduras will take temporary control of foreign-owned oil storage terminals as part of a government import program meant to drive down fuel prices, President Manuel Zelaya said late on Saturday.

Zelaya ordered the move after failing to reach a deal with big oil companies Exxon Mobil (XOM.N: Quote, Profile , Research) and Chevron (CVX.N: Quote, Profile , Research), as well as local company DIPPSA, to rent the terminals.

“It is not a nationalization, it’s a temporary use of the storage tanks through a lease and payment of a reasonable price,” he said.

Honduras produces no crude of its own and no longer has a refinery. Its fuel market, like that of most Central American countries, is dominated by Shell (RDSa.L: Quote, Profile , Research), Exxon Mobil and Chevron.

The government program takes control of imports away from the small group of oil companies that operate service stations in the Central American nation. Those companies have opposed the new system, saying it is anti-competitive.

A congressional commission set up to study the new system has said it could save Honduras — one of the poorest countries in the Western Hemisphere — about $66 million a year.

Zelaya, a logging magnate, said the decree will allow the government to go ahead with a deal reached in November with Conoco Phillips (COP.N: Quote, Profile , Research) to import at least 8.4 million barrels of gasoline and diesel a year.

Exxon Mobil and Chevron could not immediately be reached for comment.

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Vladimir Putin on Tuesday faced an angry European backlash about his decision to halt oil supplies through the pipelines crossing Belarus.

As the Russian president made clear his determination not to back down in his dispute with Belarus, Angela Merkel, the German chancellor, denounced his actions as “not acceptable”, noting that even during the height of the cold war, Russia had been a reliable energy supplier to Europe.

Ms Merkel, speaking as the new president of the EU, said Russia’s latest display of energy muscle “hurts trust and it makes it difficult to build a co-operative relationship.”

Mr Putin, speaking in a televised meeting with ministers in Moscow, stressed he wanted to do all he could to ensure that oil supplies to western Europe were not affected. But he escalated the dispute by telling his government to tell Russian companies to cut output because of the transit dispute.

Belarus wants Russia to pay an export duty of $45 per tonne of oil transported through Belarus. This is in retaliation for Russia slapping $180 export duty on crude oil it sells to Belarus.

In a sign of how seriously Germany now questions its reliance on Russia, Ms Merkel said the new dispute cast doubt on the wisdom of her country’s plan to phase out nuclear power by 2020.

Yet for all the political furore, oil markets on Tuesday shrugged off the latest geopolitical threat to supply, focusing instead on the warm US winter and strong inventories. At one point the price of oil hit an 18-month low point, dipping below $54 in New York, although it later recovered most of its losses.

The political row in Belarus – and Venezuela’s announcement of plans to take state control of its heavy oil projects – did little to deflect the downward trend in the price. The price of oil has fallen by more than 10 per cent since the start of the year and yesterday Mustafa Mohatarem, chief economist of General Motors, forecast it would fall below $50 this year. West Texas Intermediate crude for delivery in February fell to an intra-day low of $53.88 a barrel before recovering. Brent crude fell to an intra-day low of $53.64 a barrel before climbing back.

David Kirsch, manager of the markets intelligence service for PFC Energy, said the weak trend was likely to continue, with oil prices likely to test $50 a barrel. “I don’t see any positive news in the next week or so that is likely to lift prices,” he said.

The steep fall has caused concern among members of the Organisation of the Petroleum Exporting Countries, which last month agreed a supply cut of 500,000 barrels a day, with effect from February 1, to try to stabilise the market.

Some Opec members have a target of $60 a barrel for the basket of their output, which is typically about $5 a barrel below the benchmark prices in London and New York.

The US Energy Information Administration, a government agency, trimmed its forecast of world oil demand to 86.2m barrels a day for the first quarter of the year, down 300,000 b/d from its December forecast. The EIA forecasted US oil prices would average $64.42 a barrel in 2007 and $64.58 in 2008

The oil price fall has taken place against a sell-off in the commodities market: copper has fallen 11.3 per cent; zinc 16.2 per cent; and tin 13.1 per cent.

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Oil prices fell about $2 a barrel Tuesday to their lowest levels in 18 months in a market expecting more mild weather and rising inventories in the United States.

Temperatures in the U.S. Northeast have been above normal this winter, curbing demand for heating fuels in the world’s largest heating oil market.

Market watchers are also looking for a rise in U.S. petroleum inventories in this week’s government report.

Light, sweet crude for February delivery on the New York Mercantile Exchange dropped $2.04 to $54.05 a barrel in electronic trading by afternoon in Europe. The front-month contract last closed below $54 a barrel in June 2005.

February Brent crude at London’s ICE Futures exchange fell as much as $1.96 to $53.64 a barrel.

Traders said a break through key support levels triggered a wave of sell orders.

The Nymex oil contract slipped 22 cents to settle at $56.09 a barrel Monday after falling nearly 8 percent last week.

Monday’s session was volatile, however, as prices rose as high as $57.72 on reports that OPEC oil ministers are considering another cut in output, and worries that a dispute between Russia and Belarus could result in energy shortages in parts of Europe.

The halt to the flow of Russian oil through Belarus had supported prices Monday, but ample supplies in Germany, Poland and Ukraine were expected to keep refineries running.

Nigeria’s oil minister Edmund Daukoru discouraged talk of any immediate action to support prices by OPEC, which recently resolved to cut output by 1.7 million barrels per day.

“Let’s implement the 1.7 million fully then we’ll see if there’s a need for additional cuts,” Daukoru told Dow Jones Newswires.

If OPEC announced another production cut — on top of the 1.2 million barrel-a-day reduction that began in November, and the 500,000 barrel-a-day cut set to begin Feb. 1 — analysts say prices would likely rise. Still, OPEC’s previous cuts haven’t been able to keep crude prices above $60 a barrel for long, largely because many traders doubt that the cuts are fully enforced.

Forecasters expect temperatures in the U.S. Northeast to drop to normal levels over the next couple of weeks.

But heating oil futures fell more than half a cent to $1.5498 a gallon on Tuesday while natural gas rose 6.2 cents to $6.440 per 1,000 cubic feet.

Analysts surveyed by Dow Jones Newswires expect U.S. petroleum inventories to rise in government data to be released Wednesday by the U.S. Energy Department. Crude inventories were expected to climb an average of 820,000 barrels, the survey showed.

Crude stocks normally fall this time of year, but with imports rebounding from a recent slump, inventories are likely to rise, said analyst Phil Flynn of Alaron Trading Corp. in Chicago.

Petroleum product stocks are expected to increase for the fourth straight week. Distillate stocks, which include heating oil and diesel fuel, are seen rising by an average of 1.9 million barrels while gasoline stocks are projected to increase by 2.5 million barrels.

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Oil prices continue to come down to a realistic level but gas prices have not followed suit.  Gas prices have come down in price but certainly has not kept up with the Oil prices coming down.  Gas has drop about 10% in the same time period that Oil has fallen by nearly 25%.  Time for the gas companies to anti up!

Europe’s oil supplies from Russia were being held to ransom last night as the Kremlin fell into bitter dispute with a former Soviet satellite state.
 
Moscow abruptly halted millions of barrels of oil destined for the EU via Belarus in an increasingly hostile wrangle with its neighbour.

The move raised further questions over whether Western Europe can trust Mr Putin for its energy supply. Experts said that Russia had a deeply entrenched habit of manipulating oil and gas supplies as a substitute for diplomatic policy.

Russia’s strong-arm tactics have added resonance in Britain, amid persistent speculation that Gazprom, the Kremlin-controlled gas group, will seek to buy Centrica, the British Gas group, which has 16 million gas and electricity customers in the UK. Angela Merkel, the German Chancellor, told The Times last night that Germany will use its six-month EU presidency to improve energy security on the Continent. In her first interview with a British newspaper she signalled that she would take a harsher line towards Russia than her predecessor, Gerhard Schröder, who is now on the board of a German-Russian consortium constructing a gas pipeline linking Russian gasfields with Western Europe.

“For us, energy is what coal and steel used to be,” she said, referring to the driving forces behind the European project.

Russia’s “gas war” with Ukraine last January caused supplies to Europe to drop briefly by a third during one of the coldest winters recorded. In this case, Mr Putin’s struggle with President Alexander Lukashenko of Belarus, branded “Europe’s last dictator” by the US, once again reduced the EU to watching nervously from the sidelines as its energy supplies were hit.

Belarus considered itself Moscow’s closest ally until a week ago, but was on the verge of a trade war last night after the bitter flare-up over oil duties. More than 1.2 million barrels of oil a day flow from Russia through the Druzhba, or Friendship, pipeline, providing almost a quarter of Germany’s needs and 96 per cent of Poland’s imports, as well as supplies to Ukraine, Hungary, Slovakia and the Czech Republic.

Andrei Sharonov, Russia’s Deputy Trade and Economic Development Minister, accused Belarus of jeopardising contracts with European customers by imposing a tax on oil passing through the pipeline. Relations between the two countries have soured rapidly since New Year’s Eve, when Belarus and Russia’s state-run monopoly Gazprom came within minutes of failing to agree a gas contract for 2007.

The Government in Minsk was forced to accept a doubling of gas prices to prevent supplies from being cut to its ten million citizens.

The oil dispute centres on a tit-for-tat row over taxes. Minsk introduced a penalty on January 1 on Russian oil crossing Belarus to Europe, in retaliation against Moscow’s decision to slap a duty on oil it sold to Belarus. A government delegation from Belarus flew to Moscow last night to try to negotiate a settlement. But Mr Sharonov said that there would be no talks until Minsk cancelled its tax. Europe should expect to see the natural resources giant use the same ploy in the future to extract market prices for oil and gas out of former Soviet states, experts said.

Andris Piebalgs, the EU Energy Commissioner, said that he was seeking an “urgent and detailed explanation” about the cut in oil deliveries.

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Russian oil supplies to Poland and Germany have been cut at Poland’s eastern border with Belarus, Polish pipeline company PERN said, and a Russian company has accused Belarus of diverting the flow.

In a new twist to tension between Minsk and Moscow over oil supplies and transit to western Europe, PERN spokesman Tomasz Zakrzewski told AFP on Monday: “Deliveries were disrupted overnight and then totally cut off Monday morning on the main Druzhba pipeline, which supplies crude oil to Poland and Germany.

“Fifty million tonnes of crude pass through the Druzhba pipeline each year. Of that, 18 million tonnes are supplied to Poland and 22 million tonnes to the German refineries of Schwedt and Mider Spergau,” he said.

Polish oil groups Orlen and Lotos receive Russian crude through the Druzhba pipeline, which first came onstream in 1964.

Russian pipeline operator Transneft accused Belarus of siphoning oil from the pipeline.

“Since January 6, the Belarussian side has unilaterally, and without warning anyone, begun illegally siphoning oil from the Druzhba pipeline, which is solely for transport to customers in western Europe,” Transneft head Semyon Vainshtok was quoted as saying Monday by the RIA Novosti news agency.

But the head engineer at Belarus’ Gomel Transneft Druzhba, which operates the pipeline, said oil supplies to Poland and Germany had only been reduced, on orders from state energy company Belneftekhim, not completely halted.

“We did not cut it off. We are working. But there has been a reduction,” Alexander Bordovsky told AFP.

The development comes amid a row between Minsk and Moscow over Russian crude which is pumped through Belarus on its way to customers in the European Union.

About 100 million tonnes of Russian crude pass through pipelines in Belarus each year on the way west to customers in the Czech Republic, Lithuania and Slovakia, as well as Germany and Poland.
At the beginning of the year, Belarus slapped a transit tax on Russian crude that passes through the country in response to a Russian decision to impose export duties on crude oil that Belarus buys from Russia.

The row over transit fees came just days after Belarus had narrowly averted a cut-off in Russian natural gas supplies by agreeing to a demand by Russian monopoly Gazprom that Minsk pay double last year’s price for imported gas.

The Polish economy ministry issued a statement Monday assuring that “Polish refineries have sufficient reserves” to continue functioning normally until crude supplies can be restored via a Baltic Sea terminal.

“Poland also has strategic oil and gasoline stocks for 80 days, which will be used in the event of need,” the statement said.

A different section of the Druzhba pipeline near Russia’s border with Belarus ruptured in July last year, causing the flow of Russian crude to the Mazeikiu Nafta refinery in Lithuania to be cut off.

That interruption to supplies occurred shortly after Poland’s Orlen had signed an agreement to buy the Baltic oil facility from bankrupt Russian oil company Yukos.

Supplies by the pipeline to Mazeikiu have not yet been restored, affecting — along with other incidents — the Baltic oil complex’s bottom line, which has been forecast to be 20 percent down in 2006 compared with the results the previous year.

Officials in Lithuania have speculated that the halt in supplies to Mazeikiu was politically motivated because Moscow was irked that the Baltic oil group had been sold to a Polish firm, not one of the Russian ones that had bid for it, and that Yukos had skirted the Russian legal system when it sold Mazeikiu.

The Russians, on the other hand, have blamed last year’s cut-off on technical problems, with Oleg Mitval of the Russian natural resources ministry saying last July that “hundreds of faults” had been discovered on the ageing pipeline.

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Belarus has blocked the transit of Russian oil through its territory to European countries including Germany and Poland, news reports said Monday, raising the stakes in a bitter energy dispute between Russia and the neighboring former Soviet nation.

EU energy chief Andris Piebalgs said Monday the cuts pose “no immediate risk” to energy supplies in the EU, but that he was seeking an “urgent and detailed explanation” of the cuts from authorities in Belarus and Russia.

The head of the Russian state pipeline operator Transneft, Simon Vainshtok, accused Belarus of siphoning off Russian oil through the Druzhba, or Friendship, pipeline that was destined for Europe since the weekend.

“On Jan. 6 the Belarusian side, without warning anyone, unilaterally started illegally siphoning off oil from the Druzhba pipeline designed solely for the transportation of oil to consumers in Western Europe,” Vainshtok was quoted as saying by Russian news agencies.

The Transneft chief said that Belarus had diverted 79,000 tons of oil so far and called on Minsk to ensure the uninterrupted transit of oil. He added that Russia was doing everything it could to boost oil exports to Europe via other routes.

The 2,500-mile-long pipeline has the capacity to ship over 1.2 million barrels a day to eastern and central Europe and generally works at or close to its full capacity.

Belneftekhim, a large state Belarusian industrial and energy holding company, ordered the suspension of transit of oil through Druzhba to Germany, Poland and Ukraine, the Interfax and ITAR-Tass news agencies quoted unidentified officials from the pipeline’s Belarusian section as saying.

Contacted by The Associated Press, officials from Belneftekhim declined to comment.

In Warsaw, the Economics Ministry said Monday that Poland was suffering disruptions in oil deliveries from the pipeline that crosses Belarus, the result of the dispute between Moscow and Minsk.

“This shows us once again that arguments among various countries of the former Soviet Union, between suppliers and transit countries, mean that these deliveries are unreliable from our perspective,” Poland’s deputy economy minister, Piotr Naimski, told TVN24 television.

The German government confirmed that the pipeline, which supplied two refineries in Germany, had been shut down. “I can confirm the Druzhba pipeline has been closed,” said Economic Ministry spokesman Hendrik Luchtmeier. “We are trying to ascertain the reasons.”

The impact of a short-term stoppage in Poland and Germany is likely to be minimal, as refineries maintain strategic oil stocks.

In a statement read by his spokesman, Piebalgs said he was trying to find out if Slovakia and countries in southeastern Europe were also affected. He said he was considering calling a special meeting of energy experts from the 27 EU nations to discuss the situation, in case they had to draw on oil stocks.

Piebalgs spokesman Ferran Tarradellas Espuny said Poland had 70 days of reserves and Germany 130 days.

The suspension of oil deliveries comes just days after Belarus and Russia reached a last-ditch agreement on gas prices that avoided a New Year’s cutoff of natural gas for Belarusian consumers that threatened a repeat of last year’s energy dispute between Moscow and Kiev.

Belarus grudgingly accepted a doubling of the price it pays for imports of Russian natural gas, on which it depends for industry and home heating.

But the two countries are now locked in a dispute over oil duties, with Russia determined to stop Belarus from re-exporting petroleum products made from processing Russian oil bought cheaply.

Jason Schenker, an economist with Wachovia Corp. (WB) in Charlotte, North Carolina, who covers the oil and gas industry, said that if the dispute is not contained soon, it could cause overall oil prices to rise as sellers from other markets could take the opportunity to raise their own prices.

“If this situation is not resolved with relative expediency, the market may interpret it as a repeat of the Ukraine situation from last year, which would have bullish energy price implications,” Schenker told the AP. “The magnitude of the reaction of energy markets will be directly dependent on how protracted this situation becomes or appears likely to become.”

Several countries in the European Union, which depends on Russia for 25 percent of its gas supply, suffered a brief disruption in early 2006 after Moscow suspended gas deliveries to Ukraine because of a pricing dispute. Ukraine and Belarus are the transit route for Russian gas to Europe.

The inefficient, Soviet-style state-dominated economy in Belarus and leader Alexander Lukashenko’s popularity has depended heavily on subsidized Russian energy – but analysts say the Kremlin has grown impatient at supporting his regime while receiving little in return.

Last week, Belarus announced it would charge an import duty of $45 per metric ton of Russian oil shipped to Western Europe in pipelines that cross Belarus. The move followed Russia’s imposition of an export duty of $180 a ton on oil sold to Belarus.

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Crude oil prices could head lower in 2007 from current levels of about 60 dollars per barrel, as global production catches up with demand and geopolitical risks lessen, experts say.

Despite hitting record highs in July, oil futures in New York ended the year about 1.5 percent lower than at the beginning of 2006, with futures in London up just 2.0 percent.

“This year, the main story has been the political risks story,” Global Insight oil analyst Simon Wardell said.

In 2006, amid an already tight supply situation, concerns about geopolitical instability in producer regions pumped prices higher and led to the all-time highs above 78 dollars per barrel in July and August.

The threat of UN sanctions against  Iran over its nuclear stand-off with the West led the Islamic Republic to hint at threatening disruption to its oil exports, which in turn sent prices surging.

In Nigeria meanwhile, militant attacks on oil facilities in the Niger delta have slashed the African country’s output by up to a third.

Prices were also supported this year by the July conflict between Lebanon and  Israel, worsening violence in  Iraq, and a hardening of relations between the United States and South American oil giant Venezuela.

And despite  North Korea not being an oil producer, news that it had test-fired missiles supported prices as traders felt the move could strengthen Iran’s position in its diplomatic battle with the West.

Aside from geopolitical concerns, oil futures won a lift from fears that the 2006 hurricane season would match the previous year’s ferocity and due to the temporary closure of facilities in Prudhoe Bay in Alaska, the biggest US oil field.

These threats and disruptions led oil prices to strike record high points. In July, light sweet crude hit a peak of 78.40 dollars per barrel in New York. In August, Brent North Sea crude reached an all-time high of 78.64 dollars per barrel in London.

These levels put oil prices 20 dollars higher compared with the start of 2006 and four times higher compared with 2002.

However they have since dived owing to high levels of US energy inventories and mild temperatures in the United States, while traders are beginning to overlook unrest in oil producing countries such as Nigeria and Iran.

Meanwhile with producers –  OPEC and non-OPEC members — pumping at full capacity, even minor output trouble would have pushed prices disproportionately upwards earlier in the year.

But as Lehman Brothers analyst Ed Morse pointed out: “Nothing that could have gone wrong in 2006 went wrong.” For example, Iran was not hit by economic sanctions and the hurricane season was calm.

Global Insight’s Wardell added: “At its peak when we were at 78 (dollars), I suppose you could say it (the geopolitical fear) was adding 25 to 30 dollars a barrel.

“It’s come down to around 15 dollars now.”

Wardell said that prices were now trading towards a range that was more reflective of the true state of demand and supply, which he put at between 55 and 60 dollars per barrel.

In 2007, he forecast that “prices will probably rise further from where they are over the winter and then begin to dip through the year as supply meets demand”.

In 2005, crude prices had raced ahead owing to strong demand in China and the United States, as well as lower production caused by hurricane damage to oil installations in the Gulf of Mexico

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