Monday PM June 2nd, 2008
by: Ed Mayberry, June 2, 2008 11:06:00 am
Enron says it distributed more than $6 billion in the past month to creditors of the bankrupt Houston-based energy trading company. That's pushed the recovery by creditors to more than 50 cents on the dollar. Enron Creditors Recovery Corporation said that with the latest distributions, creditors of Enron had received 50.3 cents on the dollar. It says creditors of Enron North America Corporation had gotten back 50 cents on the dollar. Both figures excluded gains, interest and dividends. The latest distributions resulted from a settlement with Citigroup, which was the last remaining defendant in what was known as the “mega claims” lawsuit. That was a bankruptcy suit that the Enron Recovery Corporation filed in 2003 against 11 banks and brokerages alleging they helped Enron hide its financial problems from creditors. Since November 2004, Enron has returned about $20.59 billion to creditors. That's more than 289 percent of the original estimate.
The president of OPEC says the spiraling price of oil is not tied to the oil market. Algeria Energy Minister Chakib Khelil says the high prices are due to market speculation, the U.S. sub-prime crisis and the weak U.S. dollar. He notes that OPEC controls only 40 percent of world oil production, and says the high prices don't reflect market conditions. Speaking with reporters in Algiers over the weekend, he also said the cartel will make no new decision on production levels until OPEC's September 9th meeting in Vienna. Oil prices recently reached $135 a barrel, before falling to less than $130 Friday.
U.S. Treasury Secretary Henry Paulson says there is “no quick fix” to high oil prices. During a weekend visit to Qatar, he admitted the U.S. economy has been experiencing a “downturn” and reiterated that a strong dollar is in the U.S. interest. The treasury chief also says it's up to Gulf countries now struggling with high inflation whether they want to de-peg their currencies from the dollar. He called it a “sovereign decision.” Paulson has been in the Mideast to deliver a message to officials of Saudi Arabia and other oil-producing nations that soaring oil prices are putting a burden on the global economy. He is urging those countries to open up their oil markets to investment that can boost yields, exploration and production.
When it comes to gas prices, a little perspective might help. For Americans, the average price per gallon is nearing $4. But in France, drivers are paying nearly $10 a gallon. And in Turkey it's more than $11. As oil costs soar, the effect on drivers can vary widely. Taxes and subsidies that differ from nation to nation are the main reasons. But there are also limits in oil refining capacity and hard-to-reach places that drive up shipping costs. In Europe and Japan, high taxes have made drivers accustomed to staggering gas prices, and many Europeans rely on cheap mass transit. On the other hand, government subsidies shield consumers in emerging economies like China and India. But that still means those governments have to find a way to afford the soaring oil prices.
With gas prices hovering at $4 a gallon, some motorists are putting less fuel in their tanks and then coming up empty on the highway. National statistics on out-of-gas motorists don't exist. But there's plenty of anecdotal evidence that drivers who are unwilling or unable to fill 'er up are gambling by keeping their tanks extremely low on fuel. AAA mid-Atlantic, which serves Delaware, Maryland, New Jersey, Pennsylvania, Virginia and the District of Columbia, reports a 15 percent year-over-year increase in calls from members with empty tanks. AAA spokeswoman Catherine Rossi says motorists could end up paying more later. That's because running on fumes can damage a car's fuel pump--requiring repairs that make a full tank of $4 gas seem like a bargain.
A newspaper report says Texas hasn't bolstered building codes in hurricane-prone parts of the state after the devastating storm seasons of 2004-2005. Other Gulf states responded in kind, particularly Louisiana, the Houston Chronicle reports. That state adopted a statewide building code after Hurricane Katrina swamped New Orleans and Rita battered its southwestern coast. Hurricane and disaster experts are bewildered that Texas isn't talking about building codes nearly three years after a direct hit from Rita. Florida has the best rating in a system that grades communities on their building codes and enforcement. Texas lags behind the national average. Beaumont, which suffered significant damage from Rita, rates poorly. Texas has quasi-mandatory codes for coastal residents, unevenly enforced codes in cities, and builder-enforced codes elsewhere. National advocates for stronger building codes say that's not a progressive approach for a hurricane-prone state.
Inmates in about a dozen Texas jails can receive e-mails from the outside world even though they don't have Internet access. Since late last year, the jails are taking advantage of a Dallas-based Web site that allows jail officials to print the e-mails and deliver them to inmates. Jim Sadler, marketing director for Securus Technologies, says the company started testing the e-mail service about two years ago. About a dozen law enforcement agencies in Texas use it, he said. The new service has allowed Lenell Ripley to send an incarcerated friend about a half-dozen e-mails in the past three weeks with messages of encouragement and news about his case. And she says has received messages from him about information that he would like to relay to family members. As part of the service, the sender can include a reply page, which is a piece of paper that the inmate writes a note on, said roger wade, a spokesman for the Travis County Sheriff's Department. The paper is scanned and e-mailed back to the original sender. He says inmates can't initiate the e-mail. To send a message, people can register on the Securus Web site. Sadler says the sender must have the name of the inmate and inmate number.
There's plenty of economic data for investors to mull this week, led by the monthly jobs report due Friday. Analysts are looking for another decline in payrolls, while the May unemployment rate is seen rising. As the week proceeds, reports are also due on first quarter productivity, monthly auto sales, factory orders and consumer credit.