Tuesday AM July 15th, 2008
by: Ed Mayberry, July 15, 2008 4:07:00 am
President Bush's lifting of an executive ban on offshore drilling has drawn praise and criticism. House Speaker Nancy Pelosi calls it a "hoax" that won't lower gas prices or increase energy independence. She adds that it appears that "the oilman in the White House is echoing the demands of big oil." But likely Republican presidential nominee John McCain sees the move as "a very important signal." He has called on Democratic rival Barack Obama to drop his opposition to offshore drilling. Obama campaign spokesman Bill Burton says Bush's plan would ''merely prolong'' what he says are the ''failed energy policies we have seen from Washington for thirty years.'' Environmental groups are also blasting Bush. The president of the League of Conservation Voters, Gene Karpinski, calls the action reckless and says it "has neither hope of reducing gas prices nor concern for long-term consequences." Senate Republican Leader Mitch McConnell, a supporter of offshore exploration, says the only thing standing in the way "is the Democratic leadership in Congress.''
Alaska's North Slope oil production received a slight boost. Houston-based ConocoPhillips said it began producing oil at the Qannik field two months ahead of schedule. By next year it will reach peak production of about 4,000 barrels of oil per day. With oil prices inching toward $150 a barrel, any production is considered helpful. But that represents about one-half of one percent of the 730,000 barrels of oil that flows from the North Slope down the 800-mile Trans-Alaskan pipeline. The field is a joint venture between the field's operator ConocoPhillips (78 percent) and Anadarko Petroleum (22 percent). Alpine is located on the border of the National Petroleum Reserve-Alaska in the North Slope's western region.
Venezuelan President Hugo Chavez is touting a deal for delivering fuel to Caribbean nations and loosening the financing terms to aid countries struggling with high oil prices. Chavez said nations taking part in the Petrocaribe Initiative will now be required to pay just 40 percent of the bill within 90 days. That's down from the current 50 percent. He said the rest can be paid over the next 25 years at a fixed interest rate of one percent as long as oil prices are above $100 a barrel. The pact has helped Chavez promote his vision of regional independence from the United States. He's also threatened to cut off oil exports to the United States if ExxonMobil succeeds in freezing Venezuela's assets, warning that oil prices could reach $300 a barrel as a result. The Irving-based oil giant left the country last year rather than take a minority stake in its Venezuelan projects and is now locked in a legal fight over compensation. It lost a court battle to freeze Venezuelan assets overseas in March, but Chavez says ExxonMobil hasn't given up. He accused ExxonMobil of stealing natural gas from Venezuela in "pipes hidden in the undergrowth" and not declaring all its profits. He said Venezuela has evidence to back his claims but didn't provide any.
A key Democratic Senator says the actions taken by the Bush administration to support two troubled mortgage giants are "probably the right steps." Christopher Dodd of Connecticut, the chairman of the Senate Banking Committee, says it's important to "calm people's fears." He tells CBS that he'll summon Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke to a committee hearing today to answer questions. Dodd also says there's a "big difference" between Indymac Bancorp, which failed last week, and mortgage giants Fannie Mae and Freddie Mac. Dodd says Indymac "engaged in very bad mortgages, luring people into deals they could never afford." Be says that's "not the case with Fannie and Freddie." The Fed is giving its New York bank the power to lend to those two companies if necessary. And the Treasury is looking for quicker authority to expand its line of credit to them.
New York Senator Charles Schumer says it's not his fault. He's defending himself against claims by regulators that he's partly to blame for a run on Indymac. Schumer says the administration is "blaming the fire on the person who called 911."
Waste Management, the nation's largest garbage hauler and landfill operator, says it is offering to buy disposal company Republic Services in an all-cash deal valued at $6.19 billion. Houston-based Waste Management is offering $34 per share for the company, which is a 22 percent premium to Fort Lauderdale, Florida-based Republic Services closing stock price of $27.90 on Friday. Republic Services had about 181.9 million shares outstanding as of April 25th.
General Motors is planning to announce some restructuring moves this morning in response to falling U.S. sales. GM said Chairman and CEO Rick Wagoner will discuss the changes at a news conference. The company released no further details. GM has been hammered by high gas prices, the weak economy and a rapid shift in consumer tastes away from trucks and sport utility vehicles. The automaker's sales were down 16 percent in the first six months of this year, while its stock price has hit 50-year lows in recent weeks. GM announced last month it would close four truck and SUV plants and boost production of several cars. But analysts have suggested the company needs to do more as sales continue to slide, including cutting more jobs and raising cash for a turnaround.
Yahoo! has rejected another offer from Microsoft to buy its online search operations as ludicrous. Yahoo! says it received the offer Friday and was given less than 24 hours to respond. The company says the "take or leave it" proposal would have dismantled its Internet franchise. Yahoo! claims Microsoft packaged the offer with billionaire investor Carl Icahn, who's trying to overthrow Yahoo!'s board of directors at a shareholder meeting next month. Yahoo! Chairman Roy Bostock says his company won't be "bludgeoned" into a transaction that is not in the best interests of its stockholders. He says Microsoft won't even talk to Yahoo!'s current management even though the company is now willing to accept the $47.5-billion buyout offer it had rejected in May.
Apple says it sold a million iPhones in the three days following the release of the latest model Friday. CEO Steve Jobs calls it a "stunning opening weekend." The launch of the 3G model was not without some problems. All the new iPhones had to connect to apple's servers for activation, which quickly overloaded them. Lines of customers built in stores as employees were unable to get the phones working. Additionally, new software was released for the old iPhone, which required reactivation of those phones. Many owners of the older phone were left with unusable units. Reports of activation problems subsided over the weekend. The iPhone 3G was launched simultaneously in 21 countries, including the U.S.
Microsoft's Xbox 360 video game console will be able to stream thousands of movies over the Internet, thanks to a deal with NetFlix. The arrangement Microsoft announced at the e3 Media & Business Summit in Los Angeles will give NetFlix's eight million subscribers another way to stream movies on a TV instead of a computer. A NetFlix-backed startup called Roku already sells a small streaming device that connects to TVs. The NetFlix streaming service — which operates in addition to its DVD-by-mail program — offers 10,000 movies and TV shows. Microsoft's Xbox had movies available before, but not nearly as many. This expansion is key in helping Microsoft compete with Sony's PlayStation 3, because gaming consoles are becoming entertainment hubs with movies, videos and music.
Midwest Airlines says it'll reduce its work force by 1,200 people as it removes its fleet of 12 MD-80 jets from service. Oak Creek, Wisconsin-based Midwest Air Group says the cuts represent about 40 percent of current staffing at Midwest and its Skyway subsidiary. The company will begin notifying affected employees Monday, with most jobs ended by mid-September. Midwest air group also says it is continuing talks with pilots and flight attendants unions to reach deals on concessions needed to reduce the airline's costs. Like other airlines, Midwest has been hurt by soaring fuel costs. Fort Worth-based private equity firm TPG Capital in January completed its roughly $450 million acquisition of Midwest Air Group and paid 53 percent of the purchase price. Northwest Airlines owns the rest.
A North Texas company is building dome-shaped buildings in the small Oklahoma town of dibble to increase energy efficiency and weather safety. Two dome-topped school buildings under construction in dibble are hoped to ease school overcrowding in the McClain County School District. The buildings are projected for completion in February. They're the latest in Oklahoma to adopt plans to incorporate monolithic domes, which are well-insulated, steel-reinforced concrete structures. The Monolithic Dome Institute of Italy, Texas, was subcontracted to build the domes; JWS Construction of Mustang was contracted to work on the other parts of the buildings. The monolithic dome institute Web site says Oklahoma has eight schools with monolithic domes, more than any other state in the nation.
Continental Airlines has expanded its landing gear overhaul contract with Goodrich, according to the Houston Business Journal. The $49 million agreement covers Continental's Boeing aircraft fleet. Goodrich is the original landing gear equipment manufacturer of nearly all Boeing airliners in service.
Continental has been named "Best Domestic Airline," "Best Airline for Customer Service" and "Best Airline for Flights to Mexico" in Executive Travel magazine's 2008 Leading Edge Awards. The Houston-based air carrier placed second in "Best Domestic Airline for First Class Service" and "Best Domestic Airline for Business Class Service." It placed third for airport lounges and for flights to Canada and the Caribbean.