Thursday PM September 25th, 2008
by: Ed Mayberry, September 25, 2008 11:09:14 am
Centerpoint Energy reports that 1.76 million of its 2.15 million customers affected by Hurricane Ike now have power. That’s 78 per cent restoration, leaving some 495,270 without electricity.
Comcast reports that about 25 per cent of its customers are still without cable services. Most outages are due to the loss of electrical power. Nearly 500 out-of-company technicians are helping Comcast maintenance technicians to restore service.
While oil companies are returning crews to their Gulf platforms and rigs after the storms plowed through the region, most production remains offline. About 66 per cent of oil production and 61 per cent of natural gas output in the Gulf of Mexico remains shut after the passage of Hurricanes Gustav and Ike, according to the Minerals Management Service. Fifty-two oil and natural gas producing platforms were destroyed by Ike, as well as four drilling rigs. MMS says 29 oil and natural gas producing platforms in the Gulf of Mexico damaged by Hurricane Ike will take three to six weeks to repair. Another 33 platforms sustained moderate damage that will take one to three months to fix. Six offshore natural gas pipelines were damaged.
At the pump, AAA says the national average for regular unleaded gas stands at $3.70.
Shell Oil says there will be intermittent flaring at Shell Deer Park over the next few days as the company restarts the refinery and chemical plant. Residents may observe smoke, light and noise from the flares.
Damage to U.S. Gulf Coast refineries prompted the Mexican state oil company Pemex to reduce its daily output. It expects production to be back to normal by the end of the week.
Postal Service employees are providing mail service at a temporary mail pickup location in La Marque for customers serviced by the Galveston Main Post Office on Rosenberg. The temporary site at 14057 Delaney Road in La Marque is near I-45 at the Delaney Road exit (Exit 13) in the Gulfway Plaza at La Marque outlet mall. The site will also serve customers of the Bob Lyons Station on Galveston Island, and will also distribute post office box mail. Meanwhile, a mobile van at Bob Lyons Station on Broadway in Galveston will provide retail service and mail collection. The Postal Service reminds those who have permanently relocated or will be in a temporary location for an extended time to submit a change of address form.
The nation's postmaster general says the economic slowdown has caused a sharp slowdown in the mail business. John Potter says as the volume of mail declines, the agency could face a loss of more than $2 billion. He told a meeting of the agency's governing board that cost savings steps are required now, including a reduction in working hours. In addition, the Postal Service is offering early retirement, without incentives or bonuses, to thousands of clerks, mail handlers and supervisors. Postage rates rose a penny in May to 42 cents. Another increase is expected next May, with the amount to be announced in February. Any increase is limited to the rate of inflation. Last year the Post Office ended the year more than $5 billion in the red.
HEB says its Stewart Road store in Galveston remains closed, and there are no plans to reopen it in the foreseeable future. The store suffered extensive water damage. Employees are being offered transfers to other HEB locations in greater Houston. There are 67 HEB stores in the Houston division.
Bill Heard Enterprises is closing its 13 dealerships nationwide. Bill Heard Chevrolet in Sugar Land will stay in business, but Landmark Chevrolet is closed. Landmark was seventh in area vehicle sales and Bill Heard Chevrolet was eighth, according to InfoNation. The corporate office attributes the closings to rising fuel prices and the economic slowdown, and an inventory focused on heavy trucks and SUVs. Warranties from closed locations will be honored at other Chevrolet dealerships.
General Motors says it will build a new factory in Flint, Michigan, to make four-cylinder engines for the Chevrolet Volt electric car and other models. At a ceremony in Flint on Thursday, GM officials said production at the new $370 million facility will begin in 2010. The plant will make 1.4-liter four-cylinder engines for the Volt as well as the Chevrolet Cruze, a new compact car to be built in Lordstown, Ohio. Both new cars are slated for production the same year. No new jobs will be created, but GM says the project will retain about 300 hourly positions. Earlier this week, the state of Michigan approved $132.5 million in tax incentives for the new plant and to upgrade four other facilities, including the Detroit-Hamtramck assembly plant where the Volt will be assembled.
GM CEO Rick Wagoner says the company should be able to put to good use its portion of a $25 billion government loan package. Wagoner spoke to reporters at a ceremony announcing the new engine plant in Flint, Michigan. He said many of the loan program's specifics still must be written by the U.S. Department of Energy, but GM can live with the version the House approved Wednesday. Wagoner says he would like the loans to be available to fund all new technologies with significant improvement in fuel economy, but he realizes congress has put limitations on how the money can be used. He says he expects the loans to help development of the Chevrolet Volt rechargeable electric car, and a dual-mode gas-electric hybrid system that GM is spreading to more models.
Detroit's troubles are spilling onto Madison Avenue. U.S. automakers, the single largest category of advertisers in America, cut their ad spending 18 per cent in the second quarter compared with 2007. According to industry figures, domestic automakers spent $1.37 billion in the second quarter compared with $1.67 billion in the same quarter a year ago. TNS media intelligence says second-quarter spending was 11 per cent lower than the most recent quarterly peak of $1.54 billion, which U.S. automakers reached in the fourth quarter of 2005. TNS says high oil prices, the mortgage crisis and the credit market meltdown are making this downturn particularly worrisome for struggling automakers. Foreign automakers also are trimming their spending on advertising in U.S. markets.
President Bush summoned Barack Obama, John McCain and legislative leaders to an extraordinary White House summit. He warned Americans and Congress last night that failing to act on a $700 billion financial industry bailout could lead to “a long and painful recession.” Earlier, Bush bowed to Democratic demands to limit the pay of executives whose tottering companies would be rescued. He appears to be softening his resistance to democrats' demand that the eye-popping cost be phased in rather than approved all at once. Democrats and Republicans are nearing agreement on the rescue legislation, the most sweeping government intervention in the market since the Great Depression.
Key lawmakers have reported an agreement in principle on a bailout of the financial industry designed to avert a deeper economic crisis. Leaders are describing it as an agreement in principle on the general direction of the bailout bill. The Bush administration has agreed to a limit on pay for executives of bailed-out financial institutions. Lawmakers have also been pushing to phase in the $700 billion cost and allow the government to take an ownership stake in troubled companies rather than just buying their bad debt. House Financial Services Committee Chairman Barney Frank says “there really isn't much of a deadlock.” Emerging from a two-hour negotiating session, Senator Chris Dodd said, “we are very confident that we can act expeditiously.” Senator Bob Bennett, a Utah Republican, told reporters: “I now expect that we will indeed have a plan that can pass the House, pass the Senate (and) be signed by the president.” Dodd is a Connecticut Democrat who heads the Senate Banking Committee. The plan would have the government provide insurance to companies that agree to buy frozen assets, rather than purchase them directly as envisioned under the administration's plan. The firms would have to pay insurance premiums to the Treasury Department for the coverage.
Former President Clinton says legislation stabilizing troubled financial markets ought to ensure there'll be no “unjust enrichments” of people who do not deserve a bailout. The former president also said he believes the convulsiveness in the markets has the potential to substantially damage the economy in the absence of action by Congress and the administration. Clinton was interviewed this morning on CBS's “The Early Show.” He said that “when people lose confidence in everything, down to the four-year money market accounts, that's bad.”
The Federal Reserve says banks and investment firms ramped up borrowing from its emergency lending facility over the past week, more proof of the credit stresses plaguing the country. A Fed report says commercial banks averaged $39.36 billion in daily borrowing over the past week. That compared with a daily average of $21.6 billion in the previous week. For the week ending Wednesday, investment firms drew $88.15 billion. This category was broadened to include any loans that were made to the U.S. and London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley and Merrill Lynch. Last week, Wall Street firms averaged $20.3 billion in daily borrowing.
Government data show sales of new homes dropped sharply in August, falling to the slowest pace in 17 years. The average sales price fell by the largest amount on record, too. The Commerce Department said that new homes sales fell by 11.5 per cent in August to a seasonally adjusted annual sales rate of 460,000 units, the slowest sales pace since January 1991. It was a much bigger sales decline than the small one per cent drop that economists had been expecting. The average price of a new home sold in August dropped by a record amount of 11.8 per cent to $263,900, compared to the July average of $299,100. The median price was also down, falling 5.5 per cent to $221,900.
Government data shows the number of new applications for unemployment benefits jumped last week to its highest level in seven years due to the impact of Hurricanes Ike and Gustav and a weak economy. The Labor Department reports that new requests for jobless benefits increased by 32,000 to a seasonally-adjusted 493,000, much higher than analysts' expectations of 445,000. The two hurricanes added about 50,000 new claims in Louisiana and Texas, the department said. The four-week moving average, which smooths out fluctuations, rose to 462,500.
A report from the United Nations says efforts to battle climate change could lead to millions of additional jobs around the world. The U.N. Environmental Program report says the global market for environmental services and products is expected to double to $2.7 trillion by 2020. The report says green jobs include work in agriculture, industry, services and administration that contributes to preserving or restoring the quality of the environment. In the U.S. and Europe, the U.N. says investments in improved energy efficiency in buildings could generate an additional two to 3.5 million green jobs.
Orders for big-ticket manufactured goods plunged in August by the largest amount in seven months as demand for both airplanes and autos fell sharply. The Commerce Department says orders for durable goods fell by 4.5 per cent last month, far worse than the 1.6 per cent decline expected by economists. It was the biggest setback since a 4.7 per cent fall in January and came after modest increases in the past three months. The widespread weakness was led by a 38.1 per cent fall in orders for commercial aircraft--the biggest drop in this category in a year. Demand for autos fell by 8.1 per cent--the biggest drop in 19 months--as automakers struggle with the weak economy and falling demand for once-popular trucks and sport utility vehicles.