Thursday PM June 4th, 2009
by: Ed Mayberry, June 4, 2009 5:06:49 pm
BP Products North America is being sued by Texas authorities who accuse the petrochemical giant of 46 separate pollution violations at its Texas City refinery--including one tied to an explosion that killed 15 workers and injured 170 others four years ago. The suit filed by the Texas Attorney General's Office in state court in Austin alleges the BP Texas City refinery, about 35 miles southeast of Houston, spewed hundreds of thousands of pounds of unauthorized pollutants in a “pattern of unnecessary and unlawful emissions.'' The state said the emissions were the result of poor operational practices and inadequate maintenance at the refinery. BP spokesman Ronnie Chappell declined comment on the lawsuit, but says the company's goal is to resolve the matter and address the state's concerns. Chappell says BP is working hard to reduce the number of emissions events at the refinery.
The government of Venezuelan President Hugo Chavez has seized control of 14 natural gas compression plants. The move comes as the country proceeds with the takeover of private companies in Venezuela's oil industry. Venezuela's state oil company has taken control of 75 oil contractors amid payment disputes and plunging oil prices. Houston-based Exterran Holdings, in a filing Tuesday with the U.S. Securities and Exchange Commission, says Petroleos de Venezuela began taking over its operations that same day. Venezuela's state oil company has recently clashed with domestic and foreign service providers--falling behind on billions of dollars in payments as it aims to cut costs. The debts have prompted some drillers to halt their Venezuela operations--including Dallas-based Ensco International.
Soldiers are among six Texans suing Houston-based KBR and Halliburton over burn pits at U.S. camps in Iraq and Afghanistan. The suit filed in a San Antonio federal court alleges the military contractors burned everything from trucks and tires to human corpses in the large war-zone pits. Plaintiffs say the burning waste released toxins that harmed at least 10,000 people. KBR spokeswoman Heather Browne told the San Antonio Express-News the assertion that the company knowingly harmed troops is “unfounded.” Halliburton, formerly the parent company of KBR, says it had no involvement in the allegations. The suit seeks unspecified punitive and compensatory damages. Attorneys for the plaintiffs have filed lawsuits in ten states, including the one in San Antonio.
The government says the number of people on unemployment insurance rolls fell slightly for the first time in 20 weeks, while the tally of new claims also dipped. The report provides a glimmer of good news for job seekers, though both figures remain significantly above the levels associated with a healthy economy. The Labor Department says the tally of first-time claims for jobless benefits declined last week to a seasonally adjusted 621,000 from the previous week's revised figure of 625,000, nearly matching analysts' expectations. The total jobless benefit rolls fell by 15,000 to 6.7 million, the first drop since early January. Continuing claims began setting records later that month and reached record highs for 17 straight weeks.
The government says U.S. workers were more productive in the first quarter than previously estimated, as rapid layoffs meant companies were forced to make do with fewer employees. The Labor Department says productivity--the amount of output per hour worked--rose at a seasonally adjusted annual rate of 1.6 per cent in the January-March period, double the government's estimate last month. That is also above analysts' expectations of 1.2 per cent growth. Higher productivity can raise living standards because workers that produce more can earn higher wages without forcing companies to raise prices. But the increase resulted from a sharp cut in hours worked, which fell at a faster pace than output.
Many U.S. retailers are reporting sales declines in May as shoppers continue to shop cautiously. Costco Wholesale, Hot Topic and Stage Stores are all reporting drops more than analysts expected. However, The Buckle says sales rose above expectations. Two factors might weigh on May results. A year ago, sales benefited from fiscal stimulus checks. And Wal-Mart, which has recently reported positive results, stopped issuing monthly sales data as of this month. That is likely to hurt overall results. Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance because they measure growth at existing stores rather than newly opened ones.
President Barack Obama's pick to oversee the $700 billion bank bailout program says more time is needed for the effort to work. Herbert Allison said the nation shouldn't be fooled that the economy is on the mend or that government aid is no longer needed because some banks have started repaying the money. Allison once led troubled mortgage buyer Fannie Mae. He said the government still has to see the bailout program through and make sure it's well administered along the way. He testified before the Senate Banking Committee. If confirmed as Assistant Secretary for Financial Stability at the Treasury Department, Allison would be in charge of managing the largest bank bailout program in history.
Federal Reserve Chairman Ben Bernanke says the global financial crisis highlights the need for economists to deepen their understanding of how events on Wall Street can affect the broader economy. In prepared remarks to a Fed conference, Bernanke says: “the rationale for such research has certainly been underscored by the financial crisis that began in August 2007 and the powerful adverse effects of the crisis on economic activity around the globe.”' The Fed chief's remarks didn't mention current economic conditions, or offer clues as to whether the central bank would announce any additional steps to shore up the economy at its meeting later this month.
Wal-Mart expects to hire about 22,000 people for new positions in 2009 as it opens about 150 new or expanded stores. Those positions include plenty of cashiers and stock clerks, but the world's largest retailer will also be adding store managers, pharmacists and personnel workers. Wal-Mart is holding its annual shareholders meeting tomorrow and employees from its stores around the world are spending the week in Bentonville at company headquarters. Wal-Mart, still the target of criticism from union-backed groups for its pay and benefits, has improved its health insurance coverage and opened it to full- and part-time employees. The company says 94 per cent of its employees have health coverage, either through Wal-Mart or another family member.
The federal government is launching a $7 million grant program to help kick-start training to prepare laid-off autoworkers and other unemployed people for a second career. Education Secretary Arne Duncan says the grants will provide initial funds for community colleges and other organizations that help adults develop new career skills. The programs can provide services like tutoring, academic and career counseling or could do things like remove financial constraints for adults returning to school by taking care of child care, transportation or textbook costs. Duncan says it's a chance for adults “to get back on their feet.”
A source says General Motors is considering the temporarily closure of more factories later this year. This, as it tries to control inventory to prepare for its exit from bankruptcy protection. A person briefed on the plans says while decisions are still being made, the company wants to have supplies under control before its target of emerging from Chapter 11 in 60 to 90 days. The third quarter closures would not be as extensive as GM announced for the second quarter. In April, the company said it would shutter 13 assembly plants for up to 11 weeks starting in May to control a growing supply of cars and trucks. GM normally releases third-quarter production estimates with its May sales statistics, but the figures were absent from data released Tuesday. The forecast is now expected in the next couple of days.
The judge overseeing Chrysler's bankruptcy case says the automaker has a good case for the termination of 789 of its dealer franchises as part of its ongoing restructuring. U.S. Judge Arthur Gonzalez said that under Chrysler's plan, the dealers representing about 25 per cent of the company's dealer base, will remain with “old Chrysler.” That’s a collection of assets that aren't slated to be sold to a group led by Italy's fiat group. Since those leftover assets won't be making vehicles, the judge said there would be little use for the dealers that would go with them. It’s not clear when he will rule on Chrysler's motion, or if a hearing today will delay Chrysler's plans to terminate the franchises effective Tuesday. Just under 20 Chrysler dealers were sworn in at the beginning of today's hearing. Late Sunday, the judge issued a ruling approving the government-backed sale of most of Chrysler's assets to a group led by Fiat. But the sale has been stayed pending an appeal filed by three Indiana state pension and construction funds. Arguments before the U.S. Court of Appeals for the Second Circuit are slated for tomorrow afternoon.
House Republican leaders have accepted a challenge from President Barack Obama and suggested more than $23 billion in spending cuts over the next five years. Unlike sweeping proposals made 14 years ago, such as eliminating the Education Department, Republicans are thinking a bit smaller. For example, they suggest saving $183 million by killing a program that pays for building sidewalks, bike paths and crossing guards as part of the safe routes to schools program. The Associated Press was provided an advance look at the plan, which flows from a tiff between President Barack Obama and Republicans who derided him for proposing $100 million in spending cuts for this year. There are 37 specific program cuts that would save taxpayers more than $23 billion over the next five years and more than $5 billion in the first year alone.
With rates on long-term government debt on the rise, mortgage rates are edging up. Mortgage finance giant Freddie Mac says rates on 30-year home loans surged above five per cent for the first time in nearly three months this week. The average for 30-year fixed-rate mortgages rose to 5.29 per cent. That is up from an average of 4.91 per cent a week earlier. It’s the highest weekly average in nearly six months. Similarly, the average rate on a 15-year fixed-rate mortgage rose to 4.79 per cent this week. That is up from 4.53 per cent. Rates on five-year, adjustable-rate mortgages inched up to 4.85 per cent from 4.82 per cent last week. Rates on one-year, adjustable-rate mortgages rose to 4.81 per cent from 4.69 per cent.
Groups on both sides of the issue are taking notice of a push for new taxes on soda, beer and wine to help pay for Americans' health care. The Senate Finance Committee considering this so-called “lifestyle tax” says the levies would slow sales of unhealthy products that contribute to rising medical costs. Soft drink and alcohol lobbyists have snapped quietly into action to oppose it. Other industries also are on alert, worried that the idea of “lifestyle taxes” could spread to other products deemed unhealthy. The Center for Science in the Public Interest, a consumer advocacy group, has been a leading proponent of the taxes. Even addiction treatment providers are watching. Ron Hunsicker, who heads a trade group for addiction treatment centers, says he supports the alcohol tax if “those dollars will come back and beef up” federal spending on treatment programs.
IRS Commissioner Doug Shulman says he is planning to propose new rules that could require paid tax preparers to be licensed, to improve tax compliance and reduce fraud. Shulman told a Congressional committee that 80 per cent of taxpayers get help with their returns, either from paid preparers or computer programs. Tax preparers currently don't have to be licensed, unless they represent clients in proceedings before the Internal Revenue Service. Shulman said he will seek input from the industry before making his proposals to President Barack Obama by the end of the year. The proposals could include new regulations or laws.
Dish Network said that a federal appeals court has temporarily set aside a lower court's ruling that favored Tivo in a long-running patent infringement lawsuit between the two companies. A federal judge in east Texas ordered Dish Network to pay Tivo $103 million--plus interest--in damages. The court found Dish to be in contempt of a permanent injunction on Tivo's digital video recorder time warp technology, which lets viewers pause, rewind and fast-forward live shows. But the appellate court in Washington stayed the ruling, pending an appeal by Dish. The satellite TV provider said it has “strong grounds” for an appeal and customers can continue using their DVRs.
American Airlines reports its traffic in May fell 11.7 per cent--compared to one year ago. The Fort Worth-based airline flew 10.38 billion revenue passenger miles, each unit representing one paying passenger flown one mile. That compares with 11.76 billion miles for the same month in 2008. Domestic traffic dropped 13.3 per cent as the airline cut capacity by 12.4 per cent. International traffic fell 8.9 per cent with a 2.7 per cent capacity cut. The airline's occupancy rate fell to 79.2 per cent from 81.7 per cent.
T. Boone Pickens is reaching out to American Indians in his crusade for U.S. energy independence. The Texas billionaire who made his fortune in the oil industry appealed to a gathering of Oklahoma-based tribes at the annual Sovereignty Symposium, asking them to support the construction of wind turbines and solar panels on tribal land. Pickens has set out to eliminate America's dependence on foreign oil by converting the country's electrical supply to alternative sources like wind and solar power and then freeing up natural gas to fuel vehicles. Pickens says he believes President Barack Obama will make great strides this year in formulating an energy plan that is less reliant on countries that aren't friendly with the U.S.
Some trials are seeking to hold big oil companies liable for human rights abuses or environmental damage overseas. Oil companies say they can't be held responsible for the actions of the national governments in countries where they operate. But they have paid attention to the potentially damaging perception of human rights abuses, and so have company shareholders. Here's more: Chevron was cleared in December of wrongdoing in a violent protest on one of its Nigerian oil platforms a decade ago. Still, a judge in Ecuador is expected to issue a ruling later this year on unrelated environmental damages in the Amazon Rain Forest that could cost the company as much as $27 billion; Irving-based ExxonMobil is being sued by Indonesian villagers who say guards at its natural gas facility kidnapped, tortured and murdered civilians in the Aceh province. The federal suit against Exxon was tossed, but a similar state tort case is working its way through courts in Washington. Company spokeswoman Margaret Ross says ExxonMobil condemns human rights violations in any form. She says the plaintiff's claims are based on the alleged acts of the Indonesian military against citizens of Indonesia during a civil conflict in that country. She says there is no claim that ExxonMobil participated in any human rights violations.