Thursday PM May 13th, 2010
by: Ed Mayberry, May 13, 2010 4:05:00 pm
The cost of fighting the oil spill is mounting rapidly for the company that owns the well. London-based BP says it has spent $450 million since the spill started after the explosion. That's up by $100 million from the last company update three days ago. BP said in a filing to U.S. securities regulators that the cost for its response includes efforts to contain the crude, drilling a relief well, money it has given to Gulf Coast states, settlements and federal costs. BP Chief Operating Officer Doug Suttles says the price tag increases at least $10 million a day. BP did not immediately respond to a message to clarify details of the new total.
The owner of the rig that exploded in the Gulf of Mexico will try to limit its liability to about $27 million. A spokesman for Transocean says a company petition will cite an 1851 law that says the owner of a sunken vessel is liable only for its value after the accident. Transocean has said it expects to receive $560 million in insurance money from the loss of the rig. If successful, the liability limit would cap the amount that Transocean would be forced to pay if it loses any of the numerous lawsuits related to the deepwater horizon explosion. Transocean plans to file its petition in U.S. district court in Houston.
Protesters in Austin called for the U.S. government to seize the assets of well operator BP. About six demonstrators rallied outside the Texas Capitol, holding up signs such as “Seize BP's assets” and “BP gets rich, the people and the planet pay the price.” Protest organizer Patrick Moore says the government should seize BP's assets to pay for the damage caused by the Gulf oil spill.
A new poll finds that the Gulf of Mexico oil spill hasn't stained President Barack Obama nor dimmed the public's desire for offshore energy drilling. While some conservative pundits have called this “Obama's Katrina,” that's not how the public feels. The AP-GFK poll found that BP, the company that owns the well, is getting more of the public's ire. The well has gushed more than four million gallons since an April 20th oil rig explosion. The poll finds that 42 percent approve of Obama's actions, 33 percent disapprove and 21 percent say they have neutral feelings about his response. Soon after Katrina, more disapproved of President George W. Bush's handling of the disaster than approved.
The chairman of a subcommittee delving into what happened at BP's blown-out oil well says he wants to talk with the federal service that is supposed to oversee drilling in the Gulf of Mexico. Representative Bart Stupak, a Michigan Republican, told ABC's Good Morning America he wants to know why the Mining and Minerals Service gave permits to BP and the companies involved in various aspects of the well and rig. The service enforces drilling regulations and collects the royalties oil companies pay to the government. Stupak says that once permits to drill are issued, the federal government's role is to make sure the companies are drilling properly, to protect the environment. But investigators found evidence of equipment failures in aspects of the well's safety that weren't monitored.
The Venezuelan government says an offshore natural gas platform has sunk into the sea, and 95 workers have been safely rescued. President Hugo Chavez announced the accident on Twitter early Thursday. Oil Minister Rafael Ramirez said all of the workers on the Aban Pearl platform off Eastern Sucre state were safely evacuated, and he said the accident poses no threat to the environment. He said the navy rescued the workers, and the gas platform has disappeared into the sea.
A foreclosure listing firm says the foreclosure crisis is finally showing signs of easing, but it isn't all good news. RealtyTrac says the number of households facing foreclosure last month fell two percent from a year ago. That's the first annual decline in five years. While the delinquency rate is dropping, the number of borrowers losing their homes is still rising. Banks seized a record 92,000 homes last month. RealtyTrac says almost 334,000 households, or one in every 387 homes, received a foreclosure-related notice last month. That was down more than nine percent from March. Economic woes, such as unemployment or reduced income, are the main catalysts for foreclosures this year. Initially, lax lending standards were the culprit, but homeowners with good credit who took out conventional, fixed-rate loans are now the fastest growing group of foreclosures.
New claims for unemployment benefits dipped for the fourth straight week, a sign the job market is improving at a glacial pace. The Labor Department says first-time claims dropped last week by 4,000 to a seasonally adjusted 444,000. That's just above analysts' estimates, according to Thomson Reuters. The previous week's total was revised up to 448,000. The four-week average, which smoothes out volatility, registered a steeper decline, falling by 9,000 to 450,500. That's close to the average's lowest level this year, reached in late March. Still, claims aren't dropping as quickly as many economists would like. After falling steadily last year from a peak of 651,000, they have leveled out around 450,000 this year. The number of people continuing to receive benefits, meanwhile, rose by 12,000 to 4.6 million.
New figures show Americans pulled back from the malls in April after spending more rapidly in March. The lull comes on the heels of three straight month-to-month gains in retail spending, according to figures released by Mastercard Advisors' SpendingPulse. April's business was hurt by cool weather as well as an early Easter that spurred sales in March. But the speed bump also shows that the economy remains on uncertain ground, according to Kamalesh Rao, director of Economic Research for SpendingPulse. Including goods from food to clothing to gasoline--but excluding cars--U.S. retail sales fell two percent last month from March. SpendingPulse estimates spending in all forms including cash.
Top University of Texas System officials say pending state budget cuts could force the system to cancel its contract to provide prison inmate health care. The Austin American-Statesman reports system officials told top legislative budget writers that a projected $82 million funding shortfall could force the cancellation. Texas now spends more than $400 million per year on inmate health care. Democratic State Senator John Whitmire of Houston is chairman of the Senate Criminal Justice Committee. He says the UT System is “not going to get out of that contract.” But he says the state does “need to come to some sort of an arrangement with UT.” A projected $18 billion funding shortfall could confront state lawmakers when they convene in January. The American-Statesman reports about $1.7 billion in budget reductions are expected to be revealed Friday.
The 4th annual “Runway to Business Opportunities” at the Humble Civic Center today offered an opportunity for businesses wanting to work with the Houston Airport System. The networking fair was designed to help people interested in concession opportunities and other work, such as large-scale heating and air conditioning work.
Taking aim at deceptive lending, the Senate voted to ban mortgage brokers and loan officers from getting greater pay for offering higher interest rates on loans, and to require that borrowers prove they can repay their loans. The Senate, however, rejected a measure that would have required homebuyers to make a minimum down payment of five percent on their loans. The votes were part of the Senate's deliberations on a broad overhaul of financial regulations designed to avoid a repeat of the crisis that struck Wall Street in 2008. The Senate rejected a Republican proposal to regulate the complex securities known as derivatives. The Senate also overwhelmingly voted to let the Federal Reserve retain its supervision of smaller banks.
Mortgage rates fell this week to the lowest level of the year. The drop was caused by a high demand for U.S. government securities, which closely track mortgage rates, as investors fled risky European debt. The average rate on a 30-year fixed rate mortgage dipped to 4.93 percent this week from five percent a week earlier, Freddie Mac said. It was the lowest level since mid-December, when rates averaged 4.81 percent. Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often tracking the interest rate paid on long-term Treasury bonds.
The CEO of Houston-based J.B. Poindexter and Company--a fabricator of large delivery vans—was recently honored with the Presidential Unit Citation, along with 86 veterans of the troop he commanded in Vietnam. Captain Poindexter spent years working to have his men recognized for extreme bravery in a battle in which they were outnumbered five to one. Tonight, Poindexter is receiving the Nichols Medal from the New York University Stern School of Business at Radio City Music Hall.Earnings
Whole Foods Market's net income more than doubled in fiscal second quarter. It saw rising sales and wider profit margins, and it raised its full-year earnings guidance. The natural and organic grocery chain says it earned nearly $68 million for the quarter. That's up sharply from the $27.3 million earned in the same quarter last year. Revenue rose more than 13 percent to $2.1 billion. Both profit and sales topped analyst expectations. Whole Foods shares rose five percent in after-hours trading.