Tuesday PM May 18th, 2010
by: Ed Mayberry, May 18, 2010 9:05:00 pm
BP says its mile-long tube siphoning oil from a blown-out well is bringing more crude to the surface. BP says the narrow tube is now drawing 2,000 barrels a day for collection in a tanker, double the amount when it started operation Sunday. BP Chief Operating Officer Doug Suttles has said the company hopes the method can draw about half the leaking oil. BP have put the leak at 5,000 barrels a day from the crippled well, but officials say it’s a rough estimate at best. Scientists who have studied video of the leak say the amount could be significantly more.
Government scientists are surveying the Gulf of Mexico to determine if oil from a massive spill off Louisiana has entered a powerful current that could take it to Florida. National Oceanic and Atmospheric Administration administrator Jane Lubchenco says aerial surveys show some tendrils of light oil close to or already in the Loop Current, which circulates in the Gulf and takes water south to the Florida Keys and the Gulf Stream. But most oil is dozens of miles away from the current. Lubchenco says it will take about eight to ten days after oil enters the current before it begins to reach Florida. But scientists from the University of South Florida are forecasting it could reach Key West by Sunday. Twenty tar balls found off Key West on Monday are being tested to see if they came from the spill. Meanwhile, federal officials say they're expanding the area of the Gulf where fishing is shut down because of the spill. They had already shut down fishing from the Mississippi River to the Florida panhandle soon after the offshore oil rig exploded and sank last month. About seven percent of federal waters were affected. Nearly 46,000 square miles, or about 19 percent of federal waters, will be shut under the expanded ban. Dr. Lubchenco says the government will be testing fish that is caught to make sure it's safe.
Interior Secretary Ken Salazar concedes the government failed to hold the oil industry accountable and ensure safety in offshore oil drilling. He promises to give “more tools, more resources, more independence and greater authority” to the Minerals Management Service, which regulates drilling in the Gulf of Mexico. Salazar made his first appearance before Congress since the April 20th oil spill. He says in prepared testimony that oil companies have opposed efforts to change “the culture of doing business” at the agency. But Salazar tells the Senate Energy and Natural Resources Committee, “we have not and we will not back down on our reform agenda.”
Federal officials say the bodies of 189 sea turtles, birds and other animals have been found along Gulf of Mexico coastlines since the spill started last month. The total includes 154 sea turtles--primarily the endangered Kemp's Ridley variety--plus 12 dolphins and 23 migratory birds. But officials say they don't know how many were killed by oil or chemical dispersants. Acting U.S. Fish and Wildlife Service Director Rowan Gould says the spill's effects could be felt for decades and may never be fully known because so many affected creatures live far offshore.
A fire at a Southeast Houston refinery produced thick, black smoke that could be seen for miles--but nobody was hurt. Officials with LyondellBasell Industries are investigating the cause of the blaze. The fire broke out Monday in a crude oil distillation unit at the 700-acre facility. The blaze was extinguished within an hour. Company spokesman David Harpole says only a few people were working at the distillation unit at the time of the fire. The plant employs about 900 people. Harpole says a crude oil product similar to a heavy diesel burned in the blaze, which explained the heavy smoke. The fire happened at the same refinery where one of the world's largest mobile cranes toppled over in 2008, killing four contract workers and injuring seven others.
The Houston Association of Realtors reports that single-family home sales on the Houston MLS rose for the second consecutive month. April sales totaled 5,321—a 26.7 percent increase from a year earlier. HAR chair Margie Dorrance says the real estate market benefitted from homebuyers acting by April 30th to take advantage of the tax credit, as well as low mortgage interest rates. HAR says home prices continue rising in Houston, with the average price of a single-family home increasing 6.8 percent to $206,414, and there’s a 53.4 percent rise in luxury home sales in the $500,000 range and above. The median price of homes sold in April was $153,500—up 2.4 percent from April of last year. That’s a record median price for an April in Houston.
The University of Houston System Board of Regents has approved a $1.3 billion budget for fiscal year 2011. That’s the same budget level as fiscal year 2010. The budget includes a five percent reduction in spending from the school’s state appropriation and reallocating resources to support instructional initiatives. The new budget includes $10.1 million in funding for faculty and staff recruitment and retention. The UH System budget is 34 per cent funded by tuition and fees, 24 percent by state appropriations, 18 per cent by contracts and grants, 13 percent by auxiliary services and operations and 11 percent by capital funds.
Texas Republican leaders are ordering most state agencies to cut their budgets to brace for a shortfall of up to $18 billion. Governor Rick Perry, Lieutenant Governor David Dewhurst and House Speaker Joe Straus announced they’ve ordered the Legislative Budget Board to tell agencies to immediately implement the reductions, designed to save about $1.2 billion. State agencies earlier were ordered to provide Texas leaders with recommendations on how to cut their budgets by five percent. Certain programs involving homeland security, job training, emergency health care and student financial aid are exempt from the reductions.
The Internal Revenue Service is offering a reprieve to more than 200,000 small charities that missed a tax filing deadline Monday and are now in danger of losing their tax-exempt status. A 2006 law required nonprofit organizations with receipts of less than $25,000 to file tax returns for the first time in 2007. If charities fail to file for three years, they lose their tax-exempt status. Monday was the 2010 filing deadline, but IRS Commissioner Doug Shulman says his agency will issue guidance soon on how charities that missed the deadline can keep their tax-exempt status. In the meantime, Shulman is urging charities that missed the deadline to file as soon as possible.
Texas financier R. Allen Stanford's attorneys say jail has reduced their client to a “wreck of a man'' who is severely depressed, forgets conversations, can no longer see out of one eye and believes he is “losing his mind.” The description of Stanford's mental and physical condition is contained in a motion filed by his attorneys in Houston. They’re asking a federal judge for a third time to grant the jailed financier a bond so he can be free while awaiting trial next year on charges he bilked investors out of $7 billion as part of a massive ponzi scheme. Two previous requests have been denied. This latest motion was prepared with the help of the newest member of Stanford's legal team, Harvard law professor and celebrity defense lawyer Alan Dershowitz.
Construction of new homes rose more than expected in April, but new building permits fell sharply, signaling that the building industry's rebound could be short-lived. The Commerce Department says construction of new homes and apartments rose 5.8 percent last month to a seasonally adjusted annual rate of 672,000. The results were the highest since October 2008 and were driven by a ten percent increase in the single-family market. Analysts surveyed by Thomson Reuters had expected construction to rise more modestly to a rate of 650,000. Building permits, a gauge of future activity, sank 11.5 percent to an annual rate of 606,000, the lowest since October 2009. Analysts were expecting a slight dip to a rate of 680,000.
Prices at the wholesale level fell in April, reflecting declines in energy and food. The Labor Department says wholesale prices edged down 0.1 percent last month, the second decline in the past three months. Core inflation, which excludes energy and food, rose 0.2 percent, slightly faster than expected. But over the past year, core prices are up just one percent. The absence of inflation pressures means the Federal Reserve can continue to keep interest rates at record lows to bolster the economic recovery.
Experts blame declining Medicare reimbursement for hundreds of Texas doctors dropping out of the federal health care program for senior citizens. The Houston Chronicle reports that more than 300 Texas doctors have dropped the program in the last two years, including 50 in the first three months of 2010. The Texas Medical Association, which did the survey, said the numbers far exceeded their assumptions. Dr. Susan Bailey, president of the Texas Medical Association, says if Congress doesn't fix Medicare soon, there will be more and more doctors dropping out. She says the Congressional promise to provide medical care to seniors “will be broken.” The opt-outs follow years of declining Medicare reimbursement that led to a looming 21 percent cut this year.
U.S. stock exchanges would briefly halt trading of some stocks that make big prices swings under new trading rules aimed at avoiding market plunges, according to two people familiar with the plan. The rules are set to begin in mid-June under a six-month pilot program agreed to by exchanges and regulators, the people said. They spoke on condition of anonymity because the plan has not been made public. Under the plan, trading of any Standard & Poor's 500 stock that rises or falls ten percent or more would be halted for five minutes. These rules, known as “circuit breakers,” would be applied if the price swing occurs between 9:45 a.m. and 3:35 p.m. eastern time. That's almost the entire trading day. The rules are intended to prevent a repeat of the May 6th market plunge.
The Senate has handed bankers a partial victory by voting to limit the ability of states to impose their own consumer rules on federally chartered banks. The measure by Democratic Senator Tom Carper of Delaware rolled back provisions in an underlying financial regulation bill that broadened the authority of states. The vote was 80-18. Current law permits federal regulators to issue a blanket rule overriding state laws concerning licensing, credit terms and loan disclosures. State attorneys general cannot enforce federal laws. Carper's provision would allow federal regulators to override state law on a case-by-case basis and permit attorneys general to enforce federal regulations. The amendment passed after the Senate voted down 55-43 an amendment preferred by bankers that was offered by Republican Senator Bob Corker of Tennessee.
Toyota has paid a record $16.4 million fine for a slow response to its accelerator pedal recall. A Transportation Department official says the Japanese automaker paid the fine on Tuesday. The company agreed to the fine on April 19th and had 30 days to pay it. The official was not authorized to speak publicly before an announcement was made. The fine is the maximum allowed under law. The government accused the company of hiding earlier defects involving gas pedals, a contention that Toyota rejected even though it agreed to pay the fine. Toyota said it agreed to the fine to avoid a lengthy legal battle but denied the government's allegation that it broke the law.
The Obama administration is proposing a trust fund of more than $800 million to pay for the clean up of closed General Motors sites in 14 states. Ed Montgomery, who leads the White House Council on Automotive Communities and Workers, said the fund would clean up nearly 90 properties shuttered in the GM bankruptcy. More than half of the sites are in Michigan. The funding comes from $1.2 billion provided by the Treasury Department to wind down the “bad” assets of GM set aside in the company's bankruptcy last year. Montgomery and White House economic adviser Larry Summers announced the trust fund at a summit on the future of auto communities, co-sponsored by the White House and Brookings Institution.
Microsoft is trying to make Hotmail cool again. The free Web mail service will be switching to a new approach that Microsoft hopes will give Hotmail an edge over rival offerings from Yahoo! and Google. Microsoft is announcing the Hotmail upgrade, although the service's 360 million worldwide users won't see the changes until July or August. It will be the most extensive overhaul to Hotmail since Microsoft bought the service 12 years ago. Hotmail's new features are supposed to enable people to spend less time managing their inboxes and more time enjoying and digesting what's in the messages. Microsoft is hoping the added convenience will help overcome the perception that Hotmail was growing stale.