Monday PM June 7th, 2010

BP plans bigger cap over oil well blowout; company's cost reaches 1.25 billion...Some public colleges in Texas face additional budget cuts, freeze hiring, delay equipment purchases...International Air Transport Association upgrades industry forecast...

BP plans next month to replace a cap over the oil well blowout at the bottom of the Gulf of Mexico with a slightly bigger cap. Company spokesman Robert Wine told the Associated Press that the company believes the bigger cap will fit over more of the outflow pipes than the current cap. He says it will "provide a better, tighter fit." But he says the change will allow oil currently being collected to again spew out into the Gulf during the changeover. Oil has been shooting into the water since a BP oil rig exploded off Louisiana on April 20th, killing 11 workers. Crews have outfitted the blowout with the smaller cap, which officials say is capturing more than 460,000 gallons of oil per day. BP continues to drill relief wells in hopes of a permanent solution.

Nearly seven weeks after the explosion of the Deepwater Horizon drilling rig, the well has spilled roughly 23 million to 50 million gallons of oil into the Gulf. That oil is now fouling a growing stretch of beaches and marshes along the Gulf Coast. Tiny tar balls have begun showing up on Florida's Okaloosa Island, about 35 miles east of Pensacola, marking the easternmost point oil has been found coming ashore. Meanwhile, tar balls on Pensacola Beach have left a distinct line in the usually white sand. Officials have reported a sheen of oil about 150 miles west of Tampa, though they say it's not expected to reach the Western Florida peninsula any time soon. Coast Guard Admiral Thad Allen says dealing with the oil on the surface of the water will take a couple of months, but adds that getting oil it out of marshlands and other habitats "will be years." As one biology student on Okaloosa Island puts it: "oil just doesn't go away."

BP says the cost of the company's response to the oil spill in the Gulf of Mexico has reached about $1.25 billion. BP says the figure does not include $360 million for a project to build six sand berms meant to protect Louisiana's wetlands from spreading oil. BP says a containment cap is capturing more and more of the gushing oil. The inverted funnel-like cap is being closely watched for whether it can make a serious dent in the flow of new oil. Chief executive Tony Hayward tells the BBC he believes the cap is likely to capture "the majority, probably the vast majority" of the oil gushing from the well. The government's point man on the spill warns that the battle to contain the oil is likely to stretch into the fall. Millions of gallons of oil have spilled since the Deepwater Horizon rig exploded 50 miles off the coast of Louisiana on April 20th, killing 11 workers.

The widows of two workers killed in the Gulf of Mexico oil rig explosion are calling on Congress to repeal a 90-year-old law that limits the amount of money survivors can recover in the deaths of family members. Natalie Roshto of Liberty, Mississippi, and Courtney Kemp of Jonesville, Louisiana, told a House panel that the 1920 death on the high seas act limits how much money maritime companies must pay in employee deaths at sea. Their husbands, Shane Roshto, 22, and Roy Wyatt Kemp, 27, both worked for Transocean, which owned the rig. It was unclear whether Congress could repeal the maritime law retroactively, and whether any changes would apply in the Gulf explosion.


Wild Well Control of Houston has been summoned to put out a fire from a West Virginia gas well explosion. A West Virginia state inspector says a crew drilling a gas well through an abandoned coal mine in the state's northern panhandle ignited methane, triggering an explosion that burned seven workers. Department of Environmental Protection inspector Bill Hendershot says Buckhannon-based Union Drilling had gone about 1,100 feet when something caused the ignition early this morning. Union referred calls to the Texas office of Wild Well Control. Hendershot says Union had drilled through the mine near Moundsville before without incident. Now, flames are shooting at least 70 feet high. The workers were taken to West Penn Burn Center in Pittsburgh. All are listed in fair condition. The Occupational Safety and Health Administration has sent investigators to the site.


Some public colleges and universities in Texas are prepping for what could be additional budget cuts by freezing hiring and deferring equipment purchases. Texas leaders late last month asked state agencies to lower their next two-year funding requests by ten percent. A previous order requires five percent cuts from existing budgets, with some programs exempt. Legislators who convene in January face a budget shortfall of up to $18 billion. The Austin American-Statesman reports that the prospect of an additional reduction has some higher education leaders worried. Rey Garcia with the Texas Association of Community Colleges says the proposed money-saving cuts couldn't come at a worse time because the state is having record double-digit enrollment growth.


Consumer borrowing increased slightly in April, a sign that Americans may have more faith in the recovery. The Federal Reserve says that borrowing rose by $954.8 million in April. But the government revised away a gain it had originally reported for March. Instead, it reported that credit fell a sharp $5.44 billion during that month. The April increase, if it stands, would be only the second advance in the past 15 months. Economists are hoping that at some point soon households will feel confident enough to start borrowing again to finance purchases. That development is seen as crucial for a sustained recovery.


The International Air Transport Association has upgraded its forecast for the global airline industry this year--forecasting that it will earn $2.5 billion. The outlook compares with a forecast made in March that airlines would lose a total $2.8 billion in 2010. However, IATA said Europe is a striking weak spot and it anticipates a $2.8 billion loss for airlines on the continent--worse than the $2.2 billion previously predicted. It cited Europe's feeble growth, strikes at some airlines, the Eurozone debt crisis and the volcanic ash cloud that caused major disruption this spring. North American carriers are expected to earn $1.9 billion—a turnaround from the previously predicted loss of $1.8 billion.


Chrysler is recalling almost 600,000 minivans and Jeep Wranglers in the U.S. and another 100,000 elsewhere because of brake or wiring problems. The company says Jeep Wranglers from the 2006 through 2010 model years are being recalled for a potential brake fluid leak that could lead to a partial lose of braking. The wiring problem in Dodge Grand Caravan and Chrysler Town & Country minivans from the 2008 and 2009 model years could cause a fire inside the sliding doors. Chrysler says neither problem has caused any crashes or injuries. The recall is expected to start later this month and the repairs will be made free of charge. It's the second notable recall in the past week for Chrysler. The company recalled nearly 35,000 Dodge Calibers and a limited number of Jeep Compasses last week to fix a potential problem with sticky gas pedals.


The Obama administration is making $51 million available to states that want to beef up oversight of health insurance rate hikes. Outrage over premium increases was a turning point in the national health care debate earlier this year, after Anthem Blue Cross proposed hikes of up to 39 percent in California. The company ultimately withdrew the plan, but not before President Barack Obama used it to help revive his stalled legislation. The $51 million is the first installment of a five-year, $250 million grant program created under the health care overhaul law to help state regulators challenge unreasonable rate hikes. The Health and Human Services Department said states can get $1 million each this year.


Clayton Williams Energy has sold almost all of its proved reserves in northern Louisiana to Wilhorse Resources for $77 million. The deal includes Midland-based Clayton Williams' interests in 98 producing wells. The company is using the proceeds to repay debt. The sale does not involves the Clayton Williams' holdings in southern Louisiana.


Coca-Cola will pay $715 million to Plano-based Dr Pepper Snapple Group for the rights to distribute Dr Pepper and Canada Dry in the U.S. after Coke acquires its largest bottler. Coca-Cola also will distribute Canada Dry, C' Plus and Schweppes in Canada. Those drinks have been distributed by bottler Coca-Cola Enterprises, a separate company that Coca-Cola is acquiring. That acquisition is expected to be finished in the fourth quarter. The agreement between Coke and Dr Pepper replaces an established deal between Coca-Cola Enterprises and the beverage maker. The new agreement will last for 20 years and includes renewal options and makes the company Dr Pepper's largest distributor, with about 42 percent of its business. Rival Pepsico has 39 percent, and independent bottlers distribute the remaining 19 percent.


Bio photo of Ed Mayberry

Ed Mayberry

Local Anchor, All Things Considered

Ed Mayberry has worked in radio since 1971, with many of those years spent on the rock 'n' roll disc jockey side of the business...