Monday PM June 14th, 2010
by: Ed Mayberry, June 14, 2010 9:06:00 pm
BP's costs for responding to the massive oil spill in the Gulf of Mexico have risen to $1.6 billion. According to a company news release, that includes new $25 million grants the British oil giant has given to Florida, Alabama and Mississippi. It also includes the first $60 million for a project to build barrier islands off the Louisiana coast. The estimate does not include future costs for scores of lawsuits already filed for damages. BP is now siphoning off significant amounts of oil from its runaway well 5,000 feet underwater, but the next best chance for ending the spill won't come until relief wells are completed in August. Already potentially more than 100 million gallons of crude have been expelled into the Gulf, far outstripping the Exxon Valdez disaster.
The White House says BP appears willing to establish a multibillion-dollar compensation fund for people and companies damaged by the Gulf oil spill. President Barack Obama demanded that the oil company set up an independent compensation fund. And presidential spokesman Bill Burton told reporters the White House and BP are down to negotiating amounts, administration and other details of the fund. Burton says the fund will be in the "billions of dollars," without providing a specific figure. Be also says it will be administered by a third-party entity as Obama wants.
The meandering sand dunes and bird islands of Barataria Bay have become the epicenter of the environmental disaster spewing from BP's offshore well. And fishermen are bitter. Oil-caked birds, stranded sea turtles, globs of gooey brown crude on beaches, coated crabs and mats of tar have been found throughout the inlets and mangroves that dot the bay. The oil has smothered this watery otherworld with a rainbow sheen and is threatening the complex web of wetlands, marshes and bayous that make up this national treasure. Everything from crabbing to bait fishing is shutting down, and the anger on the bayou is palpable. Barataria teems with wildlife, including alligators, bullfrogs, bald eagles and migratory birds from the Caribbean and South America.
The average price of regular gasoline in the United States has dropped more than 11 cents over a three-week period to $2.72. That's according to the national Lundberg survey of fuel prices released Sunday. Analyst Trilby Lundberg says the average price for a gallon of mid-grade was $2.86. Premium was at $2.97. Jackson, Mississippi, had the lowest average price among cities surveyed at $2.43 a gallon for regular. San Francisco was highest at $3.10. Diesel was at $3, up 9 cents from three weeks ago. In California, the average price for a gallon of regular dropped about two cents to $3.03. Bakersfield had the state's least expensive gas, at $2.95 a gallon. Average retail prices in Houston have fallen 1.7 cents a gallon in the past week, averaging $2.54, according to HoustonGasPrices.com.
A consulting firm says U.S. companies anticipate another big increase in medical costs next year and many workers will be expected to pay a bigger share. The PriceWaterhouseCoopers report released to the Associated Press says that for the first time, most of the American workforce is expected to have health insurance deductibles of $400 or more. Employees who are asked to pay more through things like higher deductibles help keep cost growth in check because they use less health care. The health care reform law signed by President Obama in March has just started to unfold and will have little impact on costs next year. PriceWaterhouseCoopers found that medical costs are expected to rise nine percent next year. But this doesn't mean workers will see that big a jump. Employers often try to soften the blow.
Business may be picking up, if the pickup truck is any indicator. When times are good, contractors and weekend haulers buy more of them. And lately sales have started shifting into a higher gear. Americans bought 151,000 pickups last month, 19 percent more than a year ago. Pickup sales peaked at 2.5 million in 2004, when the housing boom was in full swing. Four years later, the economy was teetering, gas topped $4 a gallon and pickup sales crashed. It got worse when the financial crisis stuck. This year, pickup sales have been gaining momentum. Through May, Americans bought 11 percent more than they did in the first five months of last year and the sales pace has been accelerating. The buyers are mostly companies in the service sector that have finally decided to replace some of their aging fleets.
Governor Rick Perry is on his first trip to China as he leads a Texas economic mission to Shanghai World Expo 2010. Perry spokeswoman Lucy Nashed says that the governor and his wife, Anita, arrived Sunday. Their itinerary also includes Beijing. A Perry news release says the couple's travel and accommodations will be paid for by Texasone, a source of economic development marketing funds for the state. Perry's office says the delegation to the Expo, for "Salute to Texas Week"' through June 19th, includes Comptroller Susan Combs and Secretary of State Hope Andrade.
Continental Airlines is launching new daily non-stop flights between Houston and Lagos, Nigeria, beginning November 10th. That would be the first daily scheduled service offered between Texas and Africa by any carrier. Lagos will be Continental's first destination in Africa.
The nation's mint farmers are struggling to stay afloat in the face of cheap foreign mint oil that's forced many farmers to stop growing the fragrant crop. While buyers are now offering mint farmers more attractive contracts for their mint oil, the future of American mint farming is uncertain. Foreign competition, mainly from India, has flooded the market with cheaper versions of the oil that flavors everything from toothpaste to candies. And the small family owned farms that once supplied most of the nation's mint are fading away. Government figures show that between 1997 and 2007, the number of U.S. mint farms plummeted from 964 to 341, while peppermint and spearmint production fell from 12.5 million pounds to 8.7 million pounds.
A variety of economic data will be released this week. The government will report on the producer and consumer price indexes for May, as well as housing starts and industrial production. There will also be the weekly report on jobless claims. In addition, the National Association of Home Builders releases its housing market index for June, and the Conference Board will unveil its report on leading economic indicators for May.