Tuesday PM July 6th, 2010
by: Ed Mayberry, July 6, 2010 10:07:00 pm
The hookup of a new containment vessel to the gushing well head has been delayed by the poor weather in the Gulf of Mexico. Officials had originally hoped to connect the Helix Producer to the cap over the well on Wednesday. Christina Coulon, a spokeswoman for the Joint Information Center, now says the vessel will be hooked up later this week. A new target day was not offered. The 528-foot, nearly 2,300-ton vessel will hook up to the containment cap at the seafloor and start collecting up to 25,000 barrels a day. That could double the amount of oil being collected at the well head and then burned or transferred to other tankers. Lousy weather and choppy seas have delayed the connection.
It's taken two months but the crude from the oil spill has now arrived in every Gulf state. A bucket's worth of tar balls washed onto a pair of Texas beaches, though officials say it could have been carried by Gulf currents or been picked up by a ship working in the spill area. Hurricane Alex, which blew through the Gulf last week and made landfall along the border between Texas and Mexico, may have played a small role. The spill is also reaching deeper into Louisiana.
The International Association of Drilling Contractors hosts a Town Hall Meeting for Industry on the Gulf of Mexico moratorium on drilling beginning at 7:30 tomorrow morning. Speakers include the CEO of Pride International, officials from Hornbeck Offshore, Hercules Offshore and at least two members of Congress. The town hall meeting is at the Omni Houston Hotel on Katy Freeway tomorrow morning starting with a breakfast.
BP says it has no plans to issue new shares to help pay for the oil spill, giving its shares a further boost amid rumors of interest from sovereign wealth funds. BP spokesman Mark Salt says that BP “is always happy to welcome new shareholders or existing shareholders who wish to increase their shareholdings, but there's no current plans to issue new equity to anyone.” The company's statement is good news for investors whose own holdings would be diluted by a larger stock base. Recent reports have suggested that a number of middle east sovereign wealth funds are considering purchasing a stake in BP, helping calm fears of a full takeover.
BP's embattled Chief Executive Tony Hayward is visiting oil-rich Azerbaijan amid speculation the company may sell assets to help pay for the clean-up of the Gulf spill. The one-day visit comes a week after Hayward, who has been criticized for his handling of the devastating oil spill, traveled to Moscow to reassure Russia that the British energy company is committed to investments there. BP’s three major projects in the Azerbaijan comprise an offshore oil field in the Caspian Sea; a 30 percent share in an export oil pipeline which goes to Turkey; and 25 percent in Shah Deniz, a massive Caspian Sea gas field. Russia's Gazprom voiced an interest last month in BP's Shah Deniz share, but the British company has so far ruled out any sale.
Utilities in Texas could be required to replace decades-old steel natural gas pipelines with plastic versions to help prevent explosions. The Dallas Morning News reports Texas Railroad Commission member Michael Williams planned to propose that utilities replace the steel lines, which can shift and corrode. Williams says Texas has at least 525,000 steel lines, in a replacement project that could reach $500 million. Williams says the proposed upgrade would be the largest replacement program ever done by the three-member regulatory commission. Creating a rule to require the replacements could take months. Utilities have been allowed to charge ratepayers for the cost of new infrastructure, plus a ten percent profit.
An industry trade group says the service sector grew more slowly in June, yet another sign growth could weaken in the second half of 2010. The Institute for Supply Management, a trade group of purchasing executives, says its index tracking service-oriented companies dipped to 53.8 last month from 55.4 in may. A reading above 50 indicates expansion. Economists polled by Thomson Reuters expected a reading of 55.0 for June. A robust service sector, which accounts for about 80 percent of U.S. employment, is crucial to keeping the economy growing and adding jobs. ISM also says employers' plans to hire declined in June after growing in May for the first time in 28 months.
Drivers are finding lower gas pump prices now that the July 4th weekend is over and prices are likely to keep sliding. AAA says the national average for retail gasoline prices was $2.72 a gallon, more than two cents below Friday's price as the holiday weekend began. The price at the pump is 11 cents more than a year ago but about the same as a month ago. Predictions of a national average of $3 a gallon faded weeks ago because supplies remain above a five-year average and demand is tepid as consumers worry about jobs and the strength of the economic recovery.
The post office wants to increase the price of a stamp by two cents to 46 cents. The agency has been battered by massive losses and declining mail volume and faces a financial crisis. Postal officials announced a wide-ranging series of proposed price increases, averaging about five percent, and covering first class, advertising mail, periodicals, packages and other services. The request now goes to the independent Postal Rate Commission which has 90 days to respond.
A group opposed to a postal rate hike says it's “another tax imposed on Americans at a time when the economy can least afford it.” Tony Conway of the Affordable Mail Alliance says large and small businesses will suffer from the hike and more jobs will be lost. The alliance is a coalition of businesses, charities and other mailers opposed to the increase.
Two tax seminars are set for Houston in the next few days. The seminars are to help new and existing business owners understand their state tax responsibilities. A seminar is set for this evening at the Comptroller’s Houston Northwest Field Office on North Loop South. A second Houston seminar is scheduled to next Tuesday evening at the Comptroller’s Houston Southwest Field Office on Harwin.
A company official says Toyota knew about the engine problem in the Lexus and Crown vehicles two years ago but didn't think a recall was warranted at the time. The official says the company changed the spring part to correct the problem. A global recall is now under way to repair some 270,000 vehicles to replace engine components that could cause stalling. A spokesman tells the Associated Press that the world's top automaker previously thought the problem was caused by a foreign substance entering during manufacturing of the valve springs, and beefed up checks so that wouldn't happen. The spokesman says the complaints started climbing, and Toyota decided recently there was a design defect. Toyota had promised to recall problem cars more quickly after its reputation was tattered after recalls ballooned to more than 8.5 million since October.
The Texas Rangers want to hold an auction on July 16th for the team's sale. The surprise motion filed in bankruptcy court Monday says the team will open the sale back up to bidders, who must meet certain Major League Baseball qualifications first. In May, the Rangers filed for Chapter 11 bankruptcy protection in a plan to pay creditors $75 million and sell the team to a group led by Pittsburgh attorney Chuck Greenberg and Nolan Ryan, the Hall of Fame pitcher and team president. But angry creditors have opposed the sale. The team says it agreed to an auction after the court-appointed restructuring officer indicated he'd be more likely to approve the bankruptcy plan after an auction. Greenberg and Ryan say they still believe their $575 million bid is the best offer.
Wheat prices are rallying as investors grow increasingly concerned about weather affecting production in Russia, Kazakhstan and Canada. Analysts say wet weather in Canada and dry, hot weather in Russia and Kazakhstan could delay harvests or reduce the size of this year's crops. That means U.S. producers could see more demand for their wheat as buyers look for alternatives. Farmers worldwide are in the midst of the peak harvesting season for wheat.
Last week was a busy one for economic reports. This week, not so much. Later this week, the Federal Reserve provides an update on consumer credit, and a reading on wholesale inventories is due.