Monday PM July 12th, 2010
by: Ed Mayberry, July 12, 2010 9:07:00 pm
The Obama administration's new moratorium on deepwater offshore drilling will no longer be based on water depth. Instead, the moratorium will apply to any deepwater floating facility with drilling activities. The original moratorium applied to those in waters of more than 500 feet. Those new restrictions were spelled out in an Interior Department Q&A obtained by the Associated Press. Last week, a federal appeals court rejected the government's effort to restore its initial offshore deepwater drilling moratorium, which halted the approval of any new permits for deepwater projects and suspended drilling on the 33 exploratory wells.
The presidential panel that is supposed to find out the cause of the Gulf Oil spill is starting by focusing more on the response and impact. Monday was the start of a two-day New Orleans hearing by the National Oil Spill Commission. Amid interruptions by protesters, the talk from oil executives, experts and regular people was more about the aftermath of the spill than why it happened. Commissioners say that's by design. They want to know the disaster's impact. BP Senior Vice President Kent Wells testified about what BP was doing to stop the leak. But none of the seven commissioners asked him about the potential causes of the April 20th oil rig explosion that triggered the spill. Most of the day's testimony is about the economic cost.
The head of the $20 billion oil spill compensation fund says individuals filing claims will soon begin receiving six-month emergency checks instead of monthly payments. Appearing in Pensacola Beach on Monday, fund administrator Kenneth Feinberg said the company will start paying individuals in six-month payments in the next couple of weeks. Feinberg also said there's no reason for individuals affected by the massive Gulf of Mexico spill to file lawsuits--at least not yet. Feinberg urged claimants to see how much he'd be able to pay them for before suing.
BP says that the cost of dealing with the oil spill in the Gulf of Mexico has risen to $3.5 billion. The oil company says that includes nearly $165 million paid to settle individual claims. BP said that by Saturday, it had received 105,000 claims and made more than 52,000 payments. The company says it is still too early to estimate the final total of costs and compensation. Meanwhile, BP is warning that the verdict is still several days off, but the company sounds hopeful about what could prove its most effective effort yet to contain the Gulf oil leak.
A British newspaper says that BP is talking with Apache Corporation of Houston about possibly selling £12 billion ($18 billion) worth of assets. BP spokesman Robert Wine said the company would not comment on "market speculation." The Sunday Times said Apache was discussing the possibility of acquiring BP assets including a stake in the Prudhoe Bay field in Alaska. The newspaper did not cite a source for its report. BP is thought to be considering some asset sales to raise cash to cover its liability for the Gulf of Mexico oil spill. The company agreed to set aside some assets as security while it builds up a $20 billion compensation fund agreed with the U.S. government.
The former federal prosecutor who heads the government agency overseeing offshore drilling says he is not afraid to fine lawbreaking oil companies or ruffle environmentalists' feathers. Michael Bromwich says he is not an anti-drilling zealot and will probably take actions that upset both industry groups and offshore drilling opponents. Bromwich spoke to the Associated Press in his first interview since being sworn in last month as head of the Bureau of Ocean Energy Management, Regulation and Enforcement. Bromwich, who has no previous experience in the oil and gas industry, says he understands that offshore drilling is "an energy reality for us." The drilling agency was known until last month as the minerals management service. The agency has long had a reputation for a cozy relationship with oil companies and lax oversight.
The average price of regular gasoline in the United States has dropped 3.88 cents over a two-week period to $2.73. 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 $2.87. Premium was at $2.98. Jackson, Mississippi, had the lowest average price among cities surveyed at $2.43 a gallon for regular. San Francisco was the highest at $3.16. Diesel was at $2.99, down 2.15 cents from two weeks ago. In California, the average price for a gallon of regular was $3.09. San Diego had the state's least expensive gas at $3.06 a gallon.
Consumer Reports says the iPhone 4 has reception problems caused by its antenna design. After the iPhone 4 went on sale in June, buyers started complaining that holding the gadget a certain way could cause calls to drop. Apple has said that any phone will lose signal strength when gripped in certain ways. It said the iPhone 4 seems to show a larger drop because it has been using a faulty formula to decide how many signal bars to show. But Consumer Reports says it tested several phones that use AT&T's network, and only the iPhone 4 seemed to have the reception issue. The magazine says the iPhone 4 will not be marked "recommended" on its updated smart phone ratings list because of this problem.
The Treasury Department says businesses have added 4.5 million workers under a new program that provides tax breaks for hiring unemployed workers. The bill passed in March exempts businesses that hire people who have been unemployed for at least 60 days from paying the 6.2 percent social security payroll tax through December. Employers get an additional $1,000 credit if new workers stay on the job a full year. The Treasury Department released a report estimating that from February to May, businesses added 4.5 million workers who qualify for the tax breaks. Those businesses are projected to save $8.5 billion in taxes. The report, however, does not estimate how many of those jobs would have been added without the tax break.
Federal Reserve Chairman Ben Bernanke says getting loans flowing more normally to small businesses, is key to bolstering the economic recovery and reducing unemployment. Bernanke made the comments in prepared remarks to a Fed conference here exploring ways to help boost lending to small companies--from pizzerias to start up technology firms. Small businesses, more so than big companies, rely on bank loans to expand operations and hire. Small businesses usually help drive job creation during recoveries but tight credit has hurt hiring. Bernanke says: "making credit accessible to sound small businesses is crucial to our economic recovery" and that "more must be done."
A federal regulator is taking steps that could lead to the recovery of some losses sustained by mortgage giants Fannie Mae and Freddie Mac. The Federal Housing Finance Agency may try to get back money that Fannie and Freddie have lost on mortgage securities packaged and sold by Wall Street firms. The two government-controlled companies bought those securities as investments. The regulatory agency says it has issued 64 subpoenas seeking loan files and other documents to determine whether the sellers of those securities made any false statements or omissions. Any money recovered by the government would offset taxpayer losses. Rescuing the two mortgage finance companies has cost taxpayers $145 billion so far.
Residents of a Galveston-area community damaged by 2008's Hurricane Ike will have three months to repair their boarded-up homes or tear them down. Clear Lake Shores city administrator Paul Shelley says a previous ordinance allowed boarded-up structures if they were secure. The new ordinance, approved last week, requires businesses or homeowners to repair or demolish residences damaged by the September 13th, 2008, hurricane. Property owners, after receiving notice, will have 90 days to inform the city of their plans to repair, demolish or appeal the order. Clear Lake Shores will tear down a structure and place a lien on the property if the owner does not respond to the notice, which also applies to storage sheds and rental units. Clear lake shores is 25 miles northwest of Galveston.
Shopping mall owner General Growth Properties, which is trying to emerge from bankruptcy protection, is getting a $500 million infusion from a Texas teachers' pension fund. The Chicago developer said the Teacher Retirement System of Texas will receive shares priced at $10.25 per share in the reorganized company in exchange for the cash. The deal is part of the requirements for the real estate investment trust to emerge from Chapter 11 protection and needs bankruptcy court approval. Its April 2009 filing was the biggest real estate bankruptcy case in U.S. history. Separately, General Growth agreed to turn over management responsibility for 18 malls in 11 states to Jones Lang LaSalle.
The Methodist Hospital holds an open house and ribbon cutting tomorrow morning for its new 1.6 million-square-foot outpatient facility. The new building on Main Street, across from The Methodist Hospital, opens to patients on July 19th.
Some agriculture universities are reducing their cow herds as high feed, fuel and labor prices make it difficult to keep animals during tight economic times. The sales are taking place despite growing enrollment in agriculture programs. The herds are mainly used for faculty research. Jim Linn, vice president of the American Dairy Science Association, says a minority of schools are discontinuing their herds but all institutions are looking at the costs of keeping their animals. The University of Vermont, which is selling 255 Holsteins, plans to have faculty do research on private farms, a change that the school thinks will provide access to more cows, and reap more research. The school will keep 65 cows at its farm for research and teaching.
Economic reports rev up this week, with a number of key readings due. The government will be releasing June retail sales Wednesday, with analysts looking for a slight decline. Readings on wholesale, and retail level inflation are also scheduled. Pricing pressures have not been seen generally, particularly given the slower pace of the economic recovery. Later in the week, the Federal Reserve releases industrial production.