Thursday PM July 22nd, 2010
by: Ed Mayberry, July 22, 2010 10:07:00 pm
The federal government's oil spill chief says BP's ruptured well will remain capped if ships evacuate the Gulf because of the looming tropical depression. Retired Coast Guard Admiral Thad Allen says growing confidence in the cap's security convinced scientists it was safe to leave it unmonitored for a few days. Forecasters at the U.S. National Hurricane Center in Miami say the storm system has already caused flooding in Puerto Rico, the Dominican Republic and Haiti. It could reach the Gulf of Mexico by Saturday.
The federal government is calling into port some of the boats involved in the BP oil spill cleanup amid storm predictions in the Gulf of Mexico. Coast Guard Rear Admiral Paul Zukunft, the New Orleans-based second-in-command on the project, says his order is to ensure the safety of more than 40,000 people assisting in the oil spill response and recovery. Besides the evacuation of certain specialized vessels, he has directed workers to remove oil-absorbent booms from along the coast to prevent damage to ecologically sensitive areas.
A published report says Deepwater Horizon rig workers were concerned about safety and the condition of some equipment on board. The New York Times cites a confidential survey done before the April 20th explosion. A spokesman for Transocean, the owner of the rig leased by BP, confirmed the existence of the reports to the Associated Press. The Times reports that another report to Transocean by Lloyd's Register Group found that several pieces of equipment — including rams in the failed blowout preventer — had not been inspected since 2000. Guidelines call for inspection every three to five years. Transocean says most of the equipment trouble was minor and the blowout preventer was inspected according to manufacturer guidelines.
Big oil wants to be ready next time there's a big mess in the Gulf. The American Petroleum Institute says that ExxonMobil, Chevron, ConocoPhillips and Shell Oil have agreed to pool $1 billion to form a new company that would respond to offshore oil spills. The company would be able to mobilize within 24 hours to capture and contain oil spills in depths of up to 10,000 feet. BP is not included in the venture. The companies, which rely on offshore drilling, were not involved in the Gulf oil spill. But the growing catastrophe has dragged down share values as lawmakers promised to beef up regulations against the industry.
Continental Airlines is adding to the evidence that U.S. airlines are making a strong recovery from the recession. Continental says its net income in the second quarter was $233 million, nearly a mirror image of its $213 million loss a year ago. Continental's per-share earnings beat analysts' expectations, and revenue jumped by nearly one-fifth compared with a year ago. The Houston company is combining with United's UAL Corporation to form the world's biggest airline.
Congress has approved legislation to restore unemployment insurance to people who have been out of work for six months or more, ending a seven-week interruption that caused 2 ½ million people to lose benefits averaging about $300 a week. The 272-152 House vote sends the measure to President Barack Obama. The tally came less than 24 hours after a mostly party-line Senate vote on the measure, which is just one piece of a larger Democratic jobs agenda that has otherwise mostly collapsed after months of battles with Republicans. Retroactive payments could go out as early as next week in some states, while in others it could take a few weeks for beneficiaries to receive their money under the legislation.
New jobless claims jumped last week by the most since February, reversing a sharp fall two weeks ago. The rise is partly a result of seasonal factors but also reflects the job market's weakness. The Labor Department says new claims for unemployment insurance jumped by 37,000 to a seasonally adjusted 464,000. Analysts expected a smaller rise, according to a survey by Thomson Reuters. The sharp increase comes after claims fell steeply two weeks ago to their lowest level since August 2008. But much of that drop was driven by temporary seasonal factors and not necessarily by an improving job market. Two weeks ago, General Motors and other manufacturers reported fewer temporary layoffs than usual this time of year, the Labor Department says. Last week's rise partly reflects the fading of that trend.
Sales of previously occupied homes fell in June and are expected to keep sinking, indicating that the housing market's troubles are likely to drag on the economic recovery. The National Association of Realtors says last month's sales fell 5.1 percent to a seasonally adjusted annual rate of 5.37 million. Economists polled by Thomson Reuters had expected sales of 5.18 million. The report counts home sales once a deal closes. It still captures some buyers receiving federal tax credits that boosted sales this year. Buyers initially needed to close their purchases by June 30th, but Congress pushed back that deadline until the end of September. The median sale price was $183,700 — up one percent from a year earlier.
A private research group says its gauge of future economic activity dropped in June — the second decline in past three months, suggesting the economic recovery will weaken. The Conference Board says its index of leading economic indicators fell 0.2 percent last month. Economists polled by Thomson Reuters had expected a drop of 0.3 percent. The index was revised to a 0.5 percent increase in May from the initial report of a 0.4 percent gain. The April report was revised to a 0.1 percent drop from a prior estimate of no change. The leading indicators gauge had risen almost every month since April 2009 as the economy rebounded from recession. But weakness in the housing sector, faltering consumer spending and high unemployment have raised fears about a big slowdown in growth.
Federal Reserve Chairman Ben Bernanke says the fragile economy still needs government stimulus spending to strengthen the recovery and help reduce unemployment. Bernanke tells lawmakers that Congress should come up with a credible plan to reduce the government's record-high budget deficits in the long run. But he says they shouldn't move to slash spending or boost taxes, or undertake some combination of both right now. He says: “I believe we should maintain our stimulus in the short term.”
The ravaged economy has been a nightmare for Hispanics in America. An Associated Press-Univision poll finds the economic downturn taking a toll on Hispanics, the fastest-growing minority group. Nearly half or more express intense worry over losing their jobs, paying bills or saving for college. Forty-five percent of those surveyed say they or a relative were unemployed recently. All the numbers are worse than the general population's experience. More than 1,500 Latinos were interviewed for the survey. Six in ten say it's difficult to get ahead financially. Hispanics are particularly vulnerable to the poor economy because they generally are less educated, have lower incomes and are likelier to be new to the United States.
Mortgage rates fell to a new record low for the fourth time in five weeks. But low rates haven't been enough to lift a struggling housing market. Freddie Mac says the average rate for 30-year fixed loans this week was 4.56 percent, down from 4.57 last week. That's the lowest since Freddie Mac began tracking rates in 1971. The rate on the 15-year fixed loan dropped to 4.03 percent, down from 4.06 percent last week and the lowest on record. Rates have fallen since the spring. Investors worried about the European debt crisis have shifted money into the safety of treasury bonds, which has forced those yields down. Mortgage rates tend to track yields on Treasury debt. However, low rates have yet to spark home sales and refinancing activity remains moderate.
President Barack Obama is preparing to sign a bill requiring federal agencies to be more vigilant about identifying and recovering billions of dollars lost annually to wasteful spending. The bill is the latest effort by the Obama administration to get a handle on federal spending. The White House says improper payments to individuals, organizations and contractors reached nearly $110 billion last year. Federal auditors found that tens of millions of dollars in benefits were paid to dead people, fugitives and others not eligible for such compensation.
The U.S. Bureau of Land Management's quarterly oil and gas lease sale netted nearly $10 million for the sale of 139 leases on federal land in New Mexico, Oklahoma, Texas and Kansas. The total includes bonus bids, administrative fees and first-year rentals. Bids for 128 parcels in New Mexico brought in more than $6.8 million, the highest amount of the four states. Bids for five parcels in Texas brought in over $2.4 million, five parcels in Oklahoma brought in $684,000 and a single parcel in Kansas sold for $240. The highest bid per acre for a parcel and the highest overall total per parcel was $5,200 per acre for more than 446 acres in San Augustine County, Texas, by Eaglestone Energy Partners.
A Texas company has paid a $93,100 fine for spilling 3,300 gallons of oil into a southeastern Montana creek when an underground pipeline failed. The Montana Department of Environmental Quality announced that Fort Worth-based Encore Operating had paid the fine to settle claims the spill violated state water quality rules. The November 2009 pipeline failure dumped an estimated 80 barrels of oil and 800 barrels of production water into Belle Creek in Powder River County. Tests of water samples collected from the creek showed concentrations of toxic benzene that exceeded pollution limits, in one case by more than 11 times the state's standard.
A bankruptcy judge has ruled that the August 4th auction of the Texas Rangers won't be delayed, and Dallas Mavericks owner Mark Cuban may be among the bidders. Angry creditors argue that other interested buyers would not have time to secure financing and suggested a September 30th auction. The starting bid will be from the group led by Hall of Fame pitcher Nolan Ryan and sports attorney Chuck Greenberg. Major League Baseball endorsed the Ryan-Greenberg group after it was selected in the original bidding process last year, but the $575 million deal has been stalled by creditors. Cuban's attorney said his client has been approved by MLB and hopes to submit a bid.