Friday PM July 30th, 2010

Debris delays static kill mud pumping maneuver at Gulf oil spill; BP plans to scale back clean-up effort...Growth slowed to a 2.4 percent pace; Commerce Department estimates economy shrank 2.6 percent last year...

The government's point man for the Gulf oil spill says there's been a delay in a procedure that will help stop the gusher for good. Coast Guard Admiral Thad Allen says that debris was found in the bottom of the relief well that must be fished out before crews can pump mud into the busted well in a procedure known as a static kill. The sediment settled there last week when crews popped in a plug to keep the well safe ahead of Tropical Storm Bonnie. They found it as they were preparing for the static kill and now they have to remove it. They had hoped to start the static kill as early as Sunday, but removing debris will take 24 to 36 hours. After the static kill comes the bottom kill, where the relief well will be used to pump in mud and cement from the bottom.

BP's incoming CEO says it's time to scale back the massive effort to clean up the oil spill, but adds that the commitment to make things right is the same as ever. Bob Dudley was in Biloxi, Mississippi, to announce that former Federal Emergency Management Agency chief James Lee Witt will help BP with the recovery. BP says Witt's company has unrivaled experience in emergency response and recovery. Local officials, especially in Louisiana, have been clamoring for more long-term commitments in the face of reports that the oil spill is dissipating, at least on the water's surface. Dudley says it's not too soon to scale back the cleanup, and on beaches where there is no oil there's no need for crews in hazmat suits. He adds, however, that there is no pullback in BP's commitment to clean up the spill. Dudley rejects the idea that the environmental effects of the spill have been overblown. He says that anyone who thinks it wasn't a catastrophe must be far away from it.

Government scientists are saying South Florida and the East Coast will likely not see any oil impact from the massive spill. The National Oceanic and Atmospheric Administration says that an analysis shows most surface oil remaining in the Gulf has degraded to a thin sheen. The oil is hundreds of miles away from a powerful current that scientists had feared could carry it through the Florida keys and up the East Coast. NOAA chief Jane Lubchenco says with the exception of Louisiana, much of the northern Gulf shoreline will be spared any additional major impact as long as the well remains capped.

BP says it has picked a charitable foundation in Louisiana to administer a $100 million fund for oil workers struggling because of a federal moratorium on deepwater drilling. The Rig Worker Assistance Fund will be administered through the Gulf Coast Restoration and Protection Foundation, an affiliate of the Baton Rouge Area Foundation. BP announced last month that it would set up the fund after the Interior Department declared a six-month moratorium on deepwater drilling in the Gulf of Mexico. The moratorium came after the April 20th explosion of the rig Deepwater Horizon. Foundation president John Davies says the organization is creating guidelines to manage the program and expects to begin taking applications for grants by September 1st.

The House has begun debate on a bill to boost safety standards for offshore drilling and remove a $75 million cap on economic liability for oil spills. Democratic leaders hailed the bill as a comprehensive response to the oil spill and said it would increase drilling safety and crack down on oil companies such as BP. Republicans and some-oil state Democrats opposed the measure, calling it a federal power grab that would raise energy prices and kill thousands of American jobs. Even if the bill passes the house, partisan disagreements in the Senate will likely delay final passage of legislation responding to the spill until at least September, when Congress returns from its summer recess.

Customer boycotts of BP stations are giving rise to talk of a name change, and it's one a lot of drivers may remember--Amoco. The Gulf oil spill has cut deeply into profits of BP dealers all around the country, so some dealers are saying it would be a good time to bring back a name a lot of people know and trust. BP merged with Amoco in the 90s, and quickly retired the brand. Even with financial perks from BP to help them out, some dealers say it's the BP label that scares people away. Bob Dudley--the man who'll soon take over BP--worked for Amoco for 20 years, so dealers think he might be open to the change. On the other hand, there's Jeff Miller--whose company owns, operates and supplies roughly 56 BP-branded stations primarily in Virginia. He says if the company makes all the right moves from here on, keeping the BP nameplate could be a smart thing.


The recovery lost momentum in the spring as growth slowed to a 2.4 percent pace, its most sluggish showing in nearly a year and too weak to drive down unemployment. The Commerce Department says consumers spent less, companies slowed their restocking of shelves and the nation's trade deficit dragged more on the economy in the April-to-June quarter. Businesses invested the most in 13 years on equipment and software during the second quarter. For the first time in two years, builders boosted spending on commercial projects. And home builders spent the most in 27 years, although many expect that to fade now that government home-buying tax credits have expired. The report also showed that the economy grew at a 3.7 percent pace in the first three months of this year. That was much better than the 2.7 percent pace estimated just a month ago.

The recession was deeper than the government previously thought. Issuing revisions, the Commerce Department estimated the economy shrank 2.6 percent last year--the steepest drop since 1946. It’s worse than the 2.4 percent decline originally estimated. The unemployment rate surged to 10.1 percent in October, a 26-year high. The revisions in gross domestic product, now show zero growth in 2008. From the start of the recession in December 2007 until the April-to-June quarter of 2009, the economy sank 4.1 percent. GDP is the broadest gauge of the economy's health. It measures the value of all goods and services--from machinery to manicures--produced in the United States.


President Barack Obama was in Michigan hailing a recent turnaround for U.S. automakers, which he says vindicates his unpopular decision to bail out the industry. Ahead of Congressional elections in three months, Obama seized on positive new trends in the auto industry as evidence of broader economic good news. He launched an intensive campaign to highlight the story as a concrete area of improvement with direct ties to his administration's actions. He said the industry is "growing stronger" speaking on the floor of Chrysler's Jefferson north plant, which recently added a second shift of production with about 1,100 jobs. Obama greeted workers making Jeep Grand Cherokees.


The number of rigs actively exploring for oil and natural gas in the U.S. increased by one this week to 1,586. Houston-based Baker Hughes said Friday that 972 rigs were exploring for natural gas and 603 for oil. Eleven were listed as miscellaneous. A year ago this week, the rig count stood at 948. Texas gained one rig. The rig count tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted a record low of 488 in 1999.


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...