Wednesday PM August 4th, 2010
by: Ed Mayberry, August 4, 2010 7:08:00 pm
The Obama administration says the chances of putting an end to the oil spill in the Gulf of Mexico have “significantly improved” in the past 24 hours. National Incident Commander Admiral Thad Allen says the static kill effort to plug the leak is progressing, giving officials “high confidence” that there will soon be no oil leaking into the environment. The upbeat assessment comes as a government report saying only about a quarter of the spilled oil remains in the Gulf. The rest has been contained, cleaned up or has otherwise disappeared. But some lawmakers and environmentalists are worried about the effects of the chemical used to disperse some of the oil. So far officials say the impact of such a large quantity of dispersants are unknown. Government officials are defending the credibility of the report that much of the oil is gone. Given earlier troubles with government estimates, NOAA administrator Jane Lubchenco was asked about the credibility of the numbers. She says the government used direct measurements and the best estimates available for the new report and has a high degree of confidence in them. She says the numbers can be updated as new information comes in. Lubchenco says there is no evidence that oil is accumulating on the sea floor in the Gulf.
The government's point man on the oil spill response says engineers will still try to firm up the now-plugged Gulf leak through a relief well. Retired Coast Guard Admiral Thad Allen told WWL-TV in New Orleans that pumping mud down the throat of the blown-out well quelled the immediate threat. But he told the station that engineers will still pump mud and cement later this month through an 18,000-foot relief well to permanently plug the underground reservoir that's fed the gusher. Allen says “we've pretty much made this well not a threat but we need to finish this from the bottom.” BP bottled up the leak on July 15th with a massive cap after it had spewed millions of gallons of oil into the sea, but that cap was always considered a temporary solution.
A federal report on the Gulf oil spill says a total of nearly 207 million gallons leaked from the blown-out BP well. The report says a little more than 172 million gallons of that made it into the Gulf. It says nearly 35 million gallons was held back by a temporary containment cap. The report was released by the U.S. Geological Survey and the National Oceanic and Atmospheric Administration. A government task force released an estimate this week indicating that a total of about 205 million gallons had leaked. It also said about 172 million gallons escaped into the Gulf. It noted then that its estimate had a margin of error of ten percentage points.
Lawmakers are pressing government scientists to explain what effects efforts to get rid of the oil spill will have on the Gulf's ecosystem. A new report by the Obama administration characterizes those efforts as remarkably effective. Senator Sheldon Whitehouse of Rhode Island called the use of chemical dispersants a grand experiment during a Senate hearing. Whitehouse said it's unclear if their use would limit the damage from the spill, or cause greater harm. BP applied nearly two million gallons of dispersants to the spill to break apart the oil. Paul Anastas, head of EPA's Office of Research, said that while the quantity was unprecedented, tests so far have not found dispersants near coasts or wetlands.
Texas environmental regulators are accusing BP of showing a pattern of “poor operation and maintenance practices” at the BP Texas City refinery, the same plant where a 2005 explosion killed 15 workers. The Texas Commission on Environmental Quality made the accusation after investigating an incident at the refinery that led to a nearly 40 day release of toxic and cancer-causing chemicals. The commission's findings were passed along to the state attorney general on July 23rd. The release began April 6th, days before a BP-operated rig blew up in the Gulf of Mexico. A lawsuit filed Tuesday seeks $10 billion in damages for the same incident. The lawsuit says BP's release exposed people to toxic and cancer-causing chemicals.
Regional carriers for merger partners United and Houston-based Continental Airlines are combining in an all-cash deal valued at $133 million. Skywest says its Atlantic Southeast Airlines unit will buy ExpressJet Holdings for about $6.75 per share. Atlantic Southeast and Skywest operate as Delta Connection and as United Express. Houston-based ExpressJet operates as Continental Express. The companies say they expect the deal to close in the fourth quarter. The airlines will be based in Atlantic Southeast's home base of Atlanta. They'll continue to serve Continental's current hubs in Houston, Newark, New Jersey and Cleveland, and United's hubs at Chicago O'Hare and Washington Dulles. The move comes as Continental Airlines and UAL Corporation's United Airlines move ahead with plans to combine in a $3 billion merger that will create the world's largest airline.
Continental Airlines and United have agreed to disclose more information about their negotiations in order to settle three lawsuits by Continental shareholders. The critics said they were shortchanged by the $3 billion deal to create the world's biggest airline. The airlines, in regulatory filings, said that the unhappy Continental shareholders agreed to drop their lawsuits in exchange for the airlines providing more details. One request is how negotiators arrived at the plan to give Continental shareholders 1.05 United shares for each Continental share held. The combined company will be called United Airlines and based in Chicago. The plaintiffs sought class-action status for their lawsuits, which were filed in state court in Houston shortly after the deal was announced in early May. The Justice Department is still weighing antitrust implications of the combination.
Continental and Brussels Airlines have announced plans to start codesharing on trans-Atlantic flights between New York and Brussels. Both are members of the Star Alliance. The agreement will offer Continental customers quicker and easier access to a dozen cities in Africa, as well as additional cities in Europe.
House Speaker Nancy Pelosi says she will call the House back into session next week to approve a measure to help states ease their severe budget problems and save the jobs of tens of thousands of teachers and other public employees. The move by the California Democrat would force lawmakers to interrupt their August recess to speed a $26 billion jobs measure to President Barack Obama's desk so he can sign it into law before most schools reopen. The measure cleared a crucial hurdle in the Senate headed for passage there soon. The bill would extend programs enacted in last year's stimulus law to help preserve the jobs of teachers, police officers, firefighters and other public employees.
The Pentagon is reminding an estimated 100,000 retired military men and women that they are owed back pay and should claim it. Congress last year approved a $500 retroactive bonus to soldiers, sailors, airmen and marines for every month they were forced to stay in the military beyond their enlistment term--a controversial practice known as “stop-loss.” Troops kept involuntarily in the services from the September 2001 terrorist attacks until 2009 were given until this fall to apply for the money. But the October 21st deadline is approaching and only 30,000 claims have been paid out so far. Pentagon spokeswoman Eileen Lainez says officials have posted reminders on blogs, social networks and at veterans hospitals and that more information on the program is at the Web site www.defense.gov/stoploss.
An industry trade group says growth in the U.S. service sector picked up in July, a good sign for the job market. The Institute for Supply Management says its service-sector index rose to 54.3 last month, up from 53.8 in June. Economists had expected a reading of 53 for July. Levels above 50 signal growth. The index shows service companies have been expanding every month this year, but at a less robust pace than the manufacturing sector. That had put a damper on overall hiring, since the service sector accounts for about 80 percent of U.S. employment. Service jobs include those in hospitals, shops, restaurants, airlines, banks and consulting firms.
Worried about the stalling economic recovery, Americans remained reluctant to spend at stores in July, especially on pricier items like jewelry, though they let go of some money for travel. Data released by Mastercard Advisors' SpendingPulse signals that spending remains choppy as shoppers grapple with an almost ten percent unemployment rate and tight credit. Revenue from high-end jewelry, which had held steady in June, plummeted in July from a year earlier, when the figures already were dismal. Furniture also suffered as the boost from homebuyer tax credits wore off. Shoppers even pulled back on shoes and children's clothing, while luxury spending--excluding baubles--was virtually unchanged. The figures include transactions in all forms including cash.
Ford says contractual deals with the United Auto Workers union will allow it to bring almost 2,000 jobs into its factories that would have gone to parts supply companies. Ford Americas President Mark Fields told an auto industry conference that some of the jobs have come back to the U.S. from other countries. The automaker says the 2007 union contract allows it to hire new workers at $14 per hour, about half the hourly rate of current workers. Factory-level contracts have also changed work rules to make the plants more efficient. Ford says it has already brought about 1,340 jobs into 24 of its plants, assembling parts that otherwise would have been made by outside companies. It plans to bring in another 635 jobs by 2012.
Toyota appears to be recovering from both the economic mess and the battering its reputation took over massive safety recalls. The company reports a quarterly profit of $2.2 billion, reversing the red ink from a year earlier. Toyota also raised its full year earnings forecast. The world's biggest automaker says revenue for its fiscal first quarter surged 27 percent to $57.3 billion as vehicle sales improved in Japan and overseas including North America and Asia.
The Obama administration plans to send $600 million to help unemployed homeowners avoid foreclosure in five states. The Treasury Department says mortgage-assistance proposals submitted by North Carolina, Ohio, Oregon, Rhode Island and South Carolina received approval. The states estimate their efforts could help up to 50,000 homeowners. The administration is directing $2.1 billion from its existing $75 billion mortgage assistance program to a total of ten states. Each state designed its own plan. Treasury approved money in June for Arizona, California, Florida, Michigan and Nevada.
A federal judge in West Virginia has dismissed two lawsuits filed by National Guardsmen who believe they were exposed to toxic chemicals in Iraq. U.S. District Judge Frederick Stamp says he has no jurisdiction over the case, which involves Texas-based military contractor Kellogg Brown & Root Services and KBR Technical Services. Attorney Jeff Kessler says his clients aren't giving up. They will join a similar case in Texas that already includes more than 100 guardsmen from Indiana. The soldiers say they were exposed to cancer-causing sodium dichromate while providing security for KBR workers at a water plant in Iraq in 2003. They say they've suffered long-term health problems, including respiratory struggles and nose bleeds. KBR has denied wrongdoing.
The Treasury Department says that it has scaled back its annual borrowing capacity by $232 billion since April and plans further gradual cuts in coming months. The cuts are coming after a massive expansion of the government's borrowing over the past two years as the annual federal deficit hit $1.41 trillion last year and is forecast to hit a new record of $1.47 trillion this year. Treasury officials said that the reductions in borrowing capacity can be achieved because the improving economy is boosting tax receipts and many of the emergency programs enacted to deal with the deep recession and financial crisis are being phased out.
The Texas Rangers say a group of investors led by Dallas Mavericks owner Mark Cuban has submitted the highest opening bid to buy the team at a rare and unusual auction. Rangers attorney Martin Sosland says the bid disclosed as the auction began is at least $25 million more than the base bid submitted by the only other bidder. That group is led by Rangers President and Hall of Fame pitcher Nolan Ryan and sports attorney Chuck Greenberg. The Greenberg-Ryan group offered about $520 million as its opening bid. An attorney for that group, Tom Lauria, says the bid from Cuban and investor Jim Crane is not higher and shouldn't qualify.
A Syrian businessman claims he is in “advanced negotiations” to buy Liverpool from the Premier League club's financially troubled owners. Yahya Kirdi, a former Syria international, is representing a group of investors from the Middle East and Canada. Kirdi says that an :agreement has been reached on all major terms, including the purchase price, repayment of the existing bank debt from RBS and Wells Fargo and financing of a new stadium.” Kirdi says he is in the “final stage of negotiation” with American owners Tom Hicks of Dallas and George Gillett, Jr. Hicks also owns baseball's Texas Rangers, which faces auction. But Kirdi's group isn't the only one trying to buy the club. Chinese businessman Kenny Huang has offered to buy Liverpool's $374 million debt.
There's a new trend in the locally grown food movement. Following in the footsteps of upscale restaurants, spas are starting to put produce from nearby family farms on their menus. they're incorporating the fruits and herbs in skin treatments and massage therapies. Southern California's Ojai Valley Inn offers a $145 treatment that uses halves of tangerines from a nearby farm as applicators for a sugar-based exfoliant. A treatment at Spa Hotel Healdsburg in Northern California features a salve of wine and honey from a local vineyard. And the Aspira Spa in Western Wisconsin uses local elderberries in facials and other offerings. Atlanta-based spa consultant Mark Wuttke says demand for such treatments is driven by a desire for authentic experiences tied to spas' location.Earnings
Transocean says second-quarter net income fell 11 percent as it lost revenue from the ill-fated oil rig it leased to BP in the Gulf of Mexico and charged lower rates for some rigs still in operation. The world's largest offshore drilling contractor incurred after-tax costs of $69 million associated with the Deepwater Horizon incident. That was more than offset by $267 million in insurance payments for the lost rig. For the second quarter, Transocean had net income of $715 million, down from $806 million a year ago. Operating revenue fell to $2.5 billion from $2.9 billion. The company has also agreed to alert the Justice Department before buying back shares or making large cash outlays.