Wednesday PM September 1st, 2010
by: Ed Mayberry, September 1, 2010 8:09:00 pm
The federal government's point man on the Gulf of Mexico spill response says there is no “significant risk” that more oil will leak into the sea when engineers remove the temporary cap Thursday that first contained the gusher in mid-July. Retired Coast Guard Admiral Thad Allen says that vessels will remain on standby just in case to collect any leaking oil. He says a break in the weather is expected within the next 24-36 hours, allowing engineers to proceed with the removal of the cap and then the raising of the blowout preventer, which failed to stop the oil from leaking in the first place. That means the blowout preventer could begin being raised late Thursday or early Friday. Engineers will then proceed with the final plugging of the blown-out well. The Deepwater Horizon explosion April 20th killed 11 workers and led to 206 million gallons of oil spewing from BP's undersea well.
A federal judge who overturned the Obama administration's initial six-month moratorium on deepwater oil drilling has rejected the government's bid to have the court challenge thrown out. Government lawyers argued that a lawsuit filed by several offshore service companies over the May 28th moratorium was moot because the Interior Department imposed a new, temporary drilling ban on July 12th. But U.S. District Judge Martin Feldman rejects that argument, saying the second moratorium “arguably fashions no substantial changes” from the first. The Justice Department has asked the 5th U.S. Circuit Court of Appeals to review Feldman's earlier ruling overturning the first moratorium.
The head of the Bureau of Ocean Energy Management, Regulation and Enforcement will hold forums in Mississippi, Texas and Louisiana this month and get briefed on the spill and deepwater drilling. Michael R. Bromwich, the agency's director, will hold forums in Houston on September 7th, and in Biloxi, Mississippi, on September 10th. Another public forum will be held in Lafayette, Louisiana, later in the month. The date has not been announced. Bromwich will get briefed on drilling safety issues and the oil spill caused by a defective BP well. He will hear from academics, environmentalists and the oil and natural gas industry. The public can submit comments too. The BOEM is the new name for what was known as the Minerals Management Service.
BP says it has spent more than $5 million a week on advertising since the Gulf Coast oil spill—more than three times the amount it spent on ads during the same period last year. BP told the House Energy and Commerce Committee that it spent a total of $93 million on advertising from April to the end of July. The company says the money was intended to keep Gulf Coast residents informed on issues related to the oil spill and to ensure transparency about its actions. The increased spending was largely targeted at TV, newspapers and magazines. A small portion was directed to the Internet. BP says it actually aired fewer TV spots from April to July than during a similar period last year.
The unemployment rate rose in nearly half of the nation's 374 largest metro areas in July, as the pace of hiring slowed from earlier this year. The Labor Department says the jobless rate rose in 178 areas, dropped in 151 and was unchanged in 45. Despite the weak showing, that's an improvement from July. The jobless rate rose in about three-quarters of the metro areas. But it's worse than this spring, when rates declined in more than 230 areas for three straight months. The economy is barely growing and economists worry it won't expand fast enough to bring down the 9.5 percent national unemployment rate. On Friday, the government is expected to say that private employers added only 41,000 jobs in August, down from 71,000 the previous month.
New data shows Americans spent--at best--only slightly more this August than last. Mastercard's SpendingPulse is reporting that August spending rose on children's clothing and consumer electronics. But shoppers pulled back on most other merchandise, including women's and men's fashions and luxury goods. In fact, spending on many nonessentials remained about where it was five years ago. Online sales, up for a 13th month in a row, offered a rare bright spot. They rose 7.2 percent from a year ago, when they were up 1.5 percent. The figures confirm a flurry of anecdotal evidence that this year's back-to-school season will disappoint retailers.
An industry trade group says manufacturing companies grew faster in August as the industrial sector continues to lead the recovery. Rising exports overseas and demand from businesses for capital equipment and supplies have helped propel production in factories for a year. The Institute for Supply Management says its manufacturing index rose to 56.3 in August from 55.5 in July. A reading above 50 indicates growth. The manufacturing sector has expanded for 13 straight months. Economists polled by Thomson Reuters had forecast a weaker reading of 53.0. While momentum had slowed this summer, the ISM survey also shows manufacturing managers' desire to hire increased last month.
Construction spending tumbled in July to the lowest level in a decade, as the housing market struggles in the weak economy and without a popular home-buying tax credit. The Commerce Department says construction activity dropped one percent in July, the third straight monthly decline. And government revisions showed much weaker activity than previously reported for May and June. The report was the latest evidence that the economy was weakening significantly in the summer. That has raised concerns about the possibility of the country falling back into a recession.
BAE Systems has been awarded a $629 million contract from the U.S. Mine Resistant Ambush Protected Joint Program Office to upgrade 1,700 Caiman MRAP vehicles. BAE Systems introduced the Caiman MTV unemployment rate rose in nearly half of the nation's 374 largest metro areas earlier this year, with a strengthened chassis frame and highly effective blast absorbing seats. The upgrades include a refurbished and improved armored capsule and a new high-power automotive power train, chassis and independent suspension. The chassis will be produced in Sealy beginning in November.
Electric companies stuck after deadbeat customers make it their practice to rack up bills, then switch to a new provider and leave the old bill unpaid could get help from the Texas Public Utility Commission. The PUC this month is scheduled to consider preventing some nonpaying customers from switching providers until they pay their previous utility debt. Stream Energy Chairman Rob Snyder says some people out there “switch professionally.” He estimates his company gave away about $30 million in electricity last year to people who didn't pay their bills, and as much as $7 million was to people who manipulated the system. The Dallas Morning News reports that, according to electricity companies representing about a quarter of the Texas industry, unpaid bills equal around four percent of total revenue.
A Houston company faces more than $1.2 million in proposed fines for allegedly failing to record and improperly recording work-related injuries and illnesses. The Occupational Safety and Health Administration announced 83 citations against Goodman Manufacturing at the company's air conditioning cooling facility in Houston. A spokesman for Goodman did not immediately return a message for comment to the Associated Press. The OSHA investigation began March 2nd in response to a complaint. A review found that Goodman had not recorded or failed to properly record 72 percent of employee injuries and illnesses from 2008 to March 15th, 2010. Goodman has 15 business days to comply, request an informal conference with PSHA or contest the citations and penalties.
Major banks are agreeing to give local governments and nonprofit groups the ability to buy foreclosed homes before they are sold to private investors. The Obama administration says local officials could benefit from acquiring these properties and using the land for redevelopment projects. Congress has provided $7 billion in money to buy the homes. These groups have been outbid by speculators who are snapping up foreclosures. The administration says the largest mortgage lenders in the country, including Bank of America and Wells Fargo, have agreed to let the groups purchase the properties ahead of private speculators.
Federal bank regulators are defending their actions leading up to the collapse of Lehman Brothers and the purchase of Wachovia at the height of the financial crisis. They are telling the Financial Crisis Inquiry Commission that government officials' decisions in 2008 not to rescue Lehman and to encourage Wells Fargo's takeover of Wachovia made sense under the circumstances. Thomas Baxter, general counsel of the New York Fed, says in prepared testimony: “the Federal Reserve did not 'allow' Lehman Brothers to die.” Robert Steel, the former Wachovia CEO, says Federal Deposit Insurance Corporation Chairman Sheila Bair directed Wachovia to enter talks with potential buyers. The panel is examining potential systemwide risk from financial institutions.
President Barack Obama says the country's “most urgent task” is to restore the economy. Obama says that includes strengthening education and job training and jump-starting industries that create jobs. He says it also means ending dependence on foreign oil, unleashing innovation and nurturing ideas from entrepreneurs. The president calls the task difficult but necessary. Obama made the comment in his televised address on the end of the U,S. combat mission in Iraq.
Departing White House economist Christina Romer says the government has the tools for bringing down unemployment, but policymakers need to find the will and wisdom to use them. Romer calls on officials to move forward on policies that will increase government spending and cut taxes. She also called for investments in infrastructure and new trade agreements. Romer said that while some new policies should be viewed as emergency measures, most should be paid for with future spending cuts or revenue returns. She said concerns about the mounting deficit should not be used as an excuse “for leaving unemployed workers to suffer.” Romer is leaving her post as head of the Council of Economic Advisers to return to the University of California, Berkeley, as an economics professor.
General Motors says its August sales dropped seven percent compared with July, as the shaky economy discouraged customers from buying new cars and trucks. U.S. auto sales in July were a strong point for the economy, helping to boost consumer spending. But high unemployment and a declining stock market have made people afraid to spend money on big-ticket items, industry analysts say. Sales last month also fell 25 percent from August of 2009. But last year's sales were boosted by the government's cash for clunkers rebates. GM says sales from its four remaining brands--Chevrolet, Buick, GMC and Cadillac--fell 11 percent compared with August of last year. Buick, GMC and Cadillac reported increases. But Chevrolet sales slipped because last year's clunkers program gave a boost to its lineup of smaller cars.
Ford says its U.S. auto sales dipped five percent in August compared with July as consumers continued to hold off on big purchases. Ford's sales dropped 11 percent over last August but that had been widely expected. Last August saw strong sales thanks to the government's cash for clunkers program, which gave buyers up to $4,500 in cash to buy a more fuel efficient vehicle. Ford says it's lowering its fourth-quarter production slightly because of lackluster demand. Bad economic news, including high unemployment, hurt August sales.
Chrysler says its August sales rose seven percent over July as many of its models saw gains. The automaker's sales also increased seven percent over August of 2009. But last year the company was just restarting factories after closing them during its stay in bankruptcy court. Chrysler got only a small sales boost last August from the government's cash for clunkers program. That program offered up to $4,500 in rebates for people to trade in older cars and trucks for more fuel-efficient models. Sales of the new Jeep Grand Cherokee nearly doubled over July.
Toyota says its sales fell 12 percent in August compared with July, as buyers nervous about the economy stayed away from showrooms. The Japanese automaker plagued by recalls says sales plunged 34 percent compared with August last year. But the poor comparison was expected since cash for clunkers helped sales of smaller Toyota cars such as the Corolla and Camry sedans. Toyota sales continue to be dogged by recalls, which include more than ten million cars and trucks worldwide since last fall. The automaker recalled 1.3 million Corolla and Matrix cars last week over possible stalling.
A U.N. agency says international food prices have risen to their highest level in two years. The Rome-based U.N. Food and Agriculture Organization says its food price index shot up five percent between July and August. That was still 38 percent down from its peak in June 2008. It says the food price surge reflected a sudden sharp rise in wheat prices following drought in Russia and the country's subsequent restrictions on wheat sales. Higher sugar and oilseed prices also were factors.
Apple CEO Steve Jobs is introducing a new line of iPods. Jobs is unveiling a new iPod Nano without any buttons. It has a touch screen instead. He also is introducing a new iPod shuffle, the lowest-end music player in Apple's line. Like the past generation, it can speak the names of playlists and songs. But unlike the most recent of the tiny music players, it brings back the square shape and buttons of Apple's second-generation shuffle. Jobs also says iPhone users will be getting a software update that offers the ability to upload high-definition video over wi-fi. And when people take photos, the new software will save three slightly different copies that, when combined, make for a sharper image. The new software will be available next week for free, initially for Apple's iPhone and iPod touch.