Thursday PM September 2nd, 2010
by: Ed Mayberry, September 2, 2010 9:09:00 pm
Firefighting vessels have been battling the flames from an oil rig that exploded and caught fire today in the Gulf of Mexico off the Louisiana coast. Today's explosion happened about 80 miles south of Vermilion Bay along the central Louisiana coast. That's west of the site of the April explosion on the Deepwater Horizon rig leased by BP that caused the recent massive oil spill. All 13 crew members were rescued. The Coast Guard says one crew member was injured, but the platform's owner says there were no injuries.
The Coast Guard is backing off its earlier report that an oil sheen about a mile long was spreading following a platform explosion in the Gulf of Mexico. Coast Guard Commander Cheri Ben-Iesau said this afternoon that crews was unable to confirm the oil sheen. The Coast Guard says the platform owner reported a sheen about a mile long and 100 feet wide. But the company has said in a statement that an initial flyover didn't find an oil spill.
The rig is owned by Mariner Energy of Houston and wasn't producing oil and gas. The rig is in shallow water--about 340 feet deep. The BP well that spewed oil and gas into the Gulf for three months was in water about 5,000 feet deep. Louisiana Governor Bobby Jindal says he's been told by the platform's owner that there were seven active production wells there, and they were shut down shortly after the fire broke out. In April, Apache said it planned to buy Mariner for $2.7 billion, though the deal hasn't been completed yet. Most of Mariner's operations are in West Texas and along the Gulf Coast. The company also owns more than 240 blocks in shallow parts of the Gulf of Mexico.
Dell is walking away from a bidding contest with rival Hewlett-Packard for data-storage maker 3Par. Dell says it will not match Hewlett-Packard's offer to pay $33 per share for 3Par, or about $2.07 billion. Dave Johnson, Dell's Senior Vice President for Corporate Strategy, says the company “took a measured approach throughout the process and have decided to end these discussions.” Dell boosted its offer to $32 Wednesday from $27, but before it could be made public, HP again raised the stakes this morning. Both PC makers were looking at 3Par as a way to build up their “cloud computing” businesses, delivering software, data storage and other services to customers via the Internet. 3Par could also help them cut data storage expenses.
The number of buyers who signed contracts to purchase previously occupied homes increased in July but remained well below last year's levels, a sign that demand for housing remains weak. The National Association of Realtors says its seasonally adjusted index rose 5.2 percent from a month earlier to a reading of 79.4. Economists surveyed by Thomson Reuters had expected the index would fall to 74.9. The index was still down 19 percent from the same month last year. June's reading was the lowest on records dating to 2001. Tt was revised slightly downward to 75.5. The index provides an early measurement of sales activity because there is usually a one- to two-month lag between a sales contract and a completed deal.
Mortgage rates fell to the lowest level in decades for the tenth time in 11 weeks, as investors worried about the economy. Mortgage buyer Freddie Mac says the average rate for a 30-year fixed loan was 4.32 percent this week, down from 4.36 percent last week. That's the lowest since Freddie Mac began tracking rates in 1971. The average rate on 15-year fixed loan dropped to 3.83 percent from 3.86 percent the previous week. That's the lowest on records starting in 1991. Rates have been falling since spring as investors shift money into safer treasury bonds. That has lowered their yields, which mortgage rates tend to track.
The number of people requesting unemployment benefits declined for the second straight week, suggesting that the slowing economy isn't prompting widespread job cuts. The Labor Department says new claims for unemployment aid fell last week by 6,000 to a seasonally adjusted 472,000. Economists had expected a slight increase, according to a survey by Thomson Reuters. The four-week average of claims, a less-volatile measure, fell by 2,500 to 485,500, its first decrease after four straight increases. Even with the declines, claims are still at much higher levels than they would be in a healthy economy. When economic output is growing rapidly and employers are hiring, claims generally drop below 400,000.
Productivity in the spring fell by the largest amount in nearly four years while labor costs rose, signals that companies may have reached the limits of squeezing more work out of fewer workers. The Labor Department says productivity dropped at an annual rate of 1.8 percent in the April-to-June quarter, double the 0.9 percent decline originally reported a month ago. Unit labor costs rose 1.1 percent, the biggest rise in labor costs since late 2008. While lower productivity and higher labor costs could spell trouble for corporate profits, it could translate into more hiring and larger incomes for U.S. workers.
Retailers are reporting surprisingly solid gains for August even as unusually hot weather and job worries kept a lid on back-to-school buying. The results are providing a sliver of hope for the recovery, but worries still remain about the holiday season. As merchants report their results, Costco is reporting a robust gain, boosted by higher gas prices and improved international revenue. Limited Brands and Macy's also had solid revenue increases. But shoppers are still keeping to their lists, hurting a number of clothing store results came in below expectations. The figures are being compared with a weak August 2009. They're based on revenue at stores open at least a year.
Orders to U.S. factories managed a slight gain in July as a surge in demand for commercial aircraft helped offset widespread weakness in other areas. The Commerce Department says factory orders edged up 0.1 percent in July, the first increase after two months of declines. But the strength came in the volatile transportation sector. excluding transportation, orders were down 1.5 percent, the biggest drop in this category in 16 months. Manufacturing has been the standout performer so far in this recovery with American companies benefiting from stronger growth in China and other developing nations, which has helped offset sluggish U.S. consumer demand.
The Houston City Council has approved a three-year agreement to allow a company to explore for natural gas reserves beneath three municipal parks. The $200,000 lease is with Southern Star Exploration, with the city standing to get 25 percent if natural gas is found and recovered. The proposal involves Herman Brown, Brock and Maxey Parks. Mayor Annise Parker says if natural gas is found, drilling would take place from nearby property, with no drilling allowed in the parks. Parker says any gains would be reinvested in the park where the natural gas was found. The Houston Chronicle reports that some neighbors have cited environmental concerns.
Texans frustrated by not being able to get through by phone or online to take part in an April energy-efficient appliance rebate program will have another chance. State officials have announced a winter 2010 offering using unclaimed rebate funds. The initial offer involved more than $20 million in federal stimulus funds. Comptroller's spokesman Allen Spelce says about $10 million was left over from the original program after all rebates were paid. A listing on a Website affiliated with the State Comptroller's Office, which administers the program, says additional details will be announced later.
A plastics compounding company operating in East Texas has canceled its state job creation contract. Alloy Polymers is joining other firms that have quit or changed their pacts under the Texas Enterprise Fund since the recession hit. Spokeswoman Lucy Nashed with the governor’s office says Alloy Polymers canceled its Enterprise Fund contract on July 9th, citing “business reasons.” She says the company paid back with interest the $100,000 in taxpayer money it received under the $200,000 agreement. A governor's office list of Enterprise Fund grant recipients states Alloy Poymers was to have created 52 new jobs as part of the 2006 agreement.
The cost of gasoline dropped three cents this week in Texas as motorists prepare to hit the road for the Labor Day holiday weekend. The weekly AAA Texas gasoline price survey shows that a gallon of unleaded regular fuel was at $2.52. That's six cents more than it was on the same date a year ago on September 2nd, 2009. Nationally, the average also decreased a penny from last week to $2.68. Houston tied with Fort Worth for the cheapest gas in Texas at $2.46, down four cents in Fort Worth and three cents in Houston from a week ago. The highest price remains in El Paso at $2.71--two cents cheaper than it was last week. The auto club statement says holiday travel is expected to increase nine percent in the state as the year's summer travel season ends.
A new Treasury Department program to give people without bank accounts faster access to their tax refunds will help some avoid costly short-term loans. But careless consumers could end up racking up fees and padding bank profits. The pilot program using debit cards is aimed at getting Americans their refunds quickly, and saving the government the cost of printing and mailing checks. Starting next year, the pilot tax account program will be offered to several hundred thousand Americans. Eventually, the program could be expanded to reach the nine million American households that don't have bank accounts. Treasury is still negotiating the fees for the tax refund cards. Officials would not name the bank that is close to securing the contract.
Federal Reserve Chairman Ben Bernanke is telling a panel investigating the financial crisis that regulators must be ready to shut down the largest institutions if they threaten to bring down the financial system. Bernanke says if the crisis has a single lesson, it is that the too-big-to-fail problem must be solved. He says bailing out these institutions is not a viable solution. Bernanke tells the Financial Crisis Inquiry Commission that great improvement will come from the new financial overhaul law. It empowers regulators to shut down firms whose collapse pose a broader threat, and international talks on new capital rules for banks.
Kia is recalling about 35,000 Soul and Sorento vehicles to fix wiring in the interior lighting panels that could lead to fires. The recall affects about 24,000 Kia Soul compact wagons from the 2010 model year and more than 11,000 Kia Sorento sedans from the 2011 model year. Kia told the government that some wiring harnesses located in the soul's front door trim panels and the Sorento's front and rear door trim panels may have been improperly soldered, which could lead to an electrical short. The South Korean company said the short in the wiring harnesses could cause fires. No accidents or injuries have been reported. Owners will be notified later this month and the wiring harnesses will be replaced.