Thursday PM September 30th, 2010
by: Ed Mayberry, September 30, 2010 4:09:00 pm
Congress has approved a blueprint for NASA's future that extends the life of the space shuttle program while backing President Barack Obama's intent to use commercial carriers to lift humans into near-earth space. The House vote sends to Obama a bill that rewrites NASA's space agenda. It dismantles the program under which former President George W. Bush sought to return astronauts to the moon, and extends the life of the International Space Station from 2015 to 2020. The bill relies mainly on the still-nascent commercial space industry to transport astronauts to the space station over the next five years. But in a nod to concerns about NASA jobs, it also speeds up development of a heavy launch vehicle and funds the shuttle program for another year. Senator John Cornyn of Texas applauded the House passage, saying it helps provide direction for the space agency. The Senate unanimously approved the measure last August. The Greater Houston Partnership also expressed its pleasure.
Continental Airlines says it has a labor contract deal with its flight attendants days ahead of combining with United Airlines to form the world's biggest airline. Continental reached a tentative contract agreement with the International Association of Machinists and Aerospace Workers, which represents about 9,300 flight attendants at the Houston company. Terms were not disclosed. Continental expects to close its deal with United this week. The new United will overtake Delta Air Lines to become the world's biggest carrier. Workers for both United and Continental must figure out how to combine seniority lists.
The Obama administration has announced new interim rules requiring that offshore drilling rigs certify that they have working blowout preventers and standards for cementing wells. Interior Secretary Ken Salazar says that the new rules will improve safety and reduce the chance of catastrophic blowouts such as the BP spill in the Gulf of Mexico. But Congressman Kevin Brady of Texas says energy companies are in limbo.“Those rigs are going to be idle, those workers are in jeopardy and these businesses are going to continue to struggle. Draw those rules up. Make a call and make a decision, because, you know, we’re there with you to meet every standard.”
Interior Secretary Ken Salazar has said new rules must be in place before the department lifts a ban on deepwater drilling. The ban is set to expire November 30th, but officials have said they hope to end it early.
Federal and state government agencies and BP have entered a new and important phase in determining how much damage has been done to the ecosystem by the Gulf oil spill. The government and BP have started to determine how much money it will take to repair the ecosystem damage. This is part of a legal process known as a Natural Resources Damage Assessment, or NRDA. A damage assessment is done after an oil driller causes damage to a public resource. In the three months before a temporary cap stemmed the flow from BP's blown-out well, as much as 172 million gallons of oil and millions of cubic feet of natural gas spewed into Gulf waters.
Incoming BP Chief Executive Bob Dudley says the oil company is likely to restart dividend payments in the first quarter of next year. Dudley--who will replace Tony Hayward at midnight--says the board will talk before the end of this year about restoring the payment to investors. Dudley says he thinks “we will get there,” although he added in a BBC interview that he's not sure of the level yet. BP suspended dividend payments in June under political and public pressure as the costs mounted for the cleanup of the Gulf of Mexico oil spill. Dudley earlier this week announced the creation of a new risk and safety division as part of BP's attempts to rebuild shattered confidence in the company.
The U.S. Environmental Protection Agency and the Department of Justice have slapped a $15 million fine on BP for Clean Air Act violations at the oil giant's Texas City refinery. The fine is one of the largest under the Clean Air Act. The penalty is a settlement between BP and the federal agency and is subject to court approval. The violations resulted from three incidents at the refinery in 2004 and 2005. The fine is the latest in a litany of troubles plaguing BP as it struggles to clean up the damage caused by its oil spill. BP has also been fined $87 million by the u.s. occupational safety and health administration for violations found at the refinery after a 2005 explosion killed 15 workers.
Pennsylvania's top environmental regulator says the state will sue a Houston-based drilling company unless it agrees to pay nearly $12 million to extend a public water line to at least 18 residents whose water wells have been contaminated with methane gas. John Hanger held a news conference in the small northeastern Pennsylvania town of Dimock, where tainted water wells are raising concerns about the consequences of gas drilling in the gas-rich Marcellus Shale. Hanger blamed the methane contamination on faulty natural gas wells drilled by Cabot Oil & Gas. Cabot vigorously denies it is responsible for the pollution. Cabot's CEO issued a scathing public rebuke of Hanger this week, accusing him of “political pandering.” Tensions between Cabot and Dimock residents are escalating. A resident was charged with disorderly conduct last week for an incident with a gun. In response, Cabot has hired armed guards to accompany employees onto residential properties. Hanger pleaded for calm, saying, “put the guns away.”
Applications for jobless benefits dropped last week for the third time in four weeks, a sign that employers are cutting fewer jobs. The Labor Department says that initial claims for unemployment aid fell by 16,000 to a seasonally adjusted 453,000. Wall Street analysts had expected a smaller drop. The decline returns jobless claims to the same level they were two weeks ago. Initial claims have fluctuated around 450,000 for most of this year. The four-week average of claims, a less-volatile measure, dropped for the fifth straight week to 458,000, the lowest level in two months.
The Texas Emerging Technology Fund is investing $2.9 million in three Houston area companies for the development and commercialization of their biomedical technologies. AuricX Pharmaceuticals is developing antibiotic resistant drugs. Blue Box Health is commercializing its home health disease management device. And Oncolix is working on a non-chemotherapy drug for treatment of ovarian cancer.
The Port of Houston Authority has appointed Ben Line Agencies as its representative to promote direct trade between Asia and Houston. The Port Commission approved a two-year contract with the Singapore firm to help increase foreign waterborne tonnage. The commission says this helps position the Port of Houston in one of the fastest-growing regions in the world for cargo shipping, establishing a presence in 80 cities across 15 countries, including Cambodia, China, Hong Kong, India, Indonesia, Japan, Malaysia, Myanmar, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam.
The nation's economic growth tailed off sharply in the spring and probably isn't faring any better now. The Commerce Department reports that the economy expanded at a feeble 1.7 percent annual rate in the April-to-June quarter. The new reading is a tad higher than the 1.6 percent growth estimated a month ago. But it marks a sharp slowdown from a 3.7 percent growth rate logged in the first quarter and doesn't change the big picture: the economy has been losing momentum since the end of last year. Many think the economy grew at around the same anemic pace, or slightly worse, during the July-to-September quarter. Little improvement is expected in the final quarter of this year.
The Postmaster General says he'll be considering the options, now that the independent panel that oversees the Postal Service has voted to reject a rate increase. The post office wanted to boost the cost of a first-class stamp from 44 to 46 cents. A coalition of postal customers is applauding today's vote, saying it saved tens of thousands of jobs.
Congress has extended a policy that allows homeowners in pricey real estate markets to secure government-backed mortgages of nearly $730,000. Lawmakers have voted to keep the maximum size of loans guaranteed by Fannie Mae and Freddie Mac and the federal housing administration at the current level through the end of 2011. Those limits apply in expensive areas like New York and San Francisco. Without the change, the limits would have fallen to about $625,000. The limit was $417,000 before 2008 and remains at that level in most of the country. The measure was included in a temporary spending bill that lawmakers sent to President Barack Obama.
Rates on 30-year mortgages matched the lowest level in decades and rates on 15-year loans dropped to their lowest point in nearly 20 years. Mortgage buyer Freddie Mac says the average rate for 30-year fixed loans fell to 4.32 percent, the lowest on records dating back to 1971. That's down from 4.37 percent the previous week and equal to the average rate reached four weeks ago. The average rate on 15-year fixed loans fell to 3.75 percent, the lowest on records dating back to 1991. Rates have fallen since spring as investors poured money into the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.
AIG has reached a deal to repay the government billions of dollars in assistance it received during the credit crisis. The U.S. Treasury will swap debt it currently holds in AIG for common stock and then sell those shares over time. New York-based American International Group was one of the hardest hit financial companies by the credit crisis.
The Obama administration is close to saying what sort of gas mileage it envisions for cars of the future. Environmentalists are pushing for an average of at least 60 miles per gallon for new vehicles by 2025, exceeding the mileage of the most fuel-efficient hybrids on the road today. But automakers argue that pushing gas mileage standards up that quickly could force them to raise prices higher than drivers can afford. The administration is expected to give its view Friday in the form of early planning for mileage standards for the 2017 through 2025 model years. Rules already in place will boost the fleet average to 35.5 mpg by 2016, an increase of more than 40 percent over current requirements.
Dollar Thrifty shareholders have rejected a buyout offer from Hertz, giving an opening for rival bidder Avis' offer for the car rental company. Shareholders voted down Hertz' proposal at a special shareholder meeting in Chicago, the Wall Street Journal reports. Dollar Thrifty's board had said it preferred Hertz's offer to one by Avis. Avis' offer is still on the table.
McDonald's denies reports it's considering dropping health care coverage for some employees in response to a provision of the health care overhaul. The Wall Street Journal reports, citing a memo from McDonald's to federal officials, that McDonald's has warned regulators it could drop its plan for some 30,000 workers unless the government waives a new requirement in the health care overhaul. The company says it has been speaking with federal agencies to understand the law.