Thursday June 29th, 2006
by: Ed Mayberry, June 29, 2006 5:06:00 am
Federal investigators are accusing traders at BP of cornering the U.S. propane market in the winter of 2004 to manipulate prices and drive heating costs higher for rural consumers. In a lawsuit against the company's BP Products North America unit, the Commodity Futures Trading Commission says that traders, with senior management's consent, "purchased enormous quantities of propane to establish a dominant'' position in the market. The suit further claims the company withheld fuel from the market to drive prices higher, with the intent of reaping as much as $20 million in profits. A BP spokesman says "market manipulation did not occur'' and says the company will fight the charges in court. However, the spokesman concedes that several employees failed "to adhere to BP policies governing trading activities'' and says they were fired.
Federal regulators declared that a utility district in Seattle doesn't have to pay more than $120 million for canceling its contract with Enron. The Federal Energy Regulatory Commission said it was denying Enron's claim because the company's financial fraud induced the Snohomish County Public Utility District to enter into the contract. The decision apparently ends a years-long struggle by the utility that helped reveal the extent of Enron's misdeeds. It was the Washington utility that uncovered and transcribed profanity-laced audiotapes of Enron traders conspiring to steal money from "those poor grandmothers'' in California during the energy crunch of 2000 and 2001.
FERC has approved other Enron settlements related to power contracts during California's energy crisis, according to Reuters. The approval of the most recent of two dozen settlements effectively ends litigation between Enron and the City of Santa Clara, the Metropolitan Water District of Southern California and the Valley Electric Association of Nevada.
The NABC conference on India's energy challenges at the Hilton Americas-Downtown detailed ways companies and investors can do business with that country. Organizer Pradeep Anand says there are some potential solutions to India's need for new resources, but they are not without geopolitical implications.
"The gap is substantial, however the solution to that is trans-national pipelines coming in from countries that are not necessarily on the United States' (as well as global, what I would call G8 countries') friendly list, mainly Myanmar and Iran. So the U.S. position is to discourage it. But at the end of the day, the Indian entrepreneurs, as well as the industrial infrastructure, basically says whoever delivers gas at our borders, we're willing to pay market price for it and consume it."
Anand says India's growing economy requires new investments in oil and gas, and this forum is a chance to get the right people together.
"There's always been this image of India, you know--snake charmers, elephants and all these Bollywood kind of image of India, which is changing, thanks to some of the IT revolution that took place. India is a very powerful scientific country, and with a tradition that goes back 3,000 years. And this conversation will help change that perception, especially in the oil and gas industry. And once these connections start kicking in, you've set off a process to the benefit of both the United States and India."
Participants discussed doing business in India, and looked at energy alternatives, LNG and India's transition to a multi-energy environment.
"The audience includes oil companies, oil and gas producers in the United States, people who have operating expertise. It also includes service companies such as the Big Blue and Big Red and the others, and also service companies, also accounting firms, legal firms. But a majority of them are from engineering firms and oil and gas industry folks."
Anand says the India energy business forum will be an annual event.
Arab League Secretary-General Amr Moussa called on the U.S. to assume its role as the "honest broker'' in the Mideast peace process. He told the Associated Press in Houston that the Palestinian-Israeli conflict must be Washington's top priority in the region. Moussa voiced concern as Israel, increasing pressure on Palestinian militants to release an Israeli soldier taken captive, sent warplanes to bomb a Hamas training camp. Moussa made the comments on the sidelines of the U.S.-Arab Economic Forum in Houston. Moussa said attention must be paid to other crisis areas in the Middle East, such as Sudan's Darfur region. But he says the on-going Israeli-Palestinian struggle is key to the region's long-term stability.
The Labor Department is sending a $13.4 million emergency grant to Texans left jobless by 2005 hurricanes. U.S. Senators John Cornyn and Kay Bailey Hutchison say the National Emergency Grant to the Texas Workforce Commission will provide temporary jobs and job training. The Labor Department previously awarded a $75 million National Emergency Grant to Texas after Hurricanes Katrina and Rita. Cornyn's office says about 42,500 participants have been enrolled in programs through those funds. The new grant will allow for more participants. Katrina hit the Gulf Coast in late August. Rita made landfall September 24th in southeast Texas.
Hundreds of 2005 hurricane evacuees could be evicted because the Federal Emergency Management Agency will stop helping them pay rent. Nearly 13,000 households nationwide found out in April that they're losing rent subsidies. Most were cut off May 31st. Evacuees in Texas have until Friday or the end of July before their subsidies run out. FEMA paid rent on apartments and houses for about 58,000 evacuee households after Hurricanes Katrina and Rita. FEMA says evacuees were cut off if they were homeless before the storms, were using the money for other needs or were displaced from housing they didn't own. The cutoff affects about 3,900 evacuee households in Houston and 1,100 in Dallas. Those evacuees face a July 31st deadline.
Members of Congress say they have a good chance to end a drilling ban that was enacted a quarter-century ago on most of the country's offshore waters. They hope that states will be enticed by billions of dollars in potential oil and gas royalties into allowing offshore drilling. This bill would keep the ban in place within 50 miles of shore and allow states to continue the federal drilling moratorium up to 100 miles off shore if they act to do so every five years. The bill's authors also would revamp the revenue sharing agreement with the states, so they potentially would reap billions in future oil and gas royalties if they accepted drilling. But the issue remains a politically sensitive one. In the Senate, Florida's two Senators have vowed to filibuster any legislation that would end the moratorium.
The developer of the proposed Trans Texas Corridor has reached an agreement to build the final 40 miles of the State Toll Highway 130. The area stretches from Austin to Seguin. Under the plan, developer Cintra-Zachry will invest the $1.3 billion to build the road and will receive a 50-year contract to collect the tolls. The Texas Department of Transportation says the state's cut of toll revenue will begin with the first toll collected and will eventually reach a 50-50 split with the company. The highway will be a state-owned road while Cintra-Zachry will be responsible for the financing, design, construction, operation and maintenance over half-a century.
Governor Rick Perry says expansion of a military rail facility at the Port of Corpus Christi should cut down on the time it takes to load ships. Perry was in Corpus Christi today and praised the opening of the newly-expanded operation. He says military vessels will soon be able to double their ship-loading capacity--cutting down on the time it takes to depart. Perry in 2005 announced Texas would provide $5.2 million to upgrade rail facilities at the port. The governor says, due to new military deployments, thousands of soldiers are expected to deport to Iraq through the Port of Corpus Christi in October.
Anadarko Petroleum is selling its Canadian subsidiary to generate funds to pay for the $21 billion acquisitions of Kerr-McGee and Western Gas Resources. Anadarko has 575 employees in Calgary and other Canadian offices. Anadarko Chairman and CEO Jim Hackett says the divestiture is expected to proceed quickly.
Attorney General Greg Abbott today announced a Dallas company has been shut down over an alleged housing scam. Abbott sued FCI equities in April of 2005 under the Texas Deceptive Trade Practices Act. The suit alleged the scheme involved selling homes without valid property titles. The AG's office says mostly Hispanic consumers were told they could buy homes in the Dallas area for $20,000 to $40,000. After consumers bought the homes, they discovered their titles weren't valid. Some homes were in foreclosure, while others had been condemned. Abbott says the lawsuit resulted in a permanent injunction and default judgment against FCI Equities--plus several individuals. FCI Equities couldn't immediately be reached for comment.
The government says the first quarter was stronger than thought. Releasing a revision of economic growth for the first three months of the year, the Commerce Department reports Gross Domestic Product expanded at an annual rate of 5.6 percent. That's the strongest in two and a-half years. The previous estimate, released a month ago, was put at 5.3 percent. The latest figure mostly reflects an improvement in the country's trade deficit, which was less of a drag than earlier estimated.
The number of Americans filing first-time claims for unemployment benefits rose by 4,000 last week. The Labor Department says the seasonally adjusted annual total is 313,000 claims. At the same time, the four-week moving average of claims, which is less volatile, fell by 6,000 to more than 305,000. The government provides the monthly update on employment, measuring the June job market, a week from Friday.
Mortgage interest rates have been on the rise over the past week. Freddie Mac says that's the case with each of the main categories it tracks in its weekly survey. For example, the average for 30-year fixed-rate averages stands at 6.78 percent. That's up from 6.71 percent last week. It is the highest seen since April 2002. On 15-year, fixed-rate mortgages, the average is put at 6.43 percent. That's compared to 6.36 percent. And on one-year Treasury-indexed adjustable rate mortgages, the finance giant says the average is at 5.82 percent. That's up from last week's average of 5.75 percent.
Tenet Healthcare has agreed to pay $725 million to settle federal investigations of the Dallas-based hospital chain. The Justice Department and several U.S. attorneys have been investigating allegations that Tenet over-billed for certain Medicare payments before 2003. Tenet says the settlement will be paid over a period of four years and end all federal investigations. It also says it'll waive its right to pursue $175 million in certain past Medicare payments. The deal means there will be no finding that Tenet broke the law. However, Tenet President and Chief Executive Trevor Fetter says the company acknowledges that it mistakes in its conduct before 2003. In May, Tenet settled a three-year legal battle that included two trials by agreeing to pay a $21 million fine. It also promised to close or sell a San Diego hospital accused of making kickbacks to doctors for referring patients.
Sino Swearingen Aircraft is expanding its San Antonio facility--which means 850 new jobs. Governor Rick Perry today announced a $2.5 million Texas Enterprise Fund grant helped support the operation--which makes business jets. The Sino Swearingen facility is at San Antonio International Airport.
Travelers are considerably more confident in their safety while flying within North American cities than they are while traveling abroad. That's the major finding of the J.D. Power and Associates 2006 North America Airport Satisfaction Study done in conjunction with Aviation Week Magazine. According to the study, 47 percent of travelers feel very safe while flying within North America, compared with 13 percent who say that about traveling outside North America. While 30 percent say it's unsafe or very unsafe to travel abroad, just four percent of travelers feel the same about traveling domestically. The study also finds McCarran International in Las Vegas ranks highest in overall passenger satisfaction among large airports. Laguardia in New York gets top marks among medium-size airports. And Dallas' Love Field and Houston Hobby Airport rank highest in a tie for small airports.