Tuesday AM March 6th, 2007
by: Ed Mayberry, March 6, 2007 5:03:00 am
Demand for oil in the U.S. fell last year despite record demand for gasoline and distillates, which include heating oil and diesel fuel. The Energy Information Administration says demand in 2006 was down by 105,000 barrels a day--or about a-half percent--to just under 20.7 million barrels a day. The decline was the first since 2001 and the biggest since 1991. EIA data show lower demand for jet fuel and a record 26 percent plunge in use of heavy residual fuel oil overcame the growth elsewhere. In the futures market, front-month oil futures prices rose to their highest-ever level on the New York Mercantile Exchange. They hit $78.40 a barrel on an intraday basis and $77.03 on a daily settlement basis--on July 14th.
A key measure of the non-manufacturing sector of the economy is pointing to continued growth, but at a slower pace. The Institute for Supply Management says its Services Sector Index came in at 54.3, compared with a January reading of 59. Analysts had been looking for a reading of 57.5. The increase in business activity was the 47th in a row. A reading above 50 indicates the sector is expanding, while anything below 50 suggests a slowdown.
The U.S. Supreme Court has turned aside AT&T's appeal of a ruling in a securities fraud lawsuit. A lower court had ruled that the class-action lawsuit against the San Antonio-based telecom could proceed. The dispute stems from AT&T's purchase of cable company MediaOne in June 2000. AT&T offered a combination of cash and stock for each MediaOne share and sent two letters to MediaOne shareholders urging them to make the exchange. The company then hired Georgeson Shareholder Communications to encourage any MediaOne shareholders that hadn't responded to previous letters to exchange their shares. But Georgeson said it would provide the exchange service for $7 per share of MediaOne stock, without specifying the exchange could be done for free through AT&T. A MediaOne shareholder accused AT&T and Georgeson of civil fraud by not mentioning the free exchange option. The suit was filed in Illinois state court. At issue is whether the case involves securities fraud and therefore should be moved from state to federal court. Under a 1998 federal law, a class-action lawsuit alleging securities fraud may be removed from state to federal court to ensure uniform federal securities law enforcement.
Royal Dutch Shell said it's won two permits to explore in the oil- and gas-rich undersea region off northwestern Australia. One of the permits would allow or geological studies, the drilling of exploration wells and acquisition of seismic data in the eastern Browse Basin. Shell would hold half of the equity in that permit, with Nexus Energy Limited holding the other half. The permit covers an area of about 733 square miles about 200 kilometers off the coast of the Kimberly region. The other permit covers an area of about 1,200 square miles in the Carnarvon Basin, about 60 miles off the same coast. Chevron holds half equity in that permit, with Shell and Irving-based ExxonMobil each taking a quarter. Shell also has interests in other exploration projects in the region.
Houston-based Kinder Morgan has sold $644.4 million in shares of the Corridor Pipeline System to Inter Pipeline Fund of Canada, according to the Houston Business Journal. The pipeline transports diluted bitumen from the Athabasca Oil Sands Project near Fort McMurray, Alberta, to the Scotford Upgrader near Fort Saskatchewan, Alberta.
Houston-based Creekstone Partners has purchased a pair of office buildings in the Research Forest area of The Woodlands, according to the Houston Chronicle. The Woodlands Development Corporation continuously sells assets such as the Research forest buildings to finance new projects. Since being formed in 2004, Creekstone Partners has acquired about $660 million in property in Houston and other cities, including 5,500 apartment units in complexes across the country.
Five new On the Border Mexican Grill & Cantina restaurants are being developed in San Antonio, Corpus Christi, Harlingen and Laredo, according to the Houston Business Journal. The development is part of Dallas-based Brinker International's plan to expand domestic and international franchise ownership of its brands from 20 to about 30 percent this year. There are currently ten On the Border restaurants in south Texas. The chain re-entered the Houston market in November in the Spring Cypress area. Locations are also planned in Humble, Rosenberg and Pearland by next spring. There are 144 locations in 32 states.
The head of the National Trust for Historic Preservation is calling on members to protest Texas' decision to scrap a program to beautify museums, trails, parks and other amenities because of a shortfall in federal transportation funding. Richard Moe, president of the Washington, DC-based group, says Texas is the only state in the country that has responded to recent cuts in federal highway spending by getting rid of its statewide transportation enhancement program. The money was used for projects such as provisions for bicycles and pedestrians, preservation of transportation facilities such as railways, control or removal of billboards and acquisition of scenic easements. The state cut the funding last fall after the Texas Department of Transportation learned it would not get $305 million in federal dollars because Congress needed the money for other things, including the war and hurricane response efforts. To make up the difference, the state targeted the enhancement program, worth $450 million over the current highway bill's six-year life span. In a letter asking members to complain to Governor Rick Perry, Moe says the cut was a "very bad and ill-informed move'' that he worried could spread to other states.
Despite recent incidents in which passengers spent more than ten hours waiting on runways, the government says chances of being stuck on an airliner for hours are slim. According to the Bureau of Transportation Statistics, passengers sat for two-to-five hours on more than 7,300 flights last year before taking off, but that's just a tiny fraction of the last year's more than 7.1 million flights. On Valentine's Day of this year, passengers on ten JetBlue airliners spent from five to ten and-a-half hours sitting on runways at New York's JFK Airport because of icy weather and gate congestion. That incident prompted the introduction of a bill in Congress that would prohibit airlines from keeping travelers stuck on the tarmac for longer than three hours.
Backers of a high speed rail corridor through Texarkana say the interest and need for the passenger and freight service is still alive. The bi-state city, in Arkansas and Texas, sits on one of the links for high-speed rail service, as designated by the Federal Railroad Administration in 2000. Peter Lecody, president of Texas Rail Advocates, says funds are not currently available to develop the south central high speed rail corridor so the next step would be to coordinate the various groups to seek federal and state funding. As envisioned, the service would reach speeds of 90 to 110 miles per hour. Texas rail advocates says the service could provide a reliable, safe alternative to intercity travelers, give shippers greater speed, and spur development.
The Houston Business Journal is seeking nominations for its first Best CFOs of the Year Awards, who will be announced at a luncheon on May 18th during the three-day HBJ Celebrate! Enterprise event. The closing date for nominations, which should include a brief summary of the reasons for the nomination, is March 9th. Nominations must be made using the newspaper's online link to Best CFO of the Year.
A Dallas-based pizza chain that drew national attention by temporarily accepting Mexican currency for pizzas announced it's extending the policy. The "Pizza por Pesos'' program that Pizza Patron launched in January generated plenty of hate mail and some death threats. It had planned to end the program at its 63 locations nationwide at the end of February. But the company announced the program will now continue until the end of April. Pizza Patron founder and chief executive Antonio Swad says the program has carved a market niche for the chain by serving an underserved market in the Latino customer.'' Pizza Patron has said 60 percent of its customers are Latino. Its restaurants are in mostly Hispanic neighborhoods, and each manager must be bilingual and live nearby. Most of Pizza Patron's locations are carry-out only. The take-home menus are in both English and Spanish.