Tuesday PM August 28th, 2007

Home prices suffer biggest decline since 1987...Consumer confidence index slips, although consumers remain confident...OPEC Secretary General sees no need to increase oil output...

National home prices fell 3.2 percent in the second quarter. It is the biggest decline since Standard & Poor's began its nationwide housing index in 1987. Macromarkets chief economist Robert Shiller says the declining residential real estate market "shows no signs of slowing down.'' The index tracks the price trends among existing single-family homes across the nation compared to a year earlier. The separate S&P/Case-Shiller index that covers 20 U.S. cities was down 3.5 percent from a year earlier.

Consumer confidence has slipped this month, amid the volatility in the financial markets and pain in the housing market. The Conference Board's August index dropped nearly seven points to 105. Even with the decline, the business research group's Lynn Franco says, overall, consumers remain confident. She says the data points to further economic growth in the months ahead. Measures of both expectations and the present situation saw declines. The survey is based on a sample of 5,000 U.S. households.

A federal judge in New York has overturned a bankruptcy court's decision in the Enron case that had sent shudders throughout Wall Street. U.S. District Judge Shira Scheindlin says that 2006 decision "threatened to wreak havoc on the markets for distressed debt.'' Scheindlin ruled Bankruptcy Judge Arthur Gonzalez was wrong to decide that holders of claims against a bankrupt company could see those claims wiped out--if they bought them from a seller who engaged in "inequitable conduct.'' The Bond Market Association, the International Swaps and Derivatives Association and the Securities Industry Association criticized the ruling. So did Merrill Lynch, Citibank and Barclays Bank. They'd asked Scheindlin to review the case.

The Secretary General of the Organization of Petroleum Exporting Countries said that he sees no need to increase oil output. Abdalla Salem el-Badri tells Dow Jones Newswires in an interview that there's no crude oil shortage. He blames U.S. refinery problems for sustained high oil prices. The International Energy Agency has urged OPEC to lift oil output when it meets September 11th in Vienna. The Paris-based organization said in its last monthly oil market report that world oil demand will probably outpace supply this winter. However, el-Badri says that if the group put more oil into the market, it would only add to stocks because U.S. refinery glitches are tightening demand.

Oil prices have risen following reports of problems at two U.S. refineries and amid expectations a midweek U.S. petroleum stocks report will show gasoline supplies fell again. There have been concerns about gasoline supplies after a recent fire at a Chevron refinery in Mississippi and talk of production cuts at a Citgo refinery in Texas. A crude distillation unit at a Valero refinery in Port Arthur has been restarted after being down about a week.

Marathon Petroleum is exploring a proposed $1 billion expansion of its refinery in Detroit. Company officials say the project would raise gasoline supplies in Michigan and create 135 permanent jobs and 800 temporary construction jobs. Marathon is studying a 17-acre Brownfield site adjacent to its 200-acre southwest Detroit refinery. The additional equipment there would allow the facility to process heavier Canadian crude oil. The plan would expand the refinery's capacity to 115,000 barrels per day from 100,000 barrels. Marathon in 2005 raised refining capacity at the Detroit facility from 74,000 to 100,000 barrels a day. Houston-based Marathon Petroleum will hold community open houses this week with hopes of gaining support for the expansion.

Bio photo of Ed Mayberry

Ed Mayberry

Local Anchor, All Things Considered

Ed Mayberry has worked in radio since 1971, with many of those years spent on the rock 'n' roll disc jockey side of the business...