Wednesday PM October 24th, 2007
by: Ed Mayberry, October 24, 2007 5:10:00 am
BP has reportedly agreed to plead guilty to criminal environmental charges. Dow Jones Newswires also reports the British oil giant to pay $50 million to settle a U.S. federal investigation into the deadly 2005 Texas City refinery explosion. The blast killed 15 people and injured more than 170 others. Dow Jones cites unidentified sources people familiar with the situations. The report contains no specifics on what the environmental charges might involve. But Dow Jones reports the Texas City settlement levies a corporate fine on BP for Clean Air Act violations. But the report says the deal doesn't include criminal fines or charges against BP employees who may have contributed to the explosion. A BP spokesman declined to comment when reached by the AP overnight, and Justice Department officials couldn't immediately be reached for comment.
The National Association of Realtors says sales of previously-owned homes dropped eight percent last month. That's the biggest drop since the trade group began keeping records in 1999. With weakness in sales, there was more pressure on home prices. The group says, on a national basis, the median price fell more than four percent to nearly $212,000. That marks 13 out of the past 14 months where the year-over-year sales price has dropped. Thursday, the government is to report on the status of new home sales. That number is also expected to show a decline.
Centex cut prices on many of its homes and shifted to offering more traditional mortgages this summer. But that wasn't enough for Dallas-based Centex to stave off a sharp drop in sales--and the homebuilder has posted a huge quarterly loss. Chief Executive Timothy Eller said the market deteriorated further over the quarter. The price of the average home Centex sold in the July-September quarter fell eight percent, to $280,816. The cuts helped boost sales in southern California and Las Vegas, but previously solid markets such as Houston were hit hard by lack of available loans. Centex--in its second quarter ending September 30th, swung to a loss of $643.8 million.
Pemex says at least ten oil workers died when a drilling rig hit an oil platform in the Gulf of Mexico—about 20 miles off the Dos Bocas. Some other workers--plus five rescuers--are missing. Pemex says rescuers have pulled have least 58 workers from storm-tossed waters--but have yet to control the oil leak or natural gas release from Tuesday's accident. Mexico's oil monopoly says at least 18 workers were still either floating at sea in life rafts or were unaccounted for. Poor weather conditions are a factor in the rescue attempt. The Mexican Navy has dispatched helicopters and boats. The company says more than 80 workers abandoned a subcontractor's Usumacinta platform after it hit the Kab 101 light-production rig during 25-foot waves. Winds were gusting to 80 mph.
Crude futures have risen after the government reported large declines in supplies of oil and gasoline supplies over the past week. Near-month crude was up more than a dollar a barrel, topping $86 in New York. The Energy Department says crude oil inventories dropped by more than five million barrels last week. Analysts had been expecting an increase. Distillates inventories also were lower. Analysts say much of the decline in crude supplies was due to a sharp drop in imports. At the pump, the national average price of a gallon of gas rose slightly overnight to $2.82, according to AAA and the Oil Price Information Service. Gas prices, which typically lag the futures market, have risen 6.5 cents in a week and a half.
Merrill Lynch, the world's largest brokerage, says the summer's credit crisis triggered a bigger-than-expected $7.9 billion write-down for the third quarter. Bad bets on mortgage securities and leveraged loans used for corporate takeovers caused the brokerage's first loss in six years. Merrill Lynch's quarterly performance was the worst by far of the Wall Street firms, all of which were slammed by the market turmoil. CEO Stan O'Neal says the company continues to face uncertainty on the impact of its mortgage-related investments. He also said the company, to help lessen any risk on its balance sheet, might shed non-core businesses. Merrill reports a loss after paying preferred dividends of $2.3 billion.
American Airlines has reached a deal that creates a pecking order for pilots wanting to move up from its American Eagle subsidiary to the big carrier. The Fort Worth-based airline says that's part of a tentative agreement with unions to settle three disputes over how Eagle pilots can move up to American Airlines. The agreement was announced by the Air Line Pilots Association, which represents eagle pilots, and the Allied Pilots Association, which represents their counterparts at American. The deal calls for pilots laid off by American Airlines in recent years to be recalled first, then pilots who fly American Eagle's smaller planes can move up to the mainline carrier. Pilots at American are paid more than those at Eagle, both of which are owned by Fort Worth-based AMR Corporation.
The pilots union at American Airlines says it's seeking pay raises of nearly 49 percent to make up for inflation since 1992. The Allied Pilots Association earlier this year sought a 30.5 percent increase. The union also renewed a call for signing bonuses equal to 15 percent of a pilot's pay from July 2006 to the day a new deal is reached. And the union wants additional compensation tied to company performance. A company spokeswoman says the proposal would dramatically increase pilot costs and make Fort Worth-based American less competitive with other carriers. Airline executives say pilots earn $136,000 annually--on average.
A tentative contract between Chrysler and the United Auto Workers union continues to meet resistance. Members of two of three UAW locals in Kokomo, Indiana, have overwhelmingly rejected the agreement leaving ratification even more in question. Eight union locals representing more than 16,000 workers have now turned down the landmark pact. Six locals representing about 9,100 workers have approved it. If the contract is voted down, the UAW could return to the bargaining table or call for a revote.
Texas community colleges will get $154 million to pay for employee health insurance. The deal was reached by Governor Rick Perry, Lieutenant Governor David Dewhurst and Texas House Speaker Tom Craddick. Community college officials have warned of property tax increases, tuition hikes and program cuts to compensate for $154 million in funds Perry vetoed this summer. In announcing the deal, the leaders are asking college officials to rescind tuition, fee or tax increases adopted for this year or any planned for next year--meant to offset the original veto. Perry has said he vetoed the money because lawmakers put provisions into the budget forbidding use of state money for benefits of employees whose salaries are paid with local money. The new money will only go to community college employees who are paid with state funds.
The "No Nukes'' musicians of the 1970s have revived their fight on Capitol Hill. Bonnie Raitt, Jackson Browne and Graham Nash urged Congress not to approve federal loan guarantees for new nuclear power plants. The musicians argue that approving a new energy bill would be a "virtual blank check from taxpayers'' to help build more nuclear plants. Spokesman Steve Kerekes of the Nuclear Energy Institute says it's a debate the musicians will lose because nuclear energy has proven its value to the country.