Monday PM February 11th, 2008
by: Ed Mayberry, February 11, 2008 5:02:00 am
Venezuelan President Hugo Chavez is threatening to wage "economic war'' with the United States. Chavez says he will cut off oil sales to the United States if ExxonMobil wins court judgments to seize billions of dollars in Venezuelan assets. Irving-based ExxonMobil has gone after the assets of the Venezuelan state oil company in U.S., British and Dutch courts. That's part of its challenges to the Chavez government's nationalization of a multibillion dollar oil project. A British court has issued an injunction "freezing'' as much as $12 billion in assets. Chavez has repeatedly threatened to cut off oil shipments to the United States, which is Venezuela's top client, if Washington tries to oust him. Chavez's latest warnings appear to extend that threat to attempts by oil companies to challenge his government's nationalization drive through lawsuits. Venezuela accounted for about 12 percent of U.S. crude oil imports in November, the latest figures available from the U.S. Energy Department. The 1.23 million barrels a day from Venezuela makes that country the fourth-biggest U.S. oil importer behind Canada, Saudi Arabia and Mexico.
Firefighters in Georgia may turn to sand in the effort to put out fires still smoldering in the aftermath of last week's deadly sugar refinery explosion. They've been using helicopters to dump Savannah River water onto smoldering hotspots at the Imperial Sugar refinery, four days after the explosion. A fire chief says crews are hoping to smother the flames by using construction cranes to dump sand into silos. The flames have stalled the search for two workers who have been missing since last Thursday's blast near Savannah. The body of one worker was found Sunday before the search was halted at sunset. The discovery pushed the death toll to six. Seventeen people are still in critical condition with severe burns. Imperial Sugar headquarters is in Sugar Land, Texas. One of the three 100-foot storage silos blew up at the plant outside of Savannah. The blast may have been caused by combustible sugar dust. Officials are concerned that the burning sugar could cause the silos to collapse.
Climate change and the world economy are major topics at the Cambridge Energy Research Associates annual conference this week in Houston. While the focus is on oil and natural gas, electric and nuclear power, topics will include renewable power and water resources. CERA researcher David Hobbs says the world economy will be considered in discussions on refinery expansion.
"Well, it certainly is going to be a key area of discussion, both in terms of the physical capacity of refining, but also whether the structure of that capacity is appropriate for the import barrels that will increasingly become available. What we're seeing is ever-growing demand in the middle of the barrel for distillates, particularly and to an extent for gasoline. But the supply of oil and associated liquids is increasingly made up of heavy oils and of light gas-related liquids. And so there's this mismatch on how the global refining slate adjusts to that will be a major global challenge which indeed may well require the building of holding new capacity as well as changing the configuration of existing capacity over time. Clearly, the rate at which the costs of building capacity have gone up is a source of alarm, but from consumers' perspectives, that has also fed through to higher prices that they pay for energy, and the impact on the economy is something that's in the front of a lot of people's minds. In fact, we've got Alan Greenspan, Ken Rogoff and Bob Schiller, three of the most eminent economists in North America on the program to discuss, amongst other things, the linkage between energy and the economy. I think this is one of the strongest line-ups that we've had certainly in my memory, and I think that's reflected by record numbers of registration to attend the conference. All in all, I think this is going to be the strongest CERA week ever."
This first day was made up of invitation-only sessions with economists talking about the U.S. housing crisis and the outlook for China's economy.
A survey says the national average price for gasoline fell about three cents over the last two weeks. According to the Lundberg Survey, the average price of self-serve regular gasoline on Friday was $2.94 a gallon, mid-grade was $3.07 and premium was $3.18. Of the cities surveyed, the cheapest price was in St. Louis, where a gallon of regular cost $2.76, on average. The highest was in Honolulu at $3.35.
Yahoo! is calling Microsoft's $44.6 billion takeover bid too low. The Internet portal giant appears to be betting that it can get a higher offer from the world's largest software maker or find another way to get a comparable payoff for its shareholders. Yahoo!'s negative reply had been widely expected after word was leaked during the weekend. In its formal response, Yahoo! says its board concluded that Microsoft's unsolicited offer "substantially undervalues'' the company. At the same time, Yahoo! indicates that it could be drawn to the negotiating table if Microsoft ups the ante, without mentioning a price. Investors appear confident that Microsoft wants Yahoo! Badly enough to raise the stakes. Yahoo!'s stock price had dropped by more than 40 percent in the three months leading to Microsoft's bid, valued at $31 per share when it was announced February 1st. The offer was 62 percent above Yahoo!'s market value at the time. Many analysts believe Microsoft will eventually raise its bid to $35 to $40 per share, sweetening the pot by $5 billion to $12 billion in an effort to negotiate an amicable sale.
TV producers are expecting writers to be back on the job as early as Wednesday following a move by the Writers Guild to end a three-month-old walkout that's crippled the entertainment industry. Union leadership is backing a tentative three-year contract offer from the studios and is asking members to vote separately on whether to end the strike. Writers will meet in New York and Los Angeles Tuesday. The proposal offers writers a share of digital media revenue, including compensation for TV shows and movies delivered over the Internet. While one union leader says the deal isn't all they hoped for or deserve, he claims it's still the best one the guild "has bargained for in 30 years.'' Writers have offered resounding support for the plan. They'll take a formal mail-in vote to ratify the contract.
Key economic data due this week doesn't arrive until Wednesday. That's when the Commerce Department reports on January retail sales. After the lousy same store sales numbers posted by retailers last week, expectations for this government report are low. Analysts expect to see no change in the overall number. Excluding auto sales, they see retail sales rising 0.2 percent. Among the other reports due this week is a reading on the nation's large trade imbalance. That December snapshot is set for Thursday morning. On Friday, word is expected on January industrial production from the Federal Reserve.