Gasoline prices continue upward climb…Ken Lay to testify on Monday at Enron fraud and conspiracy trial…Gulf of Mexico’s largest producing oil platform damaged by Hurricane Katrina could be running again just before start of new hurricane season…
Texas retail gasoline prices continue to skyrocket. The weekly AAA Texas gas price survey today shows regular self-serve gasoline prices are averaging $2.83 per gallon across the state. That’s ten cents more than last week and 71 cents more than last year. Dallas prices remain the state’s highest at $2.90 per gallon, which is nine cents more than last week. San Antonio has the cheapest gas at $2.76 per gallon–11 cents more than last week. The national average price is $2.83 per gallon–11 cents more than last week. Auto club spokesman Paul Gonzales says the price spike is fueled by speculator concerns over a recent decline in the nation’s gasoline inventories. That’s the result of a switchover by some refineries from MTBE to ethanol as a summer gasoline additive, leading to spot shortages of ethanol. Gonzales says refineries should complete their transition in three to four weeks and be back at full production. He says that should begin bringing retail gasoline prices down.
Some gas stations are running out of gas. Pumps ran dry at scattered stations around Philadelphia yesterday. A AAA spokeswoman says she knows of eight. Wayne Hummel of Liberty Petroleum says there’s a shortage of fuel in both the New York and Philadelphia areas. He says four of the 40 stations Liberty supplies in the Philadelphia region ran out of fuel in the last two days. The problem is a switch in fuel types. Federal law says refiners have to switch to fuel formulations containing corn-based ethanol. To do that, retailers must clean their tanks, remove all water and install extremely fine filters on their pumps. Terminals have to clean storage tanks, too, and that means empty tanks for a while.
Under an agreement announced today, U.S. Energy Partners–which owns and operates a large ethanol plant in Russell, Kansas–will be sold to a company from Dallas. Terms of the sale announced by U.S. Energy and White Energy were not disclosed.
Former Enron CEO Jeff Skilling has finished testifying in his and Enron founder Ken Lay’s fraud and conspiracy trial in Houston. Skilling spoke with reporters at the end of his two-week stand on the stand.
“Well, like I said, I am just, I am, I’ve waited a long time to be able to say something, and as you know, it’s very hard to be able to say something when, when all this is going on, and charges are being thrown around and all, and so I’ve waited a long time for it, and at this point, it’s in the, it’s in the jury’s hands.”
He said the seven-and-a-half days on the witness stand left him “exhausted” and “drained,” although he had more to say.
Lay steps to the witness stand on Monday after their usual Friday off in the federal trial. Both men hope to convince jurors that they aren’t liars and conspirators as alleged by federal prosecutors in the aftermath of one of the biggest corporate scandals in U.S. history. The government contends Skilling and Lay repeatedly lied to investors and employees about Enron’s health. Prosecutors contend the two knew their rosy statements masked flailing business ventures and fudged financial statements. The two defendants say no fraud occurred at Enron. They blame bad publicity and vanishing market confidence for Enron’s collapse into bankruptcy in December 2001.
The Gulf of Mexico’s largest producing oil platform knocked off-line by Hurricane Katrina could be running again in May, just before the start of this year’s hurricane season. Shell Exploration and Production Company, a unit of Britain’s Royal Dutch Shell, said today that repairs to its Mars platform will be finished this month, with partial production restored in late May. Hurricane season starts June 1st. The platform represents about five percent of the Gulf’s daily oil and gas production. Originally, Shell did not expect the platform to be producing until late 2006. The Mars platform is located about 130 miles southeast of New Orleans.
Oil and gas driller Baker Hughes said it’ll sell its 30 percent stake in seismic joint venture WesternGeco partner Schlumberger. Houston-based Baker Hughes says it’ll get $2.4 billion in cash for the stake. It says it expects to record a gain of about $1.05 billion on the sale, subject to adjustments, and get about $1.8 billion in cash proceeds. Baker Hughes says it’ll use the proceeds to buy back stock. Its board has approved the sale and increased its re-purchase authorization by $1.8 billion. Baker Hughes expects the sale to be completed by the end of the month. New York-based Schlumberger says WesternGeco generated $530 million in revenue in its latest first quarter. That’s up 40 percent from the year before.
Exxon Mobil announced today it is pumping Canadian crude oil directly to the Gulf of Mexico through a reconfigured 2,300-mile pipeline network. That’s an industry first that could provide a stable supply in an area prone to hurricane-related disruptions. The Irving-based company began shipping the oil to gulf refineries last month, creating an alternative to long tanker trips through the Panama Canal. It allows for about 66,000 barrels a day to move from Western Canada to Nederland. That still barely puts a dent in the production that remains offline from Hurricanes Katrina and Rita: 330,000 barrels a day. But analysts say it’s important because it’s a reliable supply from a nation devoid of political instability often confronting U.S. oil and gas companies.
Dallas-based Holly Energy Partners is surveying potential customers to determine interest in a proposed fuel pipeline from Salt Lake City to Las Vegas. The pipeline would carry gasoline, diesel and jet fuel. Holly’s proposed 12-inch pipeline would extend about 400 miles and could carry about 50,000 barrels of refined petroleum products a day. Holly says the pipeline would allow Utah refineries to take advantage of the growing supply of low-cost, heavy Canadian crude. At the same time it would provide access to a major, fast-growing market for refined products immune to the seasonal demand fluctuations common in the Utah gasoline marketplace.
Travelers are boarding planes in increasing numbers and are paying more for tickets, boosting revenue at U.S. airlines. But the carriers continue to struggle with jet fuel prices that could be headed even higher. Houston-based Continental Airlines, Dallas-based Southwest Airlines and Alaska Air Group all said today that their first-quarter revenue jumped by double-digit amounts, but only Southwest earned a profit. Airline executives worry whether consumers facing $3 a gallon gasoline and higher utility bills will have enough left over to take airplane trips, especially with airfares rising. Earlier this week, Fort Worth-based American Airlines added $10 to its leisure fares, a move that was quickly matched by most other major carriers. There have been more than a dozen increases since the beginning of last year, driving up prices on some routes more than 50 percent.
Drinks will be on the house for Southwest Airlines customers who fly from Dallas Love Field through Memorial Day. That was Southwest’s response today to a free ticket giveaway by rival American Airlines. American launched service at Love Field last month, challenging Southwest’s domination at the airport near downtown. But American executives admit that their Love Field flights have been operating only about half-full. American tried to shake things up last night by giving vouchers for free round trips between Love Field and four cities to about 20,000 fans at the Dallas Mavericks’ final home game of the regular season. Southwest Chief Executive Gary C. Kelly took credit for American’s offer. He says it was a response to Southwest’s new service from Dallas to St, Louis and Kansas City, which competes with American flights from nearby Dallas-Fort Worth International Airport. The free drinks will be offered on all Southwest flights from Love Field, beginning tomorrow and running through Memorial Day. A spokesman says there will be a two-drink maximum on alcoholic drinks.
The maker of 7-Up is looking to inject some fizz into the lemon-lime drink–by taking out artificial preservatives and calling the result a “natural” soda. The new soda is showing up on supermarket shelves now. Cadbury Schweppes plans a big advertising campaign beginning early next month. Soda sales are flat overall. 7-Up and other brands have been hurt as consumers drink more bottled water, tea and juices. But so-called natural sodas have prospered, growing nearly 15 percent a year despite the lack of a major national brand. That’s according to Spins, a San Francisco company that tracks such products. A spokeswoman for Cadbury Schweppes says the new 7-Up has the same amount of sweeteners but less sodium than previously versions. 7-Up has been around since 1929. It was the most popular lemon-lime soda in the country for decades. By 1990, it was passed by Sprite, made by Coca-Cola.
Oilfield services conglomerate Halliburton said today that first quarter income rose 33 percent, a boost driven largely by increased sales and robust rig activity in North America. The Houston-based company reported net income of $488 million, compared to $365 million. Revenue rose to $5.2 billion from $4.8 billion in the same period of 2005, short of Wall Street’s estimate of $5.62 billion. The news comes one week after the company announced its initial public offering for KBR, the company’s services group, which saw a 13 percent decrease in business. Halliburton attributed the drop to less military support work in Iraq.
Newspaper publisher Belo Corporation posted lower earnings today as higher expenses weighed down results. Dallas-based Belo–which publishes the Dallas Morning News–reported a 27 percent decline in first-quarter earnings as higher expenses outweighed revenue growth.
RadioShack said today its first-quarter profit plummeted 85 percent on disappointing cell phone sales and an asset and inventory write-down. The Fort Worth-based electronics retailer reported earnings of $8.4 million for the quarter ended March 31st. Revenue rose just three percent to $1.16 billion, and same-store sales fell by one percent. Acting Chief Executive Claire Babrowski says the results are worse than the company expected, and that the company clearly has more work to do to restore profitability. However, Babrowski said the results wouldn’t change RadioShack’s commitment to a turnaround plan announced earlier this year, which includes closing several hundred stores.
T-Mobile and Verizon are the big winners in the latest J.D. Power and Associates survey of customer satisfaction with their cell phone service. The study measures satisfaction in six categories–call performance and reliability, customer service, service plan options, brand image, cost of service and billing. The providers are ranked in the Northeast, mid-Atlantic, Southeast, North Central, Southwest and West. The study finds that overall customer satisfaction is up three percent from last year, particularly in areas where new service and more attractive pricing options are offered. Regarding those rankings, T-Mobile is the highest in all six regions, with Verizon Wireless tying for highest in five regions.