Skilling, Lay prepare for January 30th trial…Texas gasoline prices slightly lower this week…Minerals Management Service says at least one-sixth of region’s daily oil production will still be off line at start of next storm season…
Former Enron CEO Jeffrey Skilling says his 20-lawyer team is ready for trial. Skilling sat down with the Associated Press in a rare interview Thursday before the courtroom battle slated to begin January 30th in Houston. Unlike his co-defendant, Enron founder Ken Lay, Skilling didn’t discuss the case or lay out his defense on advice of his lead trial lawyer. Daniel Petrocelli accompanied Skilling to the AP interview. His lawyer limited Skilling’s comments to trial preparations and how the aftermath of Enron’s 2001 collapse has affected his life. Skilling says for the first couple of years, it was “surreal.” Skilling notes that he’s said unequivocally that they didn’t do anything wrong. He says there was no criminal intent. Skilling faces 35 counts of fraud, conspiracy, insider trading and lying to auditors. Lay faces seven counts of fraud and conspiracy. Both have maintained their innocence. Prosecutors contend Skilling either knew about or participated in schemes to hide Enron’s wobbly finances from investors. Skilling says he and his wife, former Enron corporate secretary Rebecca Carter, don’t go out much. He says strangers have made nasty comments, but others have expressed support as well.
Federal prosecutors tell defense lawyers in a letter that they will seek to drop four wire fraud charges against Skilling stemming from the actions of former Enron Chief Accounting Officer Richard Causey. Causey was a defendant in the case until pleading guilty on December 28th to a fraud charge. He’s agreed to cooperate with prosecutors. Prosecutors would also eliminate charges over several deals involving off-book partnerships created by Enron’s former Chief Financial Officer Andrew Fastow. Fastow has pleaded guilty to fraud charges and is cooperating in the case against Skilling and Lay. Skilling would now face 31 criminal charges while Lay faces seven.
Texas gasoline prices are a shade lower this week than last. The weekly AAA Texas gas price survey today found the retail price of regular self-serve gasoline averages $2.27 per gallon in Texas. That’s down just a penny. Dallas still has the costliest gas, averaging $2.29 per gallon. That’s down two cents. Corpus Christi has the cheapest gas at $2.17–down four cents. But auto club spokeswoman Rose Rougeau warns that the lives of the decreases might be brief. She says U.S. concern over Iran’s nuclear program and violence in oil-rich Nigeria have kept crude oil prices over $65 a barrel. She says if prices stay there, motorists should see no relief from high fuel prices. The national retail price for regular self-serve is averaging almost $2.34 per gallon. That’s still nine cents more than last week.
The Gulf of Mexico’s offshore petroleum industry is far from recovering from Hurricanes Katrina and Rita. A federal agency says at least one-sixth of the region’s normal daily oil production will still be off line at the start of next storm season. The Minerals Management Service, which manages federal offshore leases, says Katrina and Rita destroyed 115 of the gulf’s 4,000 production platforms and damaged another 52. The storms’ combined fury also damaged 183 pipelines, including 64 classified as major. The MMS says only 22 had been returned to service. There are about 33,000 miles of petroleum pipelines in the Gulf of Mexico, 22,000 miles of which were exposed to the two storms. As of this week, the MMS says 396,000 of the gulf’s normal daily production of one and a half million barrels of oil were being kept from market because of storm damage. Natural gas production remains at 1.8 billion cubic feet, down from the normal daily production of ten billion cubic feet of natural gas. The MMS projects future repair work will be slow. Hurricane season begins June 1st.
The largest oil industry trade group sees big challenges in the year ahead. The American Petroleum Institute says damage from Hurricanes Katrina and Rita along the Gulf Coast is still hurting. API chief economist John Felmy says the problems caused by the storms have pushed prices higher, resulting in decreased demand. He says offshore production of oil and natural gas is still operating substantially below pre-hurricane rates. An API report shows refinery inputs are still down nearly five percent from a year ago. And output is also down because storm-damaged refineries are not fully restored. Felmy says the oil industry also will struggle with a requirement to use ethanol in gasoline starting in May and the introduction of ultra-low sulfur diesel fuel on June. He says these are “major fuel specification changes, which could be a real challenge for the industry in terms of supplying fuel.”
The Coast Guard says a barge spilled up to three million gallons of oil in the Gulf of Mexico last year after hitting a submerged drilling platform wrecked by Hurricane Rita. Coast Guard officials tell the Mobile Register the November 11th spill off the Louisiana and Texas coasts might have been avoided if the platform’s owners had marked the wreck with a lighted buoy. The wrecked oil platform was marked only with floating plastic balls described as cherry fenders. The balls are not lighted and are difficult to see at midnight, when the accident happened. The spill from the double-hulled tanker cost $35 million to clean up. Federal records show at least 167 Gulf platforms were damaged or destroyed during the 2005 hurricane season. At least two more vessels have collided with submerged platforms since the November 11th accident. Officials with the U.S. Minerals Management Service told the paper they don’t know if lighted buoys have been placed at any of the 115 wrecked platforms that remain in the Gulf.
Texas’ unemployment rate fell to 5.1 percent in December as the state finished 2005 with 1.6 percent job growth. That’s according to monthly figures released today by the Texas Workforce Commission. The report says the state had an unemployment rate of 5.3 percent percent in November before adding 13,400 jobs. That gave the state an estimated 153,500 more jobs than at the start. The jobless rate in the Beaumont-Port Arthur area returned to pre-Hurricane Rita levels, falling to 7.3 percent from 8.6 percent in November. The rate in that area spiked to 11.6 percent in October–the first full month after Rita stuck the Gulf Coast. The education and health services sector saw the biggest gain in December with 3,800 new jobs. Professional and business services added 2,400 positions. Construction jumped by 1,600 jobs, and leisure and hospitality added 2,600 positions. Natural resources and mining added 500 jobs in December. Houston’s rate dropped to 5.3 percent in December, from the previous month’s 5.9 percent. Statewide, the unadjusted unemployment rate was 4.8 percent, down from 5.2 percent in November.
Analysts think consumer optimism is still growing. The estimate of economists surveyed by Dow Jones Newswires and CNBC is for a reading of 93. That’s up from the final December reading of 91.5, but still below the December 2004 level of 97.1. Jim O’Sullivan, senior economist at UBS Securities, says the preliminary indicators for early January have been mixed. He notes that while the stock market has been strong, gasoline prices have started to rise again.
Some industry economists say construction of nonresidential buildings should be strong early this year in Texas and elsewhere. Housing starts and applications for home-building permits fell in December, and the inventory of unsold homes has hit record levels as new houses outnumber buyers. Kenneth Simonson is chief economist for the Associated General Contractors of America. Simonson today told Dallas-area contractors and architects that he expects new home construction to taper off in 2006–but there’s enough momentum for a few good months. Simonson predicted an increase in manufacturing construction nationwide and in Texas. Texas Instruments is building a new semiconductor factory near Dallas. Toyota is building a truck plant in San Antonio.
Texas will likely see a tourism boost from China, with the state agency Texas Tourism taking part in the April Beijing International Travel and Tourism Market. The Beijing event gives international tourism organizations the chance to meet Chinese travel professionals and create alliances. According to Texas tourism, china is the world’s fastest-growing travel market in the world. Outbound departures from China have grown by more than 25 percent annually recently.
Entergy plans to sell Entergy Solutions, its retail electricity business in Texas. Louisiana’s largest utility owner says fourth-quarter earnings were dragged down by Hurricanes Katrina and Rita as sales to homes and businesses damaged by the storms were lost. The sale doesn’t affect Entergy’s regulated utility based in Beaumont, which serves customers in southwest Louisiana and southeast Texas.
Houston-based El Paso Corporation has closed the sale of its 50 percent ownership stake in Budapest, Hungary-based EMA-Power to an affiliate of Dunaferr Corporation for $39 million. The Houston Business Journal says the project has an energy capacity of 667 megawatts. EMA-Power sells electricity, turbo air, steam and softened water to the adjacent Dunaferr steel mill. This completes the sale of El Paso’s European power assets, supporting its debt-reduction program.
Oilfield services company Allis-Chalmers Energy has acquired Louisiana-based Specialty Rental Tools. The company rents drill pipe, spiral drill pipe, tubing work strings, blowout preventers, chock manifolds and various valves and handling tools for oil and natural gas drilling.
Houston-based Hispanic Teleservices Corporation has been bought out by Carlisle Group, a private equity firm. Hispanic Teleservices has call centers in Monterrey and Guadalajara, Mexico. Executive, sales and marketing offices are in Houston.
Rice Epicurean Markets is expanding its Web site-based grocery delivery program, according to the Houston Business Journal, beginning January 25th. The Houston-based supermarket chain will make all in-store products available, enabling purchases by category and allowing the changing weights, amounts and contents up to four hours before delivery. The Web site allows for home or office delivery in selected southwest Houston ZIP codes, or for pick-up service at one of five area grocery stores.
Texas Attorney General Greg Abbott announced more than $360,000 in funding to expand consumer law services at the University of Houston. The award is part of the liquidation of Mark Nutritional, which is currently under Chapter 7 bankruptcy in San Antonio. The AG sued the company in December 2002 for deceptive marketing and sale of weight-loss products known as “Body Solutions.” Southern Methodist University will also receive an award to supplement its consumer law program, bringing the total amount of funding to $727,000. Since it was impossible to refund money remaining in the bankruptcy case to some two million consumers who were owed $190 million, Attorney General Abbott urged the funding of the law clinics as an alternative, beneficial use of the funds. The UH Center for Consumer Law plans to provide assistance to consumers who experience problems with defective goods or services, debt collectors and identity theft, landlord-tenant problems or bankruptcy.
Waco has agreed to drop federal lawsuits against six dairies. In exchange, dairy farmers promise operational changes designed to reduce water pollution blamed for the foul taste and odor in Waco’s drinking water. deal was disclosed jointly by city officials and the dairies in Erath, Hamilton and Bosque Counties. Financial terms of the settlement are confidential and have been sealed by a federal judge. Waco also will withdraw opposition to state operational permits for the dairies. Waco sued 14 dairies in 2004, blaming them for the overabundance of phosphorus in the river–which is the main source of Lake Waco. The phosphorus from cattle waste causes massive algae blooms that can taint the water’s taste and odor. The city later reached settlements with eight dairies–some of which have ceased operations.
Agriculture Secretary Mike Johanns says the U.S. government is investigating a shipment of American beef to Japan. The shipment may have contained material considered at risk for mad cow disease. The discovery prompted Japan today to announce another ban on imported U.S. beef. Johanns says the plant that exported the meat in question is now barred from shipping more beef to Japan. He also said the government inspector who cleared the shipment may be disciplined, and that U.S. Agriculture Department investigators are being dispatched to Japan. He’s also sending extra inspectors to every plant that exports meat to Japan and has ordered unannounced inspections. Japan last month had partially lifted a two-year-old ban triggered by a mad-cow scare. That ban was ordered in 2003 following the discovery of a single case of mad cow in the United States. A second U.S. case of mad cow disease was confirmed in June in a Texas-born cow. Until the ban, Japan had been the top overseas market for U.S. beef, worth nearly $1.5 billion a year. And Texas was the top U.S. beef producer.
Baker Hughes in Houston today reports the number of rigs actively exploring for oil and natural gas in the U.S. rose by five this week–to reach 1,472. One year ago the rig count was 1,263. Texas slipped by one.