Gasoline prices rising once again…Governor signs state business tax restructuring law…Enron jury continues deliberations Monday; Lay mini-trial to begin second day…
Retail gasoline prices are back on the rise statewide after two weeks of modest declines. The AAA Texas weekly gas price survey released today shows Texas regular self-service gas prices averaging $2.85 per gallon. That’s three cents more than last week. The national price averaged $2.92 per gallon, up nearly four cents from last week. Auto club spokeswoman Rose Rougeau says crude oil prices fell to a five-week low last week and federal reports show gas supplies are building. But she says that’s not enough to counter rising concern about diplomatic tensions over Iran’s nuclear ambitions. Worries about rebel threats to Nigerian oil production and the upcoming hurricane season also are applying upward price pressure. The most expensive gas prices are in the Galveston-Texas City area, where it averaged $2.94 per gallon. That’s almost unchanged from a week ago. Corpus Christi has the cheapest gas at $2.71 per gallon, up five cents.
U.S. Energy Secretary Samuel Bodman called for expansion of domestic refining capacity during a visit Thursday to the Motiva Enterprises refinery, according to the Houston Chronicle. Motiva is considering a $3.5 billion expansion. Bodman said the domestic refining capacity is still less than what existed before last hurricane season. Bodman toured the plant with refinery manager Tom Purves and representatives from Shell Oil and Saudi Refining, the partnership that owns the Port Arthur plant and refineries in Convent and Norco, Louisiana.
Governor Rick Perry has signed legislation into law that restructures the state business tax to help pay for public schools and also delivers a major property tax cut. The measure Perry signed this week is a major component of his plan to revamp the way Texas pays for public education before a court-ordered deadline of June 1st. Perry says that the new law will help deliver a record $15.7 billion property tax reduction over three years. The measure is one of five school-finance bills passed during a 29-day special session that adjourned Monday. The law establishes a $3.4 billion tax expansion for next year. It changes the state’s business tax so more companies have to pay it. Perry praised the law as a reliable source of funding for schools and fairer to employers than the previous loophole-ridden franchise tax.
It’s a long weekend for the Enron jury. The 12 jurors will return to a Houston courthouse Monday to continue deciding the fates of Enron founder Ken Lay and former CEO Jeff Skilling. Both say they’re innocent of wrongdoing as Enron filed for bankruptcy protection in late 2001. The panel wrapped up its first full day of deliberations in the fraud and conspiracy trial yesterday and has now had the case for nine-and-a-half hours. Skilling attorney Daniel Petrocelli calls the wait for a verdict from the jury “nerve-wracking.”
“It’s a very, very serious open-minded group of people and I’m convinced they’re going to take these arguments to heart, take all the arguments from everybody and give it their best. And until the jury comes back with a verdict, and until that verdict says ‘not guilty’ 28 times, I don’t think any of us are going to have a good night’s sleep.”
Meantime, Lay is dealing with another trial–this one on bank fraud charges stemming from his personal banking. Adam Gershowitz with the South Texas College of Law explains how Lay finds himself in a mini-trial as the jury deliberates the larger Enron case.
“The reason the bank fraud charges are separate is because Ken Lay–early on well before the trial started–was trying very vigorously to get his trial separated from that of Jeff Skilling, and this is one of the arguments he had made for why his trial had to be severed because he had these unusual accounts that were different. And it worked out very badly for Lay in that respect because he ended up having these charges alone severed, but also having to deal with the rest of the charges in a joint trial with Skilling, which is probably, as far as he’s concerned, the worst of all possible scenarios. He would have rather had all the charges against him severed, and all of them tried to a jury rather than have a handful of them tried to this judge.”
Lay’s attorneys have suggested terms of bank loan documents the government alleges he violated actually were signed by an automatic signature device in his office and not by the executive himself. Lay is expected to testify in this second trial that’s expected to wrap up as early as Tuesday. Lay also took the stand in his first trial.
The Texas unemployment rate improved slightly to 5.1 percent in April–despite the addition of 4,400 jobs. The Houston-Baytown-Sugar Land area is at 4.9 percent, down from last month’s five percent. The Texas Workforce Commission said today that state employers have added jobs for 32 of the past 33 months, for a total exceeding 584,000 jobs since July 2003. In April 2005, the unemployment rate was 5.3 percent. Commissioner Ronny Congleton says the state’s economic picture “continues to improve across the state as more and more workers find employment.” Almost 579,000 Texans continued to actively seek employment in April. That’s 10,000 more than in March but 10,500 less than the previous April. Nearly all Texas metropolitan areas saw a decline in unemployment between April 2005 and last month.
Allstate says it will drop windstorm coverage for 65,000 policyholders in Texas coastal counties. It’s a move to help limit the company’s exposure to hurricane losses. The company says it intends to move the policies into the Texas Windstorm Insurance Association–a pool created by the state to cover property owners in high risk areas. Allstate will stop renewing windstorm coverage in coastal counties and part of Harris County starting September 15th. Other companies have cut back or dropped windstorm coverage along the coast in the wake of last year’s hurricanes. The companies include American National Property and Casualty, Texas Farm Bureau Insurance Company, Horace Mann Insurance, Beacon Insurance and Middle States Insurance Company. Officials with State Farm and Farmers say those companies still sell some windstorm coverage along the coast, but they also have customers insured by the wind pool.
El Paso Corporation has finalized the sale of its remaining interest in a Dominican Republic-based power facility to AES Grand Itabo Ltd. for around $25 million, according to the Houston Business Journal. The sale includes El Paso’s indirect interest in a 432-megawatt coal-fired power plant in Santo Domingo and approximately 50 percent indirect interest in New Caribbean Investment.
International Bank of Commerce-Houston has opened its 25th Houston-area location, according to the Houston Business Journal. The new IBS-Houston branch on Eldridge Parkway at Briar Forest will be open seven days a week.
Woodforest National Bank has opened a new branch in The Woodlands–its 200th location nationally. The new branch is inside a Wal-Mart super Center on Woodlands Parkway, open seven days a week.
Maui Wowi Hawaiian has opened its third Houston location, according to the Houston Business Journal–the first of three outlets planned to open this summer. The new location on FM West 1960 features fresh-fruit smoothies, coffees and gourmet hot cocoa. The franchise currently operates 350 locations.
Rarely does a high-profile company’s earnings report get overshadowed by a product announcement. But that appears to be the case for PC market leader Dell. The Round Rock-based computer maker says it’s responding to customer demand by offering chips from Advanced Micro Devices in some high-end servers. The announcement came as Dell reported an 18 percent drop in its first-quarter profit. The move marks a significant change for the company which has long used only chips from Intel, AMD’s much larger rival. Dell founder Michael Dell says it is a question of “delivering great value and great service to our customers.” News of the decision has boosted shares of both AMD and Dell, while Intel has seen its shares decline. Dell’s quarterly results missed Wall Street expectations. The Texas-based company has been struggling amid tough competition from rivals such as Hewlett-Packard.
Shareholders of J.C. Penney re-elected several directors and scrapped a resolution on executive compensation during a quick annual meeting today. There were more gauzy infomercials–two were shown–than complaining investors–one. Shareholders had reason to be content. Last year, their shares gained 34 percent in value, the third straight winning year. Penney’s profit doubled last year to $1.09 billion even though revenue rose only 3.8 percent. Earnings jumped another 22 percent in the first quarter of this year, compared to the same period last year. That doesn’t mean Penney is without problems. Sales in the key category of women’s apparel have been lackluster. And consumers are paying more for gasoline, although Penney officials believe their prices are low enough to remain affordable even if shoppers are cutting back.
Ricardo Medrano thought the skies were unusually silent during a lunchtime news conference he and his neighborhood group held to complain about airplane noise at Dallas Love Field. Medrano thought Southwest Airlines, which dominates the inner-city airport, had redirected its aircraft to a different runway to avoid bad publicity during the Committee to Protect Our Children’s Tuesday event. Southwest diverted three flights from landing over the area of the news conference for 45 minutes starting Tuesday morning, a Federal Aviation Administration spokesman says. The request came from a Southwest official who works as a liaison between the carrier and the control tower, the Fort Worth-Star Telegram reports. Medrano’s group wanted to make a point about noise and how it affects youngsters in the neighborhood near the airport as the debate builds over whether to lift the Wright Amendment. That’s the 1979 federal law that limits flights from Love to within Texas and eight nearby states.
The number of rigs actively exploring for oil and natural gas in the United States this week rose by 12 to 1,639. Of the rigs running nationwide, 1,378 were exploring for gas and 260 for oil, Houston-based Baker Hughes reported today. One was listed as miscellaneous. A year ago, the rig count was 1,315. Baker Hughes has kept track of the count since 1944. The tally peaked at 4,530 in 1981, during the height of the oil boom. Several record lows were set in 1999, bottoming out at 488. Texas lost five rigs.