Gasoline prices drop slightly for Labor Day weekend…Jury selection continues in Galveston in first civil trial stemming from 2005 BP Texas City blast…President Bush outlines initiatives to deal with mortgage defaults…
Most Texas motorists will pay less for gasoline this Labor Day weekend than last year. The weekly AAA Texas Gas Price Survey finds regular self-serve gas averaged $2.66 per gallon in 11 Texas cities. That’s three cents less than last week and four cents less than last year. Nationally, regular self-serve averages $2.77 per gallon, a penny less than last week but two cents more than last year. Houston’s average is at $2.58, down just over four cents. Amarillo and Corpus Christi are the only cities of the 11 in the survey with gas prices averaging more than this time last year. Amarillo still has the state’s costliest gas at $2.93 per gallon, three cents more than last week and 17 cents more than a year ago. Corpus Christi has the state’s cheapest gas at $2.57 per gallon, seven cents less than last week but a nickel more than a year ago. Auto club spokeswoman Rose Rougeau notes that the Labor Day holiday is usually seen as the end of the summer driving season. She says gas prices usually begin to fall in the fall as demand lessens.
People planning to use their cars for a Labor Day trip may find traffic a bit lighter, but not by much. The annual AAA Labor Day Survey, conducted by the Travel Industry Association, finds that 28.9 million people plan to jump in their cars for the long weekend, down from 29 million last year. The auto club says the overall number of people planning to travel more than 50 miles over Labor Day is a bit higher this year, nearly 35 million. That’s because the number of people planning to fly is up slightly despite record flight congestion and delays.
BP attorneys objected today to comparisons made between the company’s deadly Texas City refinery explosion and corporate mismanagement like Enron. Jury selection resumed in Galveston in the first civil trial stemming from the 2005 fiery blast that killed 15 people and injured more than 170 others. Plaintiffs attorney Brent Coon addressed potential jurors and had a picture of Enron’s logo on two large screens behind him. BP attorney Jim Galbraith objected to the oil company being compared to Enron. Judge Susan Criss ordered the Enron logo to be taken off the screens. A federal review found fostered bad management at the plant and cost-cutting moves were factors in the explosion. The lawsuits by the five plaintiffs are to be the first to be tried in connection with the blast.
President Bush has outlined the administration’s first effort to deal with an expected wave of mortgage defaults fueled by the mortgage crisis. The initiatives, which are not aimed at bailing out lenders or speculators, are designed to help homeowners with risky mortgages keep their houses. In remarks in the Rose Garden, the President said a “federal bailout of lenders would only encourage a recurrence of the problem.” The President insists that the U.S. economy is strong and can weather recent turbulence in the financial markets. One of the key elements of Bush’s plan would allow homeowners with a good credit history, but who cannot afford their mortgage payments, to refinance into mortgages insured by the Federal Housing Administration to keep from defaulting.
Federal Reserve Chairman Ben Bernanke says he’ll act as needed to keep a credit crisis from dragging down the broader economy. But addressing a Fed conference in Jackson Hole, Wyoming, Bernanke stopped short of guaranteeing an interest rate cut to nervous investors. He said it isn’t the Fed’s responsibility to, as he put it, “protect lenders and investors from the consequences of their financial decisions.” The Fed’s next meeting is September 18th. Bernanke says central bankers will pay attention to what he calls ”the timeliest indicators” as well as information from businesses and banks around the country to guide its decision-making.
Mortgage defaults on investment properties are playing a major role in rising loan delinquency rates across the nation, particularly in California and Florida. The Mortgage Bankers Association says nearly one in three homes with a high-quality mortgage in Nevada that are in default are not occupied by the owner of the house. The MBA considers a mortgage in default when the borrower is at least 90 days past due on the loan or in the foreclosure process. About 25 percent of homes with high-quality or “prime” mortgages in default in Florida, and about 21 percent in California, were also non-owner occupied. An official of the industry group says investors and speculators who tried to cash in on rapid home price appreciation in the past five years in California, Florida, Arizona and Nevada are now simply walking away from mortgages.
Dallas-based buyout firm Lone Star Funds wants to pay a lower price for mortgage company Accredited Home Lenders holding company. In exchange for the reduced price, Lone Star is offering to let Accredited seek other buyers. The bid is the latest in a string of buyouts that are in trouble or being renegotiated. The Lone Star private equity firm had agreed in June to pay $15.10 per share for Accredited, or $400 million. But it now tells the mortgage lender that it wanted to pay $8.50 per share. Lone Star’s been trying to back out of the transaction, arguing that there had been “drastic deterioration” in Accredited’s financial and operating health. Accredited was active in the sub-prime mortgage lending business and has run into financial trouble. Accredited countered by suing Lone Star in a Delaware court to try to force the equity firm to close the deal. Some analysts say San Diego-based Accredited faces bankruptcy if the deal falls through.
The Commerce Department says factory orders rose 3.7 percent in July. That’s better than expected. The increase was led by an 11 percent jump in demand for transportation goods, including the biggest leap in orders for cars in more than four years. Orders for big-ticket durable goods rose by six percent. Demand for nondurable goods, items such as gasoline and food, was up 1.3 percent in July.
Consumers returned to the stores last month after taking a breather in June. The Commerce Department says consumer spending rose four-tenths of a percent in July, double the June increase. The spending was supported by a solid half-percent rise in incomes, the best showing in four months. The gain in spending was right in line with expectations, while the increase in incomes was double what analysts had been expected. Economists caution that the July increases could be temporary, given the recent weakness in consumer confidence caused by a prolonged slump in housing and several weeks of stock market turbulence.
What does it cost to make ends meet in Texas? A report from an Austin-based non-profit group says the yearly salary needed for a family of four to meet basic needs ranges from: $29,982 in the Brownsville area, to $45,770 in the Fort Worth area. The Center for Public Policy Priorities looked at paying for housing, food, child care, health care, transportation and other basics–with no government help. Study co-author Frances Deviney says in Texas, a two-parent, two-child family needs to earn between $9,332 and $25,120 more than the poverty level to stay afloat. The federal poverty level is $20,650 for a family of four. Suggestions from the group on what can be done include making higher education more accessible and affordable, expanding job training and career development opportunities and implementing a low-rate personal income tax.
Toyota is looking to sell 10.4 million vehicles around the world in 2009. That’s well above the auto industry’s standing record and another sign that it plans on pushing General Motors out of the industry’s top spot. Even so, Toyota’s president says the company wants quality, not quantity. The total would be more than 11 percent above the number Toyota plans to sell this year, beating GM’s auto industry record of more than 9.5 million vehicles sold in 1978. The Japanese automaker has benefited from the popularity of its Camry sedans, Prius hybrids and other models with reputations for good mileage. For its part, GM has declined comment on Toyota’s sales forecast, and hasn’t issued forecasts for 2008 or 2009.
The World Trade Organization has opened a formal investigation into allegations from the U.S. and Mexico that China is giving illegal subsidies to a range of industries. The North American nations accuse Beijing of using WTO-banned tax breaks to encourage Chinese companies to boost exports, while imposing tax and tariff penalties to limit purchase of foreign products in China. The U.S. trade deficit set a record for a fifth straight year in 2006. Beijing has rejected claims of wrongdoing.
A year ago, it seemed like just about every major U.S. city was drawing up ambitious plans to build wireless Internet networks so more people could have online access whenever they wanted. Now, economics is blurring the utopian vision. City leaders and the companies proposing to build the wireless, or “wi-fi,” networks are haggling over whether the projects make financial sense. The problem came into sharper focus this week as once-ballyhooed projects in San Francisco and Chicago unraveled while another high-profile deal in Houston neared a breaking point. Muniwireless estimates there are 455 cities and counties in the United States that have wi-fi networks have either already been built or are under consideration, up from 122 two years ago. The second thoughts about municipal wi-fi revolve around questions about whether the networks will generate enough revenue to justify the multimillion-dollar investments to build and maintain them.
The chairman of the Texas Senate Transportation Committee says he’s certain lawmakers would oppose any effort by the State Transportation Department to toll existing interstate highways. The department is lobbying Congress to pass a federal law that would allow the state to “buy back” parts of interstates and turn them into toll roads. Dallas Republican Senator John Carona calls it a “dreadful recommendation” and says “taxpayers have already paid for those roadways.” U.S. Senator Kay Bailey Hutchison said she opposes the plan. Hutchison says Texans should never have to pay twice for a highway. Transportation Department spokesman Chris Lippincott says state law would require approval by county commissioners and taxpayers in a referendum if the state wanted to pursue the idea. Spokesman Robert Black says the report doesn’t contradict Governor Rick Perry’s repeated commitment that free highways will not be converted to tollways. He says that wouldn’t change without the approval of local voters.
Texas is among 17 states that will share more than $109 million in federal grants to enforce seat belt laws and promote highway safety. Texas is getting more than $14.3 million. The funding is part of a program established in 2005 to encourage states to approve stronger laws that let officers stop motorists solely for failing to wear seat belts. The statutes–called Primary Enforcement Safety Belt Laws–have been passed in 26 states, the District of Columbia and Puerto Rico. The remaining states have secondary enforcement, which allows tickets for seat belt violations only if motorists are stopped for another offense. New Hampshire has no seat belt law for adults.
The chancellor of Germany tops Forbes magazine’s list of the world’s 100 most powerful women for the second year in a row. Forbes says Angela Merkel’s “cool leadership” at two back-to-back summits continues to impress the world. It mentions her work getting leaders at the Group of Eight summit to agree to goals for cutting greenhouse gas emissions and persuading European union leaders to get moving on a treaty to replace their failed constitution. Secretary of State Condoleezza Rice slips to fourth on the list, from second last year. Senator Hillary Rodham Clinton is at number 25, House Speaker Nancy Pelosi is ranked 26th, and First Lady Laura Bush is 60th.
Baker Hughes in Houston reports the number of rigs actively exploring for oil and natural gas in the U.S. rose by 13 this week–to reach 1,829. One year ago the rig count stood at 1,732. Texas is up two. Baker Hughes has tracked rig counts since 1944.