BP agrees to record fines and restitutions to resolve Texas City refinery fire, Alaskan oil spill and price manipulation cases…Unemployment claims drop…Chinese economy poised to surpass that of Germany…
BP agreed to pay $373 million to settle criminal and civil charges that it overcharged U.S. propane consumers and ignored warnings that resulted in an Alaskan spill and a deadly explosion in Texas. At the same time, a federal grand jury in Chicago indicted four former BP traders caught on tape discussing an alleged scheme to pump up profits by cornering the propane markets. Acting Attorney General Peter Keisler says the federal probe of BP and its executives will continue during a three-year probationary period. A top BP executive issued an apology, saying the company’s operations failed to meet its own standards and the requirements of the law.
The number of Americans filing new claims for unemployment benefits fell by 8,000 last week to 331,000. Wall Street had been expecting a much larger drop of 17,000 claims. And the four-week average for claims rose by 7,750 to its highest level since September 1st. The weekly filings of jobless claims are followed closely for any signs that the labor market is weakening significantly.
Orders for big-ticket manufactured goods unexpectedly fell in September for the second month in a row. The Commerce Department says orders for durable goods dropped 1.7 percent last month. That follows an even bigger 5.3 percent plunge in August, and marks the first back-to-back declines in more than a year. Economists had predicted orders would rebound by 1.5 percent in September. The September drop reflected weakness in a variety of areas, including cars, fabricated metals, electronics and electrical appliances. The report raises new worries about how much harm the housing slump and credit crunch are causing to the overall economy.
China’s supercharged economy grew by a stunning 11.5 percent in the third quarter, staying on track to overtake Germany as the world’s third-largest economy within weeks. Growth beat economists’ forecasts but was below the 11.9 percent rate reported the previous quarter. Chinese officials were quick to claim that the small deceleration was a sign that repeated interest rate hikes and other controls are finally taking effect. The communist government wants to maintain fast growth to ease poverty but worries that runaway expansion or overinvestment in assets could ignite a financial crisis. Beijing has raised interest rates five times this year to curb spending on factories, real estate and other assets, and economists expect another hike later in the year.
The oil industry is dealing with nations and even provinces that want companies like Texas-based ExxonMobil and Chevron to cough up more royalties. The governments say they plan to use the money to address issues like poverty and education. The Associated Press reports–first it was Venezuela. Now, Nigeria is reviewing its relationships with international oil companies. The oil-rich Canadian province of Alberta is set to announce a decision Friday on increasing royalties from the energy industry. One analyst compared Alberta to Venezuela last month after a government-appointed panel called for the province to boost its total take from the energy industry by 20 percent per year. Kyle Preston is an oil and gas analyst with Salman Partners. Preston says there’s definitely been a trend over the last year or two–with a lot of countries looking to nationalize oil reserves. ExxonMobil declined comment. A spokesman says Chevron is monitoring the situation.
Shareholders of Heelys Incorporated have sued the Dallas-area company’s board and top executives for alleged mismanagement and misuse of assets. Carrollton-based Heelys makes shoes with wheels. The derivative lawsuit from its shareholders accuse Heelys’ directors, chief executive and finance chief of abusing power, wasting corporate assets and unjustly enriching themselves. That’s according to a Securities and Exchange Commission filing. The suit seeks unspecified damages and the voiding of the election of the company’s directors. Heelys also disclosed that it’s been served with five class-action suits related to its December 2006 initial public offering. The suits seek damages on behalf of investors who claim they were misled about the health of Heelys’ business in its IPO registration statements. Heelys says the suits are without merit and it will fight them in court.
Blockbuster’s independent auditor has expressed doubts about the Dallas-based video rental company’s recent Movielink acquisition. PricewaterhouseCoopers cites Movielink’s recurring losses from operations, negative cash flows and its roughly $145 million in accumulated deficit as the basis of its going-concern opinion. A Blockbuster filing with the Securities and Exchange Commission says that indicates doubt about Movielink’s viability. Movielink’s a service that allows consumers to download films from the Internet. It reports $145 million in accumulated deficit as of June 30th. The company’s net loss for the six months ended June 30th was $10.18 million. That’s narrowed slightly from a $11.62 million loss in the first half of 2006. Revenue was $1.98 million in the six-month period, compared with $1.92 million a year earlier. Movielink was jointly owned by the major Hollywood studios before Blockbuster bought it in August for undisclosed terms.
Belo Corporation says its third-quarter profit fell two percent on lower advertising sales and costs related to the spinoff of its newspaper group. The Dallas-based media company reports earnings slipped to $18.8 million. The current period’s results included about $2.3 million in transaction costs related to the recently announced spinoff of its newspaper group. Revenue fell three percent to $364.3 million. Analysts were looking for sales of $367.7 million. Newspaper group revenue fell 7.8 percent in the quarter, while television group revenue climbed 1.8 percent. The company said it expects to spin off the newspaper group in the first quarter of 2008.
An Oklahoma business has carved out a niche for itself–making excuses for people. For about $25, students and employees can buy excuse notes that appear to come from doctors or hospitals. Other options at the Thackerville-based The Excused Absence Network include a fake jury summons or an authentic-looking funeral service program. Co-founder John Liddell says people sometimes need a day off and are going to lie anyway. The company’s disclaimer advises the notes are “for entertainment purposes only.” Customers receive templates so they can print the notes after typing the name and address of a local doctor or emergency room. Those who choose jury duty as an excuse to miss work enter their county courthouse information on the form. But critics say bosses might wrongly think a doctor or other medical provider helped in the scam.