At a time of skyrocketing oil and gasoline prices, members of Congress are telling President Bush now is not the time to top off the tank of the Strategic Petroleum Reserve. Both the House and Senate are expected to approve, with bipartisan support, legislation directing Bush to temporarily halt the shipment of about 70,000 barrels of oil a day to the reserve. Bush has refused to do so. He argues that this small amount of oil won’t impact prices and that for security reasons he wants to increase the stockpile to its full capacity of 726 million barrels. It’s now about 97 percent full, equal to nearly two months of oil imports. Many Democrats and Republicans say it doesn’t make sense for the government to essentially purchase oil for a reserve that’s nearly full when crude is costing more than $120 a barrel. Senator Kay Bailey Hutchison of Texas says she supports an immediate halt to the deposits of domestic crude into the reserve as the nation enters the busiest driving season of the year. Senator John Cornyn of Texas says he’s disappointed with Senate Democrats who defeated the original sweeping domestic energy production bill. Senators instead voted to pass the bill for a temporary halt.
Federal Reserve Chairman Ben Bernanke says turmoil in financial markets has eased, but the situation is still not back to normal. The central bank has taken a number of unconventional steps, especially since March, when the credit crisis intensified, to help banks and big investment firms overcome problems and try to get credit flowing more freely again. Bernanke, in prepared remarks, says those efforts appear to be paying off and “have contributed to some improvement in financing markets.”
Some 78 percent of small business owners and managers say their company is on target or will grow at a faster pace than projected this year. That’s according to a business confidence survey from Houston-based Administaff. About 44 percent are hiring full-time employees and 11 percent plan to hire part-timers. Compensation is up 4.9 percent from the same time a year ago, and average commissions have increased 6.8 percent. More than 26 percent plan to increase salaries this year, but about half will maintain current wage levels.
Flying isn’t getting any cheaper, but one trade group says that isn’t going to mean less crowded flights this summer. The Air Transport Association predicts that more than 211 million passengers will travel on domestic carriers between June 1st and August 31st. That would be a 1.3 percent drop from last summer. But the group says airlines are reducing their carrying capacity amid slower economic growth and rising jet fuel prices. The group says planes will be nearly 85 percent full, and that delays emanating from New York-area airports will remain a problem. Some large U.S. carriers last week said they again raised ticket prices to offset surging fuel costs, and the group says further fare hikes this summer are “inevitable.”
Southwest Airlines says that it borrowed $600 million from Citibank and seven European banks to bolster its cash position because of uncertainty about the economy. The airline disclosed in a regulatory filing Monday that it had tapped the full amount of the loans on Friday. The loans were secured by the first-lien mortgages on 21 of Southwest’s Boeing 737-700 aircraft. The filing didn’t give a purpose for the debt, but spokeswoman Beth Harbin said, “it’s due to uncertainty about the economy and the credit market and the high price of fuel. We thought it would be wise to bolster our cash position.” The loans mature in 2020 and are repayable in quarterly installments beginning August 9th. They bear an interest of the London interbank offered rate plus 0.95 percent. Southwest said in the filing that there are no financial covenants to the loans. Lenders holding more than 50 percent of the outstanding principal could accelerate the unpaid principal under certain circumstances, the company said in the filing.
A Houston company is planning to expand its operation in Duncan and bring 60 to 70 more jobs in the next few years. Cameron Measurement Systems broke ground Monday at the site of its 43,000 square-foot expansion in Duncan’s north industrial park. Plant Manager Ricky Allen says the expansion should take between 12 and 14 months to complete. Cameron measurement systems employs machinists in the oil and agriculture fields. The Duncan plant manufactures flow meters and other products that measure and regulate the flow of gas and other liquids. The plant currently produces about 100,000 pieces per year, and that number could eventually double.
An insurance company wants the Mississippi Supreme Court to rule out coverage for Hurricane Katrina damage caused by a combination of wind and water. San Antonio-based United Services Automobile Association says only damage caused by water–either alone or in combination with wind–would be excluded from coverage under its homeowners’ policy. Attorneys for Long Beach, Mississippi, policyholders Magruder and Margaret Corban want the court to determine how the policy should be applied before the case is tried in local court. The 5th U.S. Circuit Court of Appeals in New Orleans has ruled that “anti-concurrent cause” clauses in insurance policies bar
coverage when wind and water act in sequence to destroy property. USAA attorneys contend any damages a jury determines to have been caused solely by wind would be covered. The Corbans contend that wind destroyed their property before the storm surge arrived. But USAA says the surge washed out the first floor of the home, with only mild wind damage to the second floor. The Corbans have collected $350,000 in flood insurance. Their home was insured for more than $1 million. USAA has paid them almost $40,000 for wind damage to the house and an outbuilding, plus $40,000 in other coverage.
A consumer group says a California farm that supplies organic milk to dean foods is breaking federal rules on organic production by keeping cows penned instead of letting them roam over pastures. Dallas-based Dean Foods is the nation’s largest dairy processor. The Cornucopia Institute said that its officials and other dairy farmers saw cows being penned even during good weather at the Fagundes Brothers Dairy near the San Joaquin Valley town of
Snelling. The Wisconsin-based group asked the U.S. Department of Agriculture to investigate the dairy. Federal rules require that dairy sold as organic must come from cows that have access to pasture.
Americans facing rising gasoline and diesel prices are cycling about, saddling up, singing out and, sometimes, going to extremes. Dozens of Alabama students are bicycling up to ten miles each way to their rural high school. An Indiana man was arrested for belting out a protest song from the roof of a convenience store. A sign-maker in Kentucky is riding his horse on business errands. And a Tennessee sheriff is investigating a more disturbing protest: a slain deer hanging from a gasoline station sign. A Purdue University professor who teaches a class on the sociology of protest says most protesters aren’t just working toward the goal of lower gas prices. Rachel Einwohner believes they’re also making a statement “about their collective identity, as environmentalists or however they see themselves.”