University of Texas System regents have approved a plan to sell some oil and natural gas reserves for about $1 billion. The reserves are beneath the system’s vast West Texas lands. The UT system would be paid up front by an investment bank or oil company. In return, the company would need to agree to provide a certain amount of oil and gas from its 2.1 million acres during the next decade or so. Since 1923, when the system’s first well began producing, it has received royalty payments only for actual production–not future production. The Austin American Statesman reports unclear what effect the so-called forward contract would have on tuition and fees. UT Finance Professor Keith Brown says a forward contract essentially amounts to price insurance–or locking in today’s prices.
The fall in the price of crude oil is reflected with a drop in the average retail cost of gasoline in Texas this week. AAA Texas reports a seven-cent decline in gasoline prices, settling at an average $3.92 per gallon. Nationally, the average price for self-serve regular slipped nine cents, to reach $4.02. AAA Texas says Corpus Christi had the least expensive gasoline statewide this week, at $3.86 per gallon. The most expensive gasoline average in Texas could be found in the Austin-San Marcos areas and El Paso, at $3.93. Association spokesman Dan Ronan says a drop in crude oil prices usually takes a few weeks to catch up at gas stations. Ronan says if oil prices continue downward, drivers could see additional relief at the pump.
The energy stalemate between Democrats and Republicans continues on Capitol Hill. Senate Democrats failed to advance a measure to rein in oil market speculators, and rejected Republican calls to expand offshore oil production. Republicans held out for a separate vote on an amendment to allow offshore drilling on the Atlantic and Pacific coasts. Senator John Cornyn of Texas has been talking to one of his constituents—Boone Pickens, who wants to build the world’s largest wind farm in Texas.
“If you look at what we use to generate electricity in Texas, it’s a portion that comes from natural gas power plants, a portion from coal power plants and a portion from nuclear. And he basically believes that we can replace the natural gas component of electricity production by substituting wind energy over time, and we would be able then to use that natural gas–which we produce a lot of in the United States and do not have to import—to use that for cars.”
House Republicans this week scuttled a bill to release 70 million barrels of oil from a national stockpile, which Democrats said would lower gasoline prices.
The Senate has cleared the last hurdle to passing a massive housing rescue bill. An 80-13 test vote showed broad support for the package and put it on track to pass the Senate by Saturday. The White House says President Bush will sign it. The bill is designed to spare an estimated 400,000 homeowners from foreclosure and bolster troubled mortgage giants Fannie Mae and Freddie Mac. It’s regarded as the most significant housing legislation in a generation. The plan creates a new regulator and tighter controls on the government-sponsored mortgage firms and starts a permanent affordable housing program to be financed by their profits. That fund would be tapped to cover any government losses from the foreclosure rescue.
Government data show sales of new homes fell in June for the seventh time in the past eight months in further evidence that the nation is still in the grips of the worst housing slump in decades. The Commerce Department reports that sales of new single-family homes dropped by 0.6 percent last month to a seasonally adjusted annual rate of 530,000 units following an even bigger 1.7 percent fall in May. The decline is slightly smaller than had been expected and sales were revised up a bit for May. However, even with those changes, new home sales are down by a sharp 33.2 percent from a year ago.
Orders to factories for big-ticket manufactured goods rose at the fastest pace in four months in June, a much stronger showing than had been expected. The Commerce Department reports that orders for durable goods increased 0.8 percent last month. That’s far better than the 0.4-percent decline that economists had been expecting. It’s the best showing since a 1.1-percent rise in February and reflects strength in demand for heavy machinery and primary metals such as steel and even a slight rebound in the beleaguered auto industry./P>
South Texas business owners impacted by Hurricane Dolly can apply to delay paying their state taxes during the storm recovery. Texas Comptroller Susan Combs announced the tax postponement schedule available to businesses cleaning up from wind and flood damage. Businesses may request extensions of up to 90 days to file state tax returns that are due in July and August. The order applies to businesses in 15 counties declared disaster areas: Aransas, Bexar, Brooks, Calhoun, Cameron, Hidalgo, Jim Wells, Kenedy, Kleberg, Nueces, Refugio, San Patricio, Starr, Victoria and Willacy. Dolly slammed ashore Wednesday in the Brownsville area, leaving behind flooding, damaged buildings and electrical outages.
About 200 ships are stacked up at a bottleneck along the Mississippi River caused by a spill of heavy fuel oil at New Orleans. Crews have sopped up about 9,500 gallons of oil from the fast-flowing river after Wednesday’s barge and tanker accident. The barge was split in a collision with the Liberian-flagged tanker Tintomara. The Coast Guard says it could take days to reopen the nation’s bustling waterway to commerce. Many of the ships waited at the Gulf of Mexico outlet to head upriver to grain and petrochemical terminals above New Orleans. Meanwhile, some residents have sued the owners and operators of the vessels that collided, alleging they’ve been exposed to fumes from the fuel oil wafting off the river. Authorities are investigating why no properly licensed pilot was aboard the tugboat towing the barge.
A Georgia lawmaker says federal officials are proposing $8.7 million in fines against Imperial Sugar for violations at a plant near Savannah where an explosion killed 13 people and at another plant in Louisiana. Representative Jack Kingston says Occupational Safety and Health Administration officials tell him the fine will be the third-highest in the federal agency’s history. He says the proposed fines include $5 million for the explosion near Savannah and $3.7 million for the plant in Gramercy, Louisiana. Officials found violations at the Louisiana plant a month after the February 7th Georgia blast. Sugar Land-based Imperial Sugar has owned the 90-year-old Georgia refinery that produces Dixie Crystals brand sugar since 1997. The company has 15 days to contest the penalties.