Wednesday PM September 10th, 2008

South Texas prepares for Hurricane Ike; offshore oil and natural gas personnel evacuate—once again…Study blames investor speculation for oil price surges…Texas Tuition Promise Fund begins enrollment, replacing Texas Tomorrow Fund…

Hurricane Ike has become a Category 2 storm as it feeds on warm Gulf waters and makes its way to Texas. Forecasters at the National Hurricane Center in Miami say the storm has top sustained wind of about 100 mph and is on track to hit the Texas coast Saturday morning. Tropical storm conditions may reach the mid to upper Texas coast by late Friday morning.

President Bush declared an emergency exists in Texas as Hurricane Ike barrels through the Gulf of Mexico toward the state. The declaration clears the way for federal aid to bolster state and local response efforts. Governor Rick Perry already has declared disaster areas for 88 counties. Bush’s action authorizes the Federal Emergency Management Agency to coordinate disaster relief efforts. Bush’s order specifically names: Aransas, Brazoria, Brooks, Calhoun, Cameron, Chambers, Fort Bend, Galveston, Hardin, Harris, Hidalgo, Jackson, Jefferson, Jim Wells, Kenedy, Kleberg, Liberty, Matagorda, Nueces, Orange, Refugio, San Patricio, Victoria, Wharton and Willacy Counties. Texas emergency officials are considering whether to order a mandatory evacuation of coastal counties as Ike approaches.

There are no voluntary or mandatory evacuation orders in place for Harris County, but Galveston Mayor Lyda Ann Thomas has called for the voluntary evacuation of Galveston’s low-lying West End and Jamaica Beach. Matagorda County officials have ordered a mandatory evacuation for special needs residents and those residing in zip code 77541, which includes Freeport. Officials are asking the evacuation to be complete by 6 p.m. tomorrow. Officials opened up a shoulder lane on Interstate 37 to accommodate heavier traffic as residents decide to evacuate. If more Texas officials order a mandatory exodus, it would be the first large-scale evacuation in South Texas history. State and county officials let people decide for themselves whether to leave a hurricane area until just before Hurricane Rita struck the Gulf Coast in 2005. Now county officials can order people out of harm’s way.

Schools in Matagorda County are closed Thursday and Friday, and Palacios ISD is also closing on Monday, September 15th. The Corpus Christi Independent School District has also canceled classes tomorrow and Friday, as has Bay City ISD. Brazosport College classes are dismissed through Monday. Many other schools in the region are canceling classes for the rest of the week. Friendswood ISD has canceled classes for Friday.

Shell evacuated 193 offshore personnel yesterday and the remaining 47 came ashore today. Shell-operated production will be shut-in with the exception of natural gas from the Fairway Field in the Mobile Bay area. Redeployment is expected to start as early as Friday in the east, stretching through the weekend, weather permitting. Other oil and natural gas drillers and producers have also been evacuating personnel including BP, Transocean and Rowan Companies. About 80 per cent of oil production and 70 per cent of natural gas production in the Gulf remains shut in following Hurricane Gustav. Four refineries in Louisiana remain shut down because of Gustav. Chevron has warehouses in Louisiana and Alabama stocked with generators to help keep gas stations open for business in storm-hit areas. Stations along key evacuation routes have been stocking up on additional fuel supplies to meet coming demand. Motiva says its terminals in Texas are stocked at safety levels.

CenterPoint Energy says customers need to be prepared to be without power for two weeks or longer, depending on the severity of the storm. The company will assess damage in the first few days after the storm, working around the clock to restore power. First priorities are key facilities vital to safety, health and welfare, such as hospitals, water treatment plants and public service facilities. Then, the company repairs major lines and circuits that restore the power to the greatest number of customers in the shortest amount of time.

The Energy Department says crude oil inventories dropped sharply for the second time last week and gasoline stockpiles also plunged. Much of the declines were linked to prolonged shutdowns after Hurricane Gustav barreled through the Gulf of Mexico. Most companies report their facilities experienced little damage from the storm. Crude oil inventories fell by 5.9 million barrels, a larger-than-expected decline. Gasoline inventories slipped by 6.5 million barrels. Inventories of distillate fuel, which include diesel and heating oil, decreased by 1.2 million barrels.

The Paris-based International Energy Agency has cut its forecast for global oil demand in 2008 and 2009. Declining consumption in developed economies is partly offset by higher fuel demand forecasts for China India and Iran.

An independent study of oil markets concludes that speculation by large investors was a primary reason for the surge in oil prices during the first half of the year and for the more recent price declines. It said investors poured $60 billion into oil futures markets during the first six months of the year as oil prices soared from $95 to $145 a barrel and since then have withdrawn $39 billion from those same markets as prices have retreated. Michael Masters of Masters Capital Management, which did the study, said the flow of money — not major changes in supply and demand — caused the volatile movement of oil prices. The report was released by Senate and House sponsors of bills to put additional curbs on oil market speculation.

Federal investigators say government officials handling billions of dollars in oil royalties engaged in illicit sex with employees of energy companies, and received improper gifts. The alleged transgressions involve 13 Interior Department employees in Denver and Washington. Alleged improprieties include rigging contracts, working part-time as private oil consultants and having sexual relationships with–and accepting golf, ski trips and dinners from — oil company employees, according to three reports released by the Interior Department’s inspector general. The inspector general also claims the former head of the Denver office — which markets oil to energy companies–was having sex and using illegal drugs with subordinates.

Less than two months into his job in the West Texas oilfields, Brandon Garrett was cut in half by a motorized spool of steel cable. He and other roughnecks were struggling to get a drilling rig up and running when the accident happened on Easter Sunday last year. Garrett’s grisly end illustrates yet another soaring cost of America’s unquenchable thirst for energy. The Associated Press has found that deaths among those working the nation’s oil and gas fields have risen at an alarming rate. The U.S. Bureau of Labor Statistics says at least 598 workers died on the job between 2002 and 2007. In that time, the death toll per year rose by around 70 per cent, from 72 victims in 2002 to 125 in 2006 and a preliminary count of 120 in 2007. The number of people laboring in the nation’s oil and gas fields has been soaring as part of a drilling boom that began in 2000-01. But that alone does not appear to explain the rising death toll since the death toll relative to the number of workers also climbed during the first half of the decade. Many of those deaths have happened in Texas, the nation’s largest producer of crude oil and natural gas.

A new study shows that law taxes in Texas, along with reasonable regulations and limited government, have created a superior economic climate with growth in income, wealth and employment projected to strengthen. That’s according to findings by Dr. Arthur Laffer, a former member of Ronald Reagan’s Economic Policy Advisory Board, in a study for the Texas Public Policy Foundation, the Texas Association of Business and the Texas Conservative Coalition Research Institute. His study compares the state’s economy with that of California on taxes on labor income, taxes on capital income, taxes on consumption, overall tax environment, government spending policies and government regulatory policies.

Bank of America says it will buy back about $4.5 billion of auction rate securities as part of a settlement agreement with Massachusetts regulators. The Charlotte, North Carolina-based bank says it continues to cooperate fully with the ongoing investigations by the Securities and Exchange Commission and the New York Attorney General’s Office. Bank of America joins eight other big investment banks that have agreed to buy back a total of more than $50 billion of the securities. The auction rate securities market involved investors buying and selling instruments that resembled corporate debt, except the interest rates were reset at regular auctions, some as frequently as once a week. The market for the securities collapsed in February.

Lehman Brothers says it will sell a majority stake in its prized investment management business and spin off its commercial real estate operations. The dramatic effort is aimed at helping it survive the credit crunch. Shares in the nation’s fourth-largest investment bank have fallen more than 80 per cent this year as investors lost confidence amid mounting losses. Lehman Brothers says it lost $3.9 billion during the third quarter due to wrong-way bets on mortgage securities and other risky assets.

Democrats are trying to push a second stimulus package through Congress. Democratic leaders hope to pass a $50 billion stimulus package before the elections, but the White House has no interest in a package this time. House Speaker Nancy Pelosi says it’s clear a second stimulus package is needed. The aim would be to get people back to work by rebuilding the nation’s infrastructure. The plan also extends jobless benefits and provides heating subsidies, but it would also add to the nation’s already near-record deficit. The White House and Republicans in Congress say offshore gas and oil drilling and several trade bills are a better way to boost the economy.

Chrysler Vice Chairman Jim Press says U.S. automakers have reached the start of a new era in which they can be competitive with foreign brands. Press told the Automotive Press Association in Detroit that a new union contract that shifts retiree health care costs to a trust and allows lower wages for new hires have helped Chrysler and other automakers become leaner. Press says Chrysler has cut a million units of production in the past year to match a smaller U.S. market. Chrysler sales are down 24 per cent so far this year. Press says it still will take time for Chrysler to fix its entire business model, but it is making progress. The company is spending $3 billion developing plants and new vehicles each year and plans seven new vehicles in 2010.

The government has unveiled a new public database that will allow consumers to look up the number of alleged deaths, injuries and cases of property damage involving passenger vehicles. Consumer groups have sought the information, which was part of legislation passed by Congress following the massive recall of Firestone tires in 2000. It required manufacturers to provide data on complaints of deaths, injuries, property damage and warranty claims. The so-called “early warning” data was released following a ruling by a federal appeals court in July that barred the government from withholding key data reported by manufacturers. The law was devised to help the government quickly detect potential trends in car accidents.

Once again, Texas parents can lock in current college tuition rates and start paying–even if their would-be graduates are infants. Comptroller Susan Combs announced the Texas Tuition Promise Fund and opened enrollment to all Texans. The plan allows parents to start paying undergraduate tuition and required fees for their children’s future education. The latest plan is an incarnation of the Texas Tomorrow Fund, which has been closed to new participants since 2003.

San Antonio is planning to turn the stink of its residents into the sweet green of cash and renewable energy. The city’s San Antonio Water System is going to sell captured methane gas from its treatment of 140,000 tons of sewage each year. The city-owned utility’s board approved a contract to provide at least 900,000 cubic feet of natural gas daily for the next 20 years to Ameresco — a Framingham, Massachusetts-based energy services company. The water system will get up to $250,000 a year under the deal for the methane, which will be drawn from the utility’s Dos Rios water recycling center. The utility already sells for reuse a portion of the water that’s cleaned up at its wastewater treatment plants. It also has contracts to turn up to 80 per cent of biosolids into compost that’s sold for use in yards and gardens. It’ll take 18 to 24 months for construction of facilities needed for the contract.

Talks at a Colorado meatpacking plant over religious accommodations for Muslim workers have broken down. And some workers say they will not return to work and may take legal action. A union official says about 200 workers have been suspended after walking out of JBS Swift & Company last Friday, saying they were not allowed to take a break at sunset to end their fast during the Muslim observance of Ramadan. Up to 300 workers walked out of the plant. United Food and Commercial Workers Local 7 and Swift met to work out differences, which included time for prayer. After talks broke down, some Muslim workers said, “no prayer, no work.” Union leader Fernando Rodriquez has told the Greeley Tribune the workers were suspended. Company spokeswoman Tamara Smid did not return messages left by the Associated Press.


Ed Mayberry

Ed Mayberry

News Anchor

Ed Mayberry has worked in radio since 1971, with much of his early career as a rock’n’roll disc jockey. He worked as part of a morning show team on album rock station KLBJ-FM, and later co-hosted a morning show at adult rock station KGSR, both in Austin. Ed also conducted...

More Information