Oil prices dropped in Asia as supply concerns eased after Saudi Arabia announced plans to boost production and OPEC questioned whether crude prices can remain so high. Saudi Arabia, the world's largest oil producer, told U.N. chief Ban Ki-Moon over the weekend that it would boost output by 200,000 barrels a day, or by two percent, from June to July. He says the production increase would add up to 9.7 million barrels a day by July. In May, the kingdom raised production by 300,000 barrels a day, but this was ignored by the oil market partly due to strong global demand. However, traders said concerns that sustained high prices will suppress global appetite for oil may push the Organization of Petroleum Exporting Countries, or OPEC, into action to stabilize the market. Earlier, the official Saudi News Agency quoted Ban as saying Saudi King Abdullah believes that "current oil prices are abnormally high." Saudi Arabia has called for a meeting of oil producing and consuming countries next weekend to discuss ways of dealing with soaring energy prices.
Finance ministers from the group of eight industrialized nations are calling on oil producers to boost output to help stabilize oil and food prices. In a joint statement after two days of talks in Japan, the G-8 ministers said the record-high prices are a serious threat to global economic growth. They said the fundamental factor driving oil prices is the imbalance between rising global demand and supply constraints, though geopolitical and financial factors also play a role. Treasury Secretary Henry Paulson urged countries to let markets work and reduce reliance on subsidies. He also pressed oil-producing countries to allow more investment in oil exploration and production. OPEC has said it won't make any decisions on production levels until its September 9th meeting in Vienna.
Landry's Restaurants has agreed to be purchased by founder and CEO Tilman Fertitta in a $415 million deal. The transaction is valued at $1.3 billion, including $885 million in debt. Fertitta already owns 39 percent of Landry's.
Houston-based Saint Arnold's Brewery is beginning work on redeveloping a three-story facility on Lyons Avenue, near downtown. Saint Arnold's co-founder Brock Wagner says the craft brewer has outgrown its current space in northwest Houston. A big part of the Saint Arnold's culture involves Saturday afternoon visits to the brewery.
"We're going to be able to increase capacity for everybody who visits the brewery. It'll now have air conditioning so we'll be able to handle the people a lot better. I think it'll just be a better experience for everyone. Our customers almost form a community rather than a traditional customer base. They're very loyal, very supportive. They're really part of the brewery. And when we went to raise some equity we went right to our customer base, and they were excited about, you know, being able to become part of the brewery."
Wagner visited Germany recently to acquire more brewing equipment.
"In the end, we're getting a brew house that is coming out of a brewery that was located in a monastery. The brewery is closed. The monastery is still active. And we're having that refurbished and updated and brought over here and near the end of this year, it should be ready for shipment to us."
The new brewery will initially double the current annual capacity of 22,500 barrels, and will be expandable to up to 120,000 barrels per year. The $6 million renovation of the building on Lyons will take about a year.
A new tax on Texas businesses has taken effect after a one-month delay. The legislature approved the tax in 2006 as part of an effort to overhaul public education funding in Texas. That's relied heavily on property taxes in the past. Small business groups and some politicians have renewed complaints against the gross receipts or franchise tax, and lawmakers may look at the issue again next year. The tax is set at half a percent of gross receipts for retailers and wholesalers and one percent for other businesses, with allowances made for some deductions. It's estimated that about one-third of the state's 900,000 businesses will owe the tax. Sole proprietors are exempt from the tax; so are companies that would owe less than $1,000 and those with gross receipts of less than $300,000 per year. Businesses with gross receipts of $300,000 to $900,000 pay lower rates.
If you're flying American Airlines be prepared to pay that $15 first checked bag fee as the carrier deals with higher fuel prices. Some exceptions apply. The nation's largest carrier on May 21st announced plans for the increased bag fee, which took effect this week. Under American's plan, many domestic passengers will now have to pay $15 each way for the first piece of checked luggage. The fee does not apply to passengers who pay full-price for tickets, elite members of its frequent-flier program or people traveling overseas. The second checked bag costs $25. American's carry-on policy of one personal item, such as a purse or laptop, plus one bag remains in place. Meanwhile, Dallas-based Southwest Airlines has been running ads saying it doesn't charge fees for items that should be free--like checking two bags.
The chairman of the Federal Communications Commission is recommending approval of the $5 billion merger between the nation's only two satellite radio broadcasters. The Associated Press has learned that the recommendation comes in exchange for concessions offered by the companies that include turning over 24 channels to noncommercial and minority programming. FCC Chairman Kevin Martin's recommendation sets the stage for a final vote on the closely watched buyout of XM Satellite Radio Holdings by rival Sirius Satellite Radio. The two companies also agree to a three-year price freeze for their subscribers.
Federal Reserve Chairman Ben Bernanke calls strengthening the performance of the U.S. health care system "one of the most important challenges our nation faces.'' In remarks to a summit on health care reform, Bernanke says the challenges fall into three major areas: improving access to health care for the 47 million Americans who lack health insurance, improving the quality of care and controlling costs. The Fed chief noted that while new medical technologies and treatments are helping people live longer, the aging of millions of baby boomers coupled with rapidly rising health care costs are straining both personal and government budgets. Bernanke made no mention of the Fed's next move on interest rates or the state of the U.S. economy.
Economic data due this week includes looks at home building and inflation at the wholesale level. The Labor Department on Tuesday releases the producer price index for May. It is expected to show a rise of about one percent, with core inflation fairly well contained. Also due Tuesday is the Commerce Department reading on May housing starts. Analysts look for further reduction in home building. Other reports scheduled for release this week include the index of leading economic indicators and industrial production. In addition, quarterly results are expected from three major investment banks: Lehman Brothers, Goldman Sachs and Morgan Stanley. Wall Street expects the three reports to offer some insight into how the beleaguered financial sector is faring a year into the credit crisis--and whether more management shake-ups may be in store.