A new policy report released by Rice University's Baker Institute for Public Policy suggests strategies to deal with the current turmoil in the global energy markets. The report says excess liquidity that resulted from the run-up in oil prices after 2003 partly fueled the subprime mortgage crisis. The report calls for international coordination. It also weighs threats to the global energy market, such as the debate over Iran's nuclear program, Europe's dependence on Russian natural gas, the rise of nationalism in Latin America and international terrorism and climatic events on oil facilities. The report calls for diversification of energy sources and greater energy efficiency, including higher mileage efficiency standards and greater refinery capacity.
The Interior Department is developing an offshore leasing plan in case Congress lifts the offshore drilling moratorium. The Minerals Management Service has been directed to start soliciting public and official comments and conduct environmental impact studies for areas currently off limits. President Bush lifted a presidential ban on offshore drilling more than two weeks ago, calling on Congress to lift its moratorium.
Texas Attorney General Greg Abbott is taking legal action against Petroleum Wholesale for shortchanging drivers at the pump. A Texas Department of Agriculture investigation found The Woodlands-based company's gas stations routinely failed to pump the amount of fuel its customers actually purchased. Petroleum Wholesale operates Sunmart convenience stores.
The owner of Action Rags USA and three managers face charges from the U.S. Attorney's Office for violating federal immigration laws. They are charged with conspiracy to harbor illegal aliens and for inducing aliens to enter the U.S. for commercial advantage. Immigration and Customs Enforcement detained more than 150 suspected illegal aliens at the Port Houston plant on June 25th. The indictment alleges that roughly 85 percent of the company's workforce consists of illegals.
The government says economic growth picked up in the second quarter as tax rebates energized consumers somewhat. The rebound followed a treacherous patch where the economy actually jolted into reverse at the end of 2007. The Commerce Department reports that gross domestic product, or GDP, increased at an annual rate of 1.9 percent in the April-to-June period. That marked an improvement over the feeble 0.9 percent growth logged in the first quarter and an outright contraction in the economy during the final quarter of last year.
Treasury Secretary Henry Paulson says the $168 billion government stimulus effort has proven to be a timely support for the economy and will continue to assist growth in the second half of this year. Paulson predicted in a speech that the economy will continue growing moderately the rest of this year even though the country faces major problems from the housing slump. "We are making progress although not in a straight line," Paulson said. "Housing continues to be at the heart of our economic challenges and remains our most significant downside risk."
The number of people filing claims for unemployment benefits jumped to the highest level in five years last week, reflecting in large part a new government outreach effort to locate people eligible for benefits. The Labor Department reports that the number of applications for jobless benefits soared to 448,000, an increase of 44,000 from the previous week. That was far worse than the decline of 8,000 that economists had been expecting. However, the government attributed much of the big jump to a special outreach program to notify people that they could qualify for up to 13 weeks of additional benefits because of legislation Congress passed in June.
Governor Arnold Schwarzenegger has signed an executive order that eliminates 22,000 government jobs and ordered that 200,000 state workers receive the federal minimum wage until a state budget is approved. He's trying to pressure state lawmakers into passing a budget for the fiscal year that began July 1st and avoiding a pending cash crisis. The workers receiving the federal minimum of $6.55 an hour will be reimbursed for their full salaries once a budget deal is reached. The others will simply be out of work. That could mean longer lines at DMV offices, fewer food safety inspections and cutbacks in the programs that stock fish in the state's rivers and lakes.
Wages and benefits paid to U.S. workers rose by a moderate amount in the spring that should not set off any inflation concerns at the Federal Reserve. The Labor Department reports that employment costs for civilian workers rose by 0.7 percent in the April-June quarter, matching the gain in the first three months of the year. Both of those quarterly increases were the lowest in two years, since wages and benefits rose by 0.6 percent in the first quarter of 2006 and provided further evidence that the weakening labor market is keeping a lid on wage pressures.
Seventy percent of investors surveyed by the Center for Audit Quality expressed confidence in the U.S. capital markets—down from 84 percent last July. According to the Houston Business Journal, the Washington, D.C.-based center says confidence in audited financial statements is down from 80 percent last year to 73 percent. Seventy-five percent of investors remain confident about investing in publicly-traded U.S. companies. Rising energy prices, the weakness of the dollar and the home foreclosure crisis are cited by investors for their reduced confidence.
The Federal Reserve says banks and Wall Street firms stepped up their borrowing over the past week from its emergency lending program. A Fed report released Thursday said commercial banks averaged $17.5 billion in daily borrowing over the past week. That compared with $16.4 billion in the previous week. For the week ending July 30th, it says Wall Street firms averaged $3 million in daily borrowing. In the prior week, the companies didn't draw such loans. Their borrowing rose as high as $38.1 billion in early April.
Congress wants to blow the whistle on colleges that raise tuition sharply. Lawmakers also want to help students pay less for textbooks and make Pell grants available year-round. A vote could come within days on a wide-ranging bill designed to address concerns about rising college costs. Under the legislation, students could get earlier warning about which textbooks they'll need for class so they have more time to shop around. And professors would get more information on prices when they're choosing which books to assign. A new government watch list could also use the threat of negative publicity to keep colleges from imposing severe tuition increases. The bill takes mostly small and midsize steps. It avoids bigger steps like price controls in the hope more transparency will lead to lower costs.
The state has closed a South Texas nursing school and sued two operators on charges they bilked students out of $10,000 in tuition. Texas Attorney General Greg Abbott says Robert Jean-Marie and Claude Wilder were not certified to provide training at the school they owned. A judge has ordered IFTech Medical Institute in Rio Grande City closed, pending a full hearing on the case. Jean-Marie and Wilder could not be reached for comment at a shared home address in Mission. The telephone at the school was disconnected. The McAllen Monitor reports the owners failed to obtain a certificate of approval from the Texas Workforce Commission. The TWC — which oversees training for jobs that require state licensing — issued a cease and desist order against IFTech Medical Institute last May, but the owners refused to comply.
According to General Services Administration data, the cost of operating the government fleet — including maintenance, leases and fuel — added up to $3.4 billion last year. While cabinet and other officials say they need the vehicles to do their jobs, watchdogs say mismanagement is costing millions of dollars a year in wasteful spending. Senator Charles Grassley calls it "one bleeding part of a budget." The government owns or leases more than 642,000 sedans, SUVs, trucks, limousines and ambulances for more than three dozen agencies, the U.S. military and the Postal Service. But only a handful of agencies say they have conducted annual audits to ensure their fleets are the right size.
Record crude prices sent ExxonMobil second-quarter earnings up nearly 14 percent — to the biggest quarterly profit ever by any U.S. corporation. Irving-based ExxonMobil reports it earned $11.68 billion in the just-completed quarter. Revenue rose 40 percent. ExxonMobil says, excluding an after-tax charge of $290 million related to an Exxon Valdez tanker accident court settlement, earnings reached $11.97 billion.
Marathon Oil says its second-quarter profit fell roughly 50 percent from a year ago and that the company may be split into two. The oil and gas company said that lower refining and marketing margins took a huge toll on profits. Houston-based Marathon said net income for the April-June period fell to $774 million from $1.55 billion a year ago. Excluding items in the latest quarter, the adjusted profit amounted to $858 million. Revenue rose nearly 32 percent to $22.22 billion from $16.88 billion.
American Electric Power says its second quarter earnings rose 56 percent from a year ago when it recorded a $79 million charge to pay refunds to customers in Virginia. Columbus, Ohio-based AEP said that it made $281 million for the quarter ended June 30th compared with a profit of $180 million a year ago. Revenue rose 13 percent to $3.5 billion from $3.1 billion a year ago. AEP supplies electricity to about five million customers in 11 states, including Texas.