OPEC oil ministers have decided to cut output by 1.5 million barrels a day as of next month. The oil cartel's move is an attempt to shore up sagging prices. Crude is selling for 50 per cent less than this year's historic heights because the worldwide economic crisis has put a huge crimp in demand for crude. OPEC's statement says prices have witnessed a dramatic collapse unprecedented in speed and magnitude. Demand for crude has dropped and the supply levers held by the Organization of Petroleum Exporting Countries appear to have little influence in the current economic climate. OPEC officials signaled they were prepared to slice deeper quickly if crude continues its freefall. Since hitting a high near $150 a barrel in July, crude has lost more than half of its value.
Weakening global demand for crude amid the world's financial woes has softened the impact of OPEC's announcement that it's cutting production by 1.5 million barrels a day, starting next month. The size of the OPEC cut reflected concerns within the cartel that the bottom appears to be falling out of the market. OPEC accounts for 40 per cent of global oil supply. Crude is selling for 50 per cent less than this year's historic highs because the worldwide economic crisis has put a huge crimp in demand.
Former Enron CEO Jeff Skilling has been moved to a low-security prison near Denver because his Waseca, Minnesota prison is being converted to an all-women's facility. Skilling has been serving 24 years since December 2006 for 19 counts of conspiracy, fraud, lying to auditors and insider trading. He's appealing his 2006 conviction with the 5th U.S. Circuit Court of Appeals in New Orleans. Skilling is now housed at the Federal Correctional Institution-Englewood in Littleton, Colorado, which houses 770 inmates, with another 171 in an adjacent minimum-security prison camp. The U.S. Bureau of Prisons says Skilling is ineligible for camp placement because of his release date, which is 2028.
Former Enron Broadband Services CEO Kenneth Rice also moved to a different prison facility. Rice has been serving his 27-month sentence for securities fraud at a federal prison camp in Beaumont, but in August was moved to a halfway house in Houston. He's set for release in February.
A real estate trade group says sales of existing homes rose by the largest amount in more than five years in September. The data is a possible glimmer of hope that the housing slump could be starting to bottom out. The National Association of Realtors said that sales of existing homes rose by 5.5 per cent in September compared to August, the best showing since a 5.6 per cent increase in July 2003, during the five-year housing boom. Even with the gain in sales, prices kept falling. The median sales price has dropped to $191,600, down by 9 per cent from a year ago.
Chrysler says it will cut 25 per cent of its salaried work force starting next month. The company says the cuts are in addition to those previously announced and will be done through involuntary layoffs and voluntary retirements and buyouts. Chrysler has about 18,500 white-collar workers. The company said in a statement that employees also were told to cut discretionary and overhead expenses and reduce capital expenditures not related to major products. Chrysler's owner, Cerberus Capital Management, is in talks to sell the company or merge with another. Discussions are under way with General Motors and the combined Nissan and Renault.
Dallas Area Rapid Transit usage—including the state's largest municipal rail system—rose this year, as higher fuel prices led more people to park and ride. The DART rail system saw a nearly nine per cent increase in ridership. Houston's light rail system is seeing an increase of about ten million systemwide individual trips in the past fiscal year.
Philadelphia-based human resources consultant Mercer says salary budgets for 2009 are projected to increase by 3.6 per cent, according to the Houston Business Journal. The report says 24 per cent plan to reduce their base pay budgets by 0.5 per cent and 18 per cent plan to increase their budgets to an average of 3.8 per cent. Job cuts have already been made by 30 per cent, while 37 per cent are considering that action. About 31 per cent have stopped or are considering stopping hiring. The poll included responses from 190 mid-size and large U.S. corporations.
Houston-based Dynegy has agreed to disclose significant financial risks faced by coal-fired power plants associated with climate change. It's part of an accord announced by former Vice President Al Gore and New York Attorney General Andrew Cuomo. Dynegy will disclose current carbon emissions from planned coal-fired power plants. The power plant owner has plans to build new units in at least six states. About 24 per cent of Dynegy's production capacity is fueled by coal. Dynegy CEO Bruce Williamson told the Houston Chronicle that electricity buyers—not producers—dictate the types of units being built, and choose coal for lower fuel costs.
KBR has been awarded a $197 million package of Iraqi contracts by the U.S. Army Corps of Engineers, according to the Houston Business Journal. KBR will provide design, engineering and construction management to six projects.
A House panel focused on how best to create jobs to help get the economy back on track. Thousands of layoffs have been announced in the past few days and the number of workers filing first-time claims last week for jobless benefits was higher than expected. More than two million Americans have lost their jobs in the past year. Former Fed Chairman Alan Greenspan says it's going to get worse. The hearing looked at ways to create good paying jobs, including rebuilding the nation's infrastructure. The head of the Pension Benefit Guaranty Corporation, the agency that backstops pensions for 44 million Americans, also testified before the Labor Committee. The agency's financial problems may threaten the retirement security of millions of Americans.
One of the key Congressional negotiators in the $700 billion financial bailout expects Democrats to push for another economic stimulus package after the November 4th election. Congressman Barney Frank predicted the new effort would focus on easing fears about lending and investing, saying the "psychological problem is even worse than the real problem." The Massachusetts Democrat, who chairs the House Financial Services Committee, made his comments to the editorial board of the Standard-Times of New Bedford. Frank said the new package would help states pay for stalled infrastructure projects, and also provide assistance to struggling Americans in the form of extended unemployment benefits and money for food stamps and health care costs. Frank added that if there does not appear to be agreement in a lame-duck Congress on a stimulus plan, Democrats will likely wait for the new Congress in January.
Asian and European leaders are poised to call for the International Monetary Fund to play a critical role in aiding countries hardest-hit by the global financial meltdown. The IMF and other institutions should help stabilize the current crisis, according to the draft of a statement to be issued at the end of a two-day gathering of representatives of 43 countries that opened in Beijing. Leaders from China, France, Germany, Japan and other nations say they are moving toward consensus ahead of next month's meeting of the world's 20 largest economies in Washington. The draft says: "leaders agreed that the IMF should play a critical role in assisting countries seriously affected by the crisis, upon their request." The statement would be among the strongest calls yet for a leading role in the crisis for the Washington-based IMF. Countries as disparate as Hungary, Ukraine, Iceland and Pakistan have already turned to the fund for help. Asian and European leaders say they are in agreement that global economic rules need to be rewritten. Today, the IMF announced it's lending Iceland $2 billion to support efforts to restore confidence in the country's collapsed banking system.
Three-month lending rates among banks in the U.S. and Europe are falling but more slowly amid fears over global economic growth. The improvement suggests credit markets are continuing to thaw. The rate on three-month loans in dollars — known as the London Interbank Offered Rate, or Libor —has decreased to 3.52 per cent from 3.54 per cent. The so-called European Interbank offered rate for three-month euro-denominated loans has eased to 4.918 per cent from 4.921 per cent. The rates have fallen steadily for ten days as confidence in the banking industry has been helped somewhat by rescue measures announced by governments and central banks. However, the improvements are smaller on growing concerns about global economic growth.
The fallout from this year's global credit crisis has claimed jobs on all corners of Wall Street, from hedge fund managers to floor traders. More than 110,000 have lost their jobs so far this year. Some industry experts forecast it could come close to 200,000 before the year is over. Goldman Sachs Group, the world's biggest investment bank, made plans to cut 3,200 positions from its staff of 32,000. Barclays Capital is in the midst of purging 3,000 jobs as part of its takeover of Lehman Brothers and Bank of America's acquisition of Merrill Lynch is likely to add thousands of additional cuts. Michael Williams, dean of the Graduate School of Business at New York's Touro College, believes up to 250,000 financial workers could be without jobs by the second quarter of next year.
The credit crisis is hitting close to home for consumers shopping at Target with plastic. The retailer, facing slower sales and rising delinquencies in its credit card business, says it is further tightening terms for its card holders — even those with good standing. It's also taking a more aggressive approach in collection activity. Executives told analysts at the company's annual investor meeting that it's lowering credit card limits for customers who are in good standing but live in high-risk areas such as California that have been hit hard by the housing slump. It's also moving quickly to tighten standards for inactive cardholders, who typically are already in trouble with other lenders. Reflecting the overall tightening of credit in the marketplace, Target noted that it's seeing lower credit card usage among its shoppers for the first time since 2001-2003.
Baker Hughes in Houston says the number of rigs actively exploring for oil and natural gas in the U.S. dropped by 12 this week—to reach 1,964. One year ago the rig count stood at 1,760. The Texas count fell by five.