ConocoPhillips plans a four per cent workforce reduction, or about 1,300 jobs. The Houston-based oil company also plans to reduce its contractor headcount. The new capital budget of $11.7 billion is a 12.6 per cent reduction from the previous year. ConocoPhillips is the first large oil company to announce layoffs. Chairman and CEO James Mulva says ConocoPhillips is positioning itself, in the current business environment, to live within its means and maintain financial strength. ConocoPhillips currently has over 32,000 employees worldwide.
The International Energy Agency is predicting that the worsening global economy will cause a decline in worldwide oil consumption for a second straight year in 2009. The Paris-based agency says in its highly watched monthly survey that the accelerating slide in oil consumption this year will result in the first two-year decline in 26 years. The agency has cut its forecast for oil demand this year by one million barrels to 85.3 million barrels a day--0.6 per cent lower than 2008. Demand last year is estimated to have slid 0.3 per cent. The IEA says it lowered its forecast because it has nearly halved its estimate for global economic growth to 1.2 per cent.
A record plunge in gasoline prices pushed overall consumer prices down for the third straight month in December, closing out a year in which the change in inflation was the smallest in more than a half-century. The Labor Department says consumer prices dropped by 0.7 per cent in December, slightly smaller than the 0.9 per cent drop economists expected. For the year, consumer prices edged up by just 0.1 per cent, the smallest annual change since consumer prices actually fell by 0.7 per cent in 1954. Consumer prices rose by 4.1 per cent for all of 2007.
Industrial production plunged by double the amount analysts expected in December. The Federal Reserve says industrial output fell by two per cent last month. The dismal showing underscores the heavy toll the housing, credit and financial crises are taking on the nation's manufacturers. The two per cent drop, came after a 1.3 per cent decline in November, which was even sharper than initially reported. Economists expected a one per cent drop for last month.
The chief economist for the International Council of Shopping Centers looks for sales to pick up in the second half of the year. Michael Niemira thinks 2009 is going to be a "transition year." Retailers can expect a sharp decline in the first half and an improving climate in the second half. He's predicting a decline of 1.9 per cent in total retail sales for the year, with a particularly painful first half. But he says stores need to be prepared, not only for a severe downturn now, but for a sharp recovery later, as shoppers release a pent-up demand for merchandise, including big-ticket items like furniture and appliances. For next year, Niemira looks for a 3.3 per cent jump in retail sales. Forecasts from many other retailing industry experts are less rosy. Mark Zandi, the chief economist at moody's economy.com, thinks all of this year is going to be "painful'' and 2010 is going to be merely "uncomfortable."
Circuit City says it has reached an agreement with liquidators to sell the merchandise in its 567 U.S. stores after failing to find a buyer or a refinancing deal. The second-biggest electronics retailer in the nation says in court papers it has appointed Great American Group, Hudson Capital Partners, SB Capital Group and Tiger Capital Group as liquidators. City filed for Chapter 11 bankruptcy protection in November. U.S. Bankruptcy Judge Kevin Huennekens gave the company permission to liquidate if a buyout was not achieved.
Rental car company Hertz global holdings says it will eliminate more than 4,000 jobs worldwide as it further cuts costs amid slowing demand. The company expects to save $150 million to $170 million this year and take a related fourth-quarter charge of $20 million to $25 million. Hertz already has trimmed its work force by 22 per cent in the last two years. The new reductions will bring staffing to 32 per cent below August 2006 levels.
President-elect Barack Obama hit the road to drum up support for his roughly $825 billion package of new spending and tax cuts aimed at helping a troubled economy. The president-elect was in northern Ohio, visiting a company that manufactures parts for wind turbines. It's a fitting backdrop to promote alternative energy dollars included in the mammoth stimulus package. The visit allowed Obama to explain how he believes Cardinal Fastener & Specialty Company, and other such companies and their workers, would benefit from his plan. It's the first stop in a series he's expected to make to generate support for the package. Obama argues nearly 500,000 jobs can be created by investing in alternative energy.
House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid say they want to have the economic stimulus bill ready for Obama's signature by mid-February. An outline calls for $550 billion in new spending and $275 billion in tax cuts. The $825 billion total is seen likely to grow as the legislation advances through Congress. Lawmakers have also released the final $350 billion infusion of bailout cash for the financial industry under the $700-billion package approved last year. The action follows intense lobbying by President-elect Barack Obama and his economic team. They urged Congress to free-up the money quickly despite qualms about how the first half of the fund was spent by the Bush administration.
Treasury Secretary Henry Paulson is defending his handling of the $700 billion financial rescue program, saying it has made real progress toward achieving financial stability. Paulson says the administration made the correct calls on major decisions in operating the program, even though he and other officials sometimes had to operate with imperfect information. Paulson's remarks came after the government reached an agreement to provide billions of dollars in additional support to Bank of America.
Between the impact of the weak economy and government actions to aid the mortgage market, interest rates have dipped for an 11th straight week. Freddie Mac says the average for 30-year fixed-rate mortgages fell to a record low 4.96 this week. That's down from 5.01 per cent last week. Rates are the lowest they've been since the company started its survey in April 1971. Mortgage rates have been dropping since late November, when the Federal Reserve said it was going to pump money into the banking system by buying $500 billion in mortgage-backed securities to get banks to lend more money and perhaps aid the ailing U.S. housing market. Freddie Mac chief economist Frank Nothaft says rates have dropped as the fed and the treasury department added more than $100 billion in liquidity to the mortgage market since September.
Citigroup says it is splitting up into two businesses as it sustains its fifth straight quarterly loss. One business, Citicorp, will do traditional banking, and the other, Citi Holdings, will hold the company's riskier assets. The bank's move reveals its growing focus on back-to-basics lending and deposit-gathering, and dismantles the "financial supermarket"' created a decade ago. The New York-based bank posted a fourth-quarter net loss of $8.29 billion. The government has lent Citigroup $45 billion, and agreed to backstop losses on some $300 billion in mortgages and other assets.
Escalating credit losses have driven Bank of America to report a $2.39 billion fourth-quarter loss and slash its quarterly dividend to a penny. The federal government has agreed to inject $20 billion worth of fresh capital into the bank, in addition to the $25 billion in rescue funds already received. The company reported a profit of $4 billion for the year. Charlotte-based Bank of America reported a quarterly loss of $2.39 billion. Meanwhile, Merrill Lynch posted a $15.31 billion loss for the period. After a marathon negotiating session, the Bush administration reached an agreement to provide an additional $20 billion in support from the government's $700 billion financial rescue fund. Bank of America had already been granted $25 billion from the bailout fund that Congress passed on October 3rd, but found it needed more as it sought to cope with rising losses related to its acquisition of Merrill Lynch.
Two energy investment banks are merging their operations into a new company that will be based in New Orleans. Pritchard Capital Partners, which was founded in Mandeville, and Global Hunter Securities, a global investment bank based in New Orleans, agreed to form Pritchard Global Hunter Securities. The combined energy investment bank also will have offices in New York, Washington, D.C., Atlanta, Newport Beach and Houston.
Ukraine's president will meet with top officials from gas-starved European nations to try to end a politically charged gas row with Russia. Viktor Yushchenko is due to meet with his Slovak counterpart, the prime minister of Moldova and Polish foreign minister to try to resolve the natural gas crisis. The meeting is likely to irk Moscow, as Russian officials have invited EU leaders for a similar energy summit in the Russian capital Saturday. Both Russian and Ukraine have courted European leaders for support in the dispute and blamed each other for the cutoff. Russia says Ukraine is blocking shipments to European consumers. Kiev says Russia wants to send gas along a route that would disrupt supplies to Ukrainian consumers.
The number of rigs actively exploring for oil and natural gas in the United States dropped by 21 this week to 1,568. Of the rigs running nationwide, 1,235 were exploring for natural gas and 324 for oil, Houston-based Baker Hughes. A total of nine were listed as miscellaneous. A year ago, the rig count stood at 1,732. Of the major oil- and gas-producing states, Texas lost 14 rigs. Baker Hughes has tracked rig counts since 1944. The tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted several record lows in 1999, bottoming out at 488.