ExxonMobil is reporting a profit of $45.2 billion for 2008, breaking its own record for full-year earnings by a U.S. company, but fourth-quarter profits tumbled 33 per cent. The fourth-quarter decline is not a surprise with oil's swift 60 per cent plunge in the final three months of the year. The previous record for annual profit was $40.6 billion, which ExxonMobil set in 2007. Crude prices began the year by passing the $100 mark and by July neared $150 per barrel. Since then, however, prices have fallen roughly 70 per cent amid a deepening global economic crisis.
Union negotiators rejected Shell Oil's latest contract proposal. Shell Oil represents the energy industry in the negotiations with the United Steelworkers Union in Austin, representing 4,200 workers at 11 Houston-area refineries and chemical plants. This is the third offer from Shell that's been rejected, but negotiations have been continuing. The current contract expires on Sunday morning. Companies represented in the talks include Shell's Deer Park refinery, chemical plant and lab, as well as INEOS NOVA Chemical in Texas city; BP's Texas City refinery, chemical plant and pipeline; Chevron Phillips Chemical in Pasadena; LyondellBasell Industries' refinery in Houston; and Pasadena Refining System.
Meanwhile, mechanics at Southwest Airlines have approved a new four-year contract. The deal with Dallas-based Southwest calls for annual raises and bonuses and includes an agreement on the company's ability to send maintenance work abroad. The aircraft mechanics fraternal association represents 2,500 of Southwest's 35,000 employees. The union says the contract includes raises of three per cent each in 2009, 2010 and 2011--and per cent in 2012. Workers will also get a three per cent ratification bonus, and those at the top pay scale can earn another one per cent bonus each year if they work enough hours. The agreement will be signed next week in Dallas. Southwest has lost money in the last two quarters, breaking a string of profitable quarters that reached back to early 1991. The airline is dealing with a slump in travel and the loss of its once-valuable fuel hedges.
Teamsters President James Hoffa calls this "a new day for workers." President Barack Obama signed a series of executive orders, which union officials say will undo Bush administration policies that favored employers over workers. One order requires federal contractors to offer jobs to current workers when contracts change. During a signing ceremony, Obama said he doesn't see "the labor movement as part of the problem." He said it's "part of the solution." Hoffa says there is finally a White House dedicated to working with unions to rebuild the middle class.
Obama used the occasion at the White House to also formally announce a new White House task force on the problems of middle-class Americans, and installed Vice President Joe Biden as its chairman. Although his task force centers on the middle class, Obama said that "we're not forgetting the poor." He said his administration wants to make sure low-income people "get a piece" of the American pie—"if they're willing to work for it."
Employment costs edged up in the final three months of the year at the smallest pace in nearly a decade while the gain for the entire year was the weakest showing in more than a quarter century. The Labor Department said its employment cost index was up 0.5 per cent for the three months ending in December, weaker than the 0.7 per cent rise that economists had expected. For the whole year, employment costs, including wages and benefits, showed an increase of 2.6 per cent, an all-time low for this data series, which goes back to 1982.
Caterpillar says it is cutting another 2,110 jobs at three Illinois plants to match production with falling demand. The cuts come on top of other work force and cost-cutting actions announced earlier this week.
Newspaper publisher A.H. Belo Corporation says it will lay off 500 workers, or about 14 per cent of its work force, to cope with declining revenue. Chief Executive Robert DeCherd informed staff in a memo and said details would be available by mid-February. Dallas-based Belo owns the Dallas Morning News, the Providence Journal in Rhode Island, the Press-Enterprise in Riverside, California, and the Denton Record-Chronicle in Texas. Belo says the layoffs will affect all operating units and the corporate headquarters in Dallas.
Texas Agriculture Commissioner Todd Staples is asking President Obama to help expand trade with Cuba. Staples wants Cuba to be restored as a market for Texas and American products, plus to help Cuba's humanitarian needs. Staples made the announcement during a symposium on Cuba-U.S. relations at the University of Texas at Austin. Staples this week sent a letter to President Obama saying other countries are capitalizing on Cuban demands for products. The Texan is asking that Obama move aggressively toward strong diplomatic relationships that "allow for free and open trade with our Cuban neighbors." The U.S. has had a trade embargo against the communist nation since 1962. Congress in 2000 passed a law allowing the sale of some agricultural and medical products to Cuba. Staples last year led a Texas delegation to Cuba.
The Harbor House hotel in Galveston, damaged by Hurricane Ike, reopens on Sunday. The Houston Business Journal says work still continues at the 42-room hotel on Pier 21, owned by oilman George Mitchell and his wife Cynthia. The Olympia Restaurant on the property reopens in June. Mitchell has other Galveston properties, including The Hotel Galvez, which reopened October 15th and The Tremont House, which reopens in May.
Wind power advocates are pushing for tax incentives and grants in the $819 billion recovery package moving through Congress. Expansion of wind energy, a key part of rural development throughout the Midwest and Great Plains, could depend on how the stimulus plan is overhauled by the Senate next week. Greg Wetstone is senior director for government and public affairs at the American Wind Energy Association. His group estimates that North Dakota has nation's largest wind energy potential, followed by Texas, Kansas and South Dakota. A report this month from the American Wind Energy Association says wind power posted gains last year. The group says electricity generated by wind turbines increased by 50 per cent and there were 13,000 additional jobs in wind turbine and component manufacturing.
The Public Utility Commission has picked several developers to build nearly $5 billion in high-voltage electricity lines. Oncor, American Electric Power, MidAmerican Energy Holdings and FPL Group will build about 2,900 miles of transmission lines from wind farms in West Texas to the largest cities in Texas. Costs will be rolled into power bills at about $3 to $5 a month over ten to 15 years.
The AAA Texas Weekend Gas Watch indicates the average price of regular unleaded gasoline in Texas dropped less than a penny this week from $1.73 to $1.72 per gallon. But that's 11 cents lower than the national average. Houston's average dropped less than a cent to $1.70 a gallon. El Paso had the most expensive retail gasoline this week, at $1.88 a gallon. Corpus Christi had the cheapest gasoline, averaging $1.68. AAA Texas spokeswoman Sarah Schimmer says nationwide consumers and businesses continue to drive fewer miles and conserve fuel.
The government says the economy shrank at a 3.8 per cent pace at the end of 2008, the worst showing in a quarter-century, as the deepening recession forced consumers and businesses to throttle back spending. The Commerce Department data shows the economy sinking at a much faster clip in the October-December period than the 0.5 per cent decline logged in the prior quarter. Although economists expected an even worse fourth-quarter performance — a staggering 5.4 per cent rate of decline — the results still showed the grim toll of the housing, credit and financial crises.
President Barack Obama is calling the economic slump a "continuing disaster" for America's families. Obama pointed to the latest dreary economic numbers as more proof that quick action is warranted on an economic recovery plan. He said he's pleased that the House has acted with the appropriate urgency in approving a plan this week. And he said he hopes to "strengthen it further in the Senate" — where he's hoping to get some Republican votes. No Republicans voted for the plan in the House. Obama told a White House gathering that the government can't drag its feet or delay action much longer.
The White House says its upcoming financial plan will clamp down on the salaries and bonuses paid to Wall Street employees whose firms receive taxpayer help. This administration is developing plans for how it will use the last $350 billion from the original $700 billion financial-sector bailout plan. White House Press Secretary Robert Gibbs said that those plans will directly address executive compensation and bonuses. President Obama calls it "shameful" that Wall Street workers received more than $18 billion in bonuses in 2008 while their firms were receiving taxpayer help. Gibbs said it was "very safe to assume" the administration's plans will take on the issue of wall street pay and bonuses.
Mortgage finance company Freddie Mac says it will allow some borrowers to rent out their homes after losing them to foreclosure. The goal of the new policy, just announced, is to prevent properties from becoming vacant so they won't fall into disrepair. Freddie Mac also said it will allow renters to remain in their homes even if their landlord enters foreclosure. The McLean, Virginia-based company currently has about 8,500 properties in the foreclosure process, but many of those are vacant. Fannie Mae, which announced similar plans earlier this month, said it has stopped about 20,000 foreclosure sales and halted 6,300 evictions of owners or renters this winter. Under Freddie Mac's new policy, tenants and former property owners need to demonstrate that they have enough income to pay the rent. Freddie Mac also said it would consider reinstating a mortgage for those borrowers who can qualify for a modified loan. Washington-based Fannie Mae and Freddie Mac were taken over by the government in September after mounting mortgage losses put them in distress that was a prelude to the broader financial crisis that hit Wall Street last year.
Deep capacity cuts, checked bag fees and aggressive fare sales couldn't stop the airline industry's bleeding. After more carriers posted losses this week, the total fourth-quarter red ink for the top nine U.S. carriers by traffic rose to $4 billion. Houston-based Continental Airlines said it lost $266 million in the quarter. As business and leisure travelers across the country watch what they spend amid the worst financial crisis in decades, the first quarter of this year will add more losses for several airlines. But the industry is eyeing profits after that, if fuel prices remain low and the economy doesn't weaken further. In the meantime, the belt tightening at the nation's air carriers will continue.
The Associated Press has learned that the government found tainted peanuts — from the same plant now linked to a salmonella outbreak — well before illnesses hit. The government is acknowledging that a shipment containing a "filthy, putrid or decomposed substance" was returned to the U.S. in April — months earlier than reflected in a federal tracking database. According to government records, the rejected shipment came across a bridge between New York and Canada. It was logged by the Food and Drug Administration, but never tested by federal inspectors. The peanuts were eventually destroyed after back-and-forth efforts between the FDA and Peanut Corporation broke down and after the FDA rejected as "unacceptable" the findings by a private lab the company hired to analyze its peanuts. The FDA's explanation raises new questions about the adequacy of food-safety tests arranged by Peanut Corporation on its own products.
In a special meeting, the Port Commission of the Port of Houston Authority voted to appoint Managing Director Wade Battles as acting executive director. The move follows the retirement of PHA Executive Director Tom Kornegay on February 1st after 37 years of service, including 17 as executive director.
Political and corporate leaders at the World Economic Forum are being asked not to forget the bottom billion, the poorest of the world's poor, in the rush to rescue the global financial systems. U.N. Secretary-General Ban ki-Moon is pleading "now more than ever the world's poor need your help." His concerns are being echoed by Bill and Melinda Gates. Melinda Gates says in tough economic times, "the people that get hit the hardest are the poor." But she says aid money being given to poor countries is working, and that it's important not to stop now. She also says initiatives to fight aids and other lethal diseases are saving millions of lives in the developing world.
A California panel has rejected a proposal that could have led to the state's first new offshore oil drilling project in 40 years. The State Lands Commission voted against Plains Exploration & Production's request to expand drilling in the Santa Barbara channel. A panel member says the project is effectively dead unless the oil company takes it to court or reapplies with a new proposal. The proposal would have been worth billions of dollars for the state. Some long-time anti-oil environmentalists backed the plan in exchange for promises from the Houston-based company, including thousands of acres of land and a commitment to end its local drilling by 2022. But the state's Congressional delegation worried the project would undercut their efforts to reintroduce a federal drilling moratorium, and members of the panel weren't convinced the application was in the best interest of the state.
Nigeria's main militant group says it's calling off a cease-fire after reporting an attack by government forces. The Movement for the Emancipation of the Niger Delta says it's ending the truce it called unilaterally in September after more than a week of deadly attacks targeting Nigeria's military and oil infrastructure. The group said in an e-mail that its decision was prompted after government forces attacked one of its camps earlier in the day. Military officials were not immediately available for comment.
The number of rigs actively exploring for oil and natural gas in the United States dropped by 43 this week to 1,472. Of the rigs running nationwide, 1,150 were exploring for natural gas and 309 for oil, Houston-based Baker Hughes reported. A total of 13 were listed as miscellaneous. A year ago, the rig count stood at 1,763. Texas lost 21 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.