Tuesday PM April 27th, 2010

The Coast Guard says a sheen of oil that's been covering an area in the Gulf of Mexico since an oil rig exploded off the Louisiana coast is growing. Coast Guard Petty Officer Erik Swanson says that the sheen has grown to about 48 miles long and 80 miles wide at its widest. The spill from the sunken Deepwater Horizon platform has grown to more than 1,800 square miles, or an area larger than Rhode Island. At the moment, the wind has been blowing the oil that leaked from the site of the rig, which was owned by Transocean and operated by BP, away from the shore. But Swanson says the winds could shift later in the week and there's concern about oil reaching the shore. So far, skimming vessels have collected more than 48,000 gallons of oily water. Meanwhile, remote control vehicles have been working around the clock underwater to try to stop the oil leak escaping from two leaks in a drilling pipe about 5,000 feet below the surface. If the crews can't stop the leak quickly, they might need to drill another well to redirect the oil. The oil could reach shore in as little as three days. Most of the 126 workers on board escaped; 11 are missing and presumed dead. No cause has been determined.

The Coast Guard says crews may set fires to burn off oil leaking into the Gulf of Mexico from a wrecked offshore drilling platform. Coast Guard Rear Admiral Mary Landry says the burn would be done far offshore and could happen as soon as tomorrow. She says efforts have failed to shut off the flow nearly 5,000 feet below where the rig exploded and sank last week. Robot subs are still working on it. The oil would be trapped in special containment booms and set on fire. A similar burn off the coast of Newfoundland in 1993 eliminated 50 to 99 percent of captured oil.

BP says crews will begin drilling later this week to try and take the pressure off the well spewing 42,000 gallons of crude oil a day, or 1,000 barrels, into the Gulf of Mexico. BP spokesman Robert Wine said it will take from two weeks to three months to drill a relief well from another rig recently brought to the site where the Deepwater Horizon sank after the blast. If the well cannot be closed, almost 100,000 barrels of oil could spill into the Gulf before the relief well is operating. That's 4.2 million gallons.

The Obama administration has launched a full investigation of last week's oil rig explosion in the Gulf of Mexico. Homeland Security Secretary Janet Napolitano and Interior Secretary Ken Salazar say they will devote every available resource to a comprehensive investigation of the explosion. Salazar and Napolitano signed an order establishing the next steps for a joint investigation that began last week into the cause. The U.S. Coast Guard and the Minerals Management Service share jurisdiction for the investigation. Lawmakers have asked the owner and operator of the oil rig that exploded last week in the Gulf of Mexico for documents as part of a Congressional investigation into the accident. The chairman of the House Energy and Commerce Committee, Democratic Representative Henry Waxman of California, and the chairman of the committee's investigations subcommittee, Democratic Representative Bart Stupak of Michigan, made the request. The Congressmen sent letters to Transocean, the rig's owner, and to BP, which operates the rig. Waxman and Stupak want company documents on the risk of an accident, potential responses and contingency plans, among other things.

The investigation will probe why the blowout prevention stack on the ocean floor, built by Cameron, failed to shut off the flow of oil. Lars Herbst is with the Minerals Management Service.

"The accident investigation will focus on number one, why that didn't work. There are alternate means for shutting in blowout preventer stacks. This one had at least three that I'm aware of. The loss of both hydraulics and electronics to the stack would activate an automatic shutdown. Again, we don't know why that didn't work. That will come out. I guarantee that'll be the focus, or at least one of the focuses, of the accident investigation."

It's a waiting game for Louisiana oyster harvesters. The oil spill is threatening oyster beds in Breton sound on the eastern side of the Mississippi River. Fourth-generation oyster farmer John Tesvich says "that's our main oyster-producing area." His company has about 4,000 acres of oyster grounds that could be affected if the spill worsens. Tesvich says trying to move crops would be "totally speculative" because he might move them to someplace worse. The wind has been blowing the oil away from the shore, but that could change later in the week.


A New Jersey environmentalist says President Barack Obama's administration is "going in the wrong direction" by promoting oil and gas exploration in the Atlantic Ocean. Jeff Tittel of the New Jersey Sierra Club says the government should be promoting clean energy and green jobs, not oil drilling off the coast. He was among the first to testify at a Federal Minerals Management service hearing in Newark. Obama last month announced an expansive new policy that could put new oil and natural gas platforms in waters along the south Atlantic coast from central Florida to Delaware. The president said expanding domestic production of oil will lessen America's foreign dependence on energy. Last week's explosion at an oil rig in the Gulf of Mexico has renewed concerns about offshore drilling.


A monthly survey shows consumers' confidence in the economy rose in April to the highest level since the financial meltdown in September 2008. The Conference Board, a private research group based in New York, says that its consumer confidence index increased to 57.9, up from a revised 52.3 in March. The April reading marks the highest level since September 2008 when the level was 61.4. Economists surveyed by Thomson Reuters expected a reading of 53.5. Economists watch the number closely because consumer spending including health care and other major items, accounts for about 70 percent of U.S. economic activity.


Home prices rose in February, the first annual increase in more than three years, but fell short of analysts' expectations. But results of the Standard & Poor's/Case-Shiller 20-city home price index were mixed, as 11 of the 20 cities showed declines. Home prices in February increased 0.6 percent on a non-seasonally adjusted basis, according to the index. The last time prices rose on a year-over-year basis was December 2006. Economists polled by Thomson Reuters predicted a 1.2 percent increase. The data show that home prices could decline further before experiencing any sustained gains and it's too early to say the housing market is recovering.


A Senate investigation has found Goldman Sachs developed a strategy to profit from the housing meltdown and reaped billions at the expense of clients. Top Goldman executives misled investors in complex mortgage investments that became toxic, investigators say. They point to e-mails and other Goldman documents obtained in an 18-month investigation. Goldman argues it didn't profit from the mortgage meltdown that began in 2007. Senator Carl Levin of Michigan, head of the Senate Permanent subcommittee on Investigations, says, "I think they're misleading the country." The government has accused Goldman of civil fraud, saying it sold mortgage securities without telling buyers that a hedge fund client had helped craft the securities and was betting on them to fail.


It's a lawsuit that could cost Walmart billions of dollars. And a federal appeals court is allowing the case to be heard. The huge class-action lawsuit alleges gender discrimination over the way the store chain pays its female workers. The retailer has fiercely fought the lawsuit since it was first filed in 2001. The lawsuit alleges that Walmart pays women less then men for the same jobs and that female employees receive fewer promotions and have to wait longer for those promotions than male counterparts.


Governor Jan Brewer is dismissing the threat of an economic boycott over the new state immigration law she signed last week. Appearing at an Arizona town hall in Tucson, brewer said she doesn't believe the law is "going to have the kind of economic impact that some people think it might." U.S. Representative Raul Grijalva, a Tucson Democrat, has called for a boycott of convention business for the state and other calls have come for a boycott of Arizona goods, services and tourism because of the nationally controversial immigration law. The Arizona Daily Star reports that Brewer says outrage over the ability of police to ask people for citizenship documentation will fade. She recalled how another uproar faded when she was secretary of state and rode herd over a requirement that voters show ID at the polls.


President Barack Obama is refusing to rule out anything--including tax increases--in the fight against "exploding deficits." Obama says he wants a bipartisan fiscal commission to be free to do its work. The president told reporters that neither he nor the commission members would say what options remain viable. The panel is supposed to limit the deficit to $550 billion by 2015. That's about three percent of the total U.S. economy and would require deficit savings in the range of $250 billion or more. The most obvious solutions, higher taxes or fewer government benefits, are the most unpopular. That's one reason the panel won't be making recommendations until after the November election. Obama says getting the job done will require putting politics aside.

Federal Reserve Chairman Ben Bernanke says failing to curb federal budget deficits would do "great damage" to the U.S. economy in the long run. Bernanke once again urges the White House and Congress to come up with a credible plan to reduce the nation's red ink, which hit a record $1.4 trillion last year. Failing to do so, he says, would push interest rates higher--not only for Americans buying cars, homes and other things—but also for Uncle Sam to service its debt payments. Bernanke says all that would sap national economic activity. The Fed chief delivers his assessment in prepared remarks to the first meeting of President Barack Obama's commission to tackle the soaring deficit.


Federal Reserve policymakers are starting a two-day meeting amid signs the economy is gaining traction. But as they gather, the policymakers are also increasingly focused on when and how they will reverse course and start boosting rates once the recovery is firmly entrenched. The Fed group is all but certain to leave their key bank lending rate between zero and 0.25 percent, where it's remained since December 2008. Yet, Fed Chairman Ben Bernanke and his colleagues are likely to discuss how best to use the various tools at their disposal to tighten credit and mop up the unprecedented amount of money that was pumped out to fight the economic and financial crises.


President Barack Obama says investments in clean energy technologies can help return jobs to the country's heartland and ensure that America doesn't fall behind other nations. Obama made the comments at a wind energy plant in Iowa that employs more than 600 workers with help from tax credits in last year's economic stimulus law. It was the president's first stop on a two-day Midwestern trip aimed at convincing voters his economic policies are working despite continued high unemployment. Obama said wind power could generate as much as 20 percent of the country's electricity two decades from now. And he predicted passage of sweeping energy legislation that's in limbo in the Senate, saying the country's security and economy--and even "the future of our planet"--depend on it.


The nation's top transportation official is promising tough enforcement of a new rule limiting to three hours the amount of time airlines can keep passengers waiting in planes on tarmacs. Transportation Secretary Ray LaHood said that airlines that don't return waiting passengers to gates within three hours can expect his department to come down hard on them. LaHood sidestepped a question about whether he will seek the maximum fine against airlines that break the rule --$27,500 per passenger. But he said it's important that there be "strong enforcement" so that airlines know the government is serious about the time limit. The three-hour rule goes into effect on Thursday.

Southwest Airlines has been fined $200,000 for violating rules on bumping passengers from oversold flights. The Transportation Department said that it reviewed passenger complaints and found many cases of improper bumping. Airlines are allowed to sell more seats than they have because some passengers don't show up. Federal rules require airlines to ask for volunteers first, then begin to bump passengers who bought tickets. Most passengers bumped from flights are entitled to up to $800 in cash.


Earnings

Ford says it earned $2.1 billion in the first quarter, another sign the economy is improving as people spend more on big-ticket items like cars. The company says it was profitable in its key North American market, but it also made money in Asia, Latin America and Europe. Ford's U.S. sales rose 37 percent for the quarter and its market share climbed nearly three percentage points. The automaker is benefiting from a rebound in auto sales, higher quality rankings and a boost to its reputation for avoiding government aid.


BP, Europe's second-largest oil company, says first-quarter profit was 42 percent higher than in the previous three months and more than double the figure posted a year ago. BP reports a net profit of $6.1 billion, compared to $4.3 billion in the fourth quarter and $2.6 billion in the first quarter of 2009. Replacement cost profit, a key oil industry measure, rose 62 percent to $5.6 billion compared with $3.4 billion in the fourth quarter and $2.4 billion in the first quarter a year earlier. Revenue of $74.4 billion was up one percent from $73.6 billion in the fourth quarter and 55 percent higher than revenue of $48.1 billion a year earlier.


 

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