Wednesday PM May 26th, 2010

BP says it is trying to seal the blown-out oil well in the Gulf of Mexico by pumping heavy mud into it. BP says that the "top kill" maneuver has started. The top kill has never before been tried a mile beneath the sea, and company officials say it could be a couple of days before they know whether it is working. Engineers hope to pump enough mud into the gusher to overcome the flow of the well. Engineers plan to follow up the mud with cement that the company hopes will permanently seal the well. BP's top executive has pegged the top kill's chance of success at 60 to 70 percent. Millions of gallons of oil has spewed into the ocean since an April 20th rig explosion.

BP says it has paid at least $29 million to people claiming economic losses because of the oil spill. The oil company said in court documents in Louisiana that it has yet to deny any claims. Many of the claims are from fishermen and shrimpers. BP said 25,000 claims have been submitted and more than 12,000 payments have been made so far. BP is trying to block an attempt by some fishermen to get a federal judge to oversee the claims process. BP says the 1990 Oil Pollution Act gives the Coast Guard oversight responsibilities. BP and other companies involved in the Deepwater Horizon rig disaster have been targeted by more than 130 lawsuits. BP says people who accept claims do not waive rights to sue.

Workers who survived the explosion on the Deepwater Horizon are testifying before a panel of officials investigating the cause of the well blowout. Hearings for a joint investigation by the Coast Guard and Minerals Management Service are scheduled to run through Saturday. The six-member panel already heard two days of testimony earlier this month. Coast Guard and MMS investigators are expected to issue a joint report on the cause of the incident within nine months.

Witness statements show senior managers complained BP was "taking shortcuts" by replacing heavy drilling fluid with saltwater in the well that blew out, triggering the massive oil spill in the Gulf of Mexico. The statements were obtained by the Associated Press. A roustabout for drilling rig owner Transocean--Truitt Crawford--told Coast Guard investigators about the complaints. The seawater would have provided less weight to contain surging pressure from the ocean depths. Crawford said in his statement that he overheard upper management saying BP was taking shortcuts by displacing the well with saltwater instead of mud. BP was leasing the rig when it exploded April 20th, killing 11 workers. A spokesman declined comment.

New Orleans port authorities say that although ship traffic into the Mississippi River remains normal, crews cleaned a tanker that encountered oil from the Gulf of Mexico spill. The tanker was cleaned by two offshore work boats outfitted with fire hoses. The cleaning took place about four miles away from the entrance to the river at Southwest Pass. Although decontamination stations have been established for several weeks, it was the first time that a vessel was cleaned. Authorities say the tanker was inspected again at a second cleaning site after it entered the pass and was cleared to go on to an undisclosed facility on the lower Mississippi River.

The oil spill in the Gulf of Mexico threatens the livelihoods of fishermen, restaurant workers, charter boat captains and the region's tourism industry. But some other jobs are benefiting. It's triggering a mini-boom among workers hired to help clean up and contain the oil spilling into the Gulf. It's reminiscent of the job boom that followed Hurricane Katrina as thousands were put to work cleaning up debris, gutting house and rebuilding. Five years after that hurricane, the area's economy is among the healthiest of major metro areas. That's according to the AP economic stress index, which assigns counties a score of one to 100 based on unemployment, foreclosure and bankruptcy data.

The CEO of ExxonMobil says the biggest challenge facing the oil industry is regaining the trust of the public and government regulators after the BP spill in the Gulf of Mexico. Exxonmobil's Rex Tillerson made the comments at his company's annual meeting. Tillerson also says Exxon is providing help to BP, although he didn't detail his company's efforts. Tillerson says ExxonMobil is eager to support efforts to prevent future oil spills. Dissident shareholders are criticizing the company on several environmental fronts. They're proposing resolutions to restore wetlands lost to oil and gas operations in Louisiana and to reduce greenhouse gas emissions.


It will take federal and state environmental regulators at least five years to unravel Texas' rogue permitting process and learn how much air pollution is being spewed by the nation's largest refineries. The Environmental Protection Agency says Texas is violating the Clean Air Act. And documents obtained by the Associated Press show that the state is letting plants spew double the pollution allowed by law, including emissions of cancer-causing toxins such as benzene and butadiene. State regulators say the EPA's data is faulty. The EPA has announced it would directly issue an operating permit to a Corpus Christi refinery and would begin taking similar action in 39 other cases. By June 30th, the EPA plans to officially disapprove a permitting program, affecting about 140 plants.


Sales of new homes posted another large gain in April as buyers rushed to sign contracts before government tax credits expired. The Commerce Department says sales of new single-family homes jumped 14.8 percent to a seasonally adjusted annual rate of 504,000 units. The April gain followed a 29.8 percent surge in March, the biggest monthly increase in 47 years. Activity in both months was pushed higher by a stampede of buyers trying to sign sales contracts before tax credits expired on April 30th. The concern, however, is that sales will slump in coming months given all the problems still facing households.


Orders to U.S. factories for big-ticket manufactured goods surged in April, propelled by a rebound in demand for commercial aircraft. The Commerce Department says demand for durable goods increased 2.9 percent last month. It was the best showing in three months and more than double the 1.3 percent gain expected. Excluding transportation, orders fell one percent after posting a sizable 4.8 percent rise in March. The big rise in overall orders was further evidence that manufacturing is helping to drive the recovery. U.S. companies are benefiting from rising demand both at home and in major export markets.


The board of the Employees Retirement System of Texas has approved higher health care co-payments for participants as medical costs go up. Board members cited unexpected higher health care costs and underfunding from the Texas legislature. The changes approved in Austin take effect September 1st. The plan provides health insurance for about 500,000 state retirees and workers and their dependents. The co-payment increase comes as Texas faces a projected budget shortfall as high as $18 billion next year.


Continental Airlines has reopened Terminal C at Bush Intercontinental Airport after completing renovations and expansion of its ticket lobby and check-in area, security checkpoints, baggage claim and surrounding curbside areas. There are now 115 check-in positions thanks to the addition of 56 self-service kiosks. Renovations began in September 2008 and were completed in three stages.


American Airlines is looking for management employees to volunteer as flight attendants in case the regular attendants go on strike. The airline sent an e-mail to managers, appealing for help. Contract talks between American and the flight attendants' union broke off Friday with no new sessions scheduled and with the parties far apart on pay and other issues. The union has asked federal mediators for permission to strike after a 30-day cooling-off period, but officials haven't yet granted the request. Flight attendants voted to support a call for a strike. American spokeswoman Missy Latham says the company still believes it can reach a negotiated agreement with the union but has a backup plan to keep flying if flight attendants walk out.


The insurer paying jailed Texas financier R. Allen Stanford's legal bills is objecting to his revolving door of attorneys--including a new criminal defense team. Lloyd's of London, during a court hearing in Houston, said it's already has spent more than $6 million on lawyers from ten firms to defend Stanford from allegations of a ponzi scheme. A judge has set a June 3rd hearing to detail how the money for Stanford's civil and criminal cases has been spent. Stanford and three executives of his now defunct Houston-based Stanford Financial Group face trial in January on charges including money laundering, wire and mail fraud. All say they're innocent. Lloyd's says the policy doesn't pay on charges of money laundering. An evidence hearing is August 24th in which the insurer will try to prove that the four committed money laundering.


Federal regulators are moving toward requiring a market-wide system among U.S. exchanges for tracking all securities orders. They say a uniform "audit trail" would make it easier to investigate market disruptions like the May 6th plunge that sent the Dow Jones industrials down nearly 1,000 points in less than 30 minutes. The Securities and Exchange Commission is proposing requiring exchanges to maintain a consolidated tracking system covering trading orders from start to routing to execution.


America's Treasury secretary is hop-scotching his way through Europe, talking high finance. Timothy Geithner will meet with European finance officials this week to review a trillion-dollar rescue package being assembled to help stem the spreading debt crisis. He talked in London with the Chancellor of the Exchequer. Later, he met with the head of the Bank of England and then the British government's new Secretary for Business and Trade. Then, it's on to Germany for another session with the head of the European Central Bank, followed by a one-on-one with Germany's finance minister. One economics professor says the Obama administration is understandably concerned because the rescue package for debt-laden European countries has not calmed the world's financial markets.


Federal Reserve Chairman Ben Bernanke says the Fed and other central banks must protect their ability to make key economic decisions free from political interference. Speaking at an international conference in Tokyo, Bernanke stressed the importance of the Fed and other countries' central banks maintaining their independence over setting interest rates, known as monetary policy. The Fed often must make decisions, such as boosting rates to keep inflation in check, that are unpopular with politicians but are necessary for a healthy economy. Bernanke says political interference in monetary policy can generate undesirable boom-bust cycles leading to a less stable economy and higher inflation. Bernanke's comments come as Congress edges closer to completing action on revamping U.S. financial rules, and subjecting the Fed to more oversight.


Interest in buying locally produced food appears to be sending more people to butcher shops across the nation. Industry officials say they don't have exact numbers, but most butchers are doing well. John Brooks, Junior, says business at his family's 88-year-old butcher shop in Des Moines has doubled in the past five years. He says more people seem interested that all the beef he butchers is raised in central Iowa. The executive director of the American Association of Meat Processors says many butchers also are doing well because there are fewer now than decades ago and those that are left are serving a niche market. For example, some serve farmers who need carcasses butchered so they can sell meat privately. Others have added specialty products or services.


Facebook is simplifying its privacy controls. The changes come amid complaints about recently announced features, including "instant personalization" that tailors other Websites to users' Facebook profiles. Protesters have been organizing campaigns to quit Facebook and privacy groups have complained to regulators. One complaint has been over the fact that while Facebook allows users to hide their list of interests on their personal profile pages, the user would still show up elsewhere as "liking" that band, company or hobby. The new privacy settings will be extending to those other places as well. In a news conference, Facebook CEO Mark Zuckerberg said the company is also making it easier for users to decline the instant personalization feature.


 

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