BP Chief Executive Officer Tony Hayward says the company should know in 12 to 24 hours whether its latest effort will contain the Gulf oil spill, though he conceded the attempt is risky. Hayward says the risk had been reduced after a major pipe was cut away earlier in the day. Government officials have warned that cutting away the pipe could, at least temporarily, increase the flow of oil by 20 percent. Hayward says the company will be on the Gulf Coast for a long time cleaning up the spill and will continue until every drop of oil is recovered.
Computer models show oil leaking from the well could wind up on the East Coast and even get carried on currents across the Atlantic Ocean toward Europe. The National Center for Atmospheric Research models show that oil could enter the Gulf's loop current, go around the tip of Florida and as far north as Cape Hatteras, North Carolina. According to researchers, oil could threaten East Coast beaches by early July, but they cautioned the models were not a forecast. The oil could then head by Bermuda on its way to Europe. Martin Visbeck, a research team member with the University of Kiel in Germany, says it is unlikely any oil reaching Europe would be thick enough to be harmful.
The White House says the federal government is sending BP a $69 million bill for costs so far in its response to the Gulf of Mexico oil spill. Obama spokesman Robert Gibbs says the bill is the first to be sent to the oil company. Gibbs says he isn't sure how long the company has to pay the bill. The White House has said BP will ultimately be responsible for all costs associated with the spill.
The Obama administration is blocking all new offshore drilling in the Gulf a day after regulators approved a new permit for drilling in shallow water. The Minerals Management Service, which oversees offshore drilling, says in an e-mail from its Gulf Coast office that "until further notice" no new drilling is being allowed in the Gulf, "no matter the water depth." A copy of the e-mail was obtained by the Associated Press. The announcement comes a day after the MMS granted a new drilling permit for a site about 50 miles off the Louisiana coast, 115 feet below the ocean surface. Environmental groups said the administration was misleading the public by allowing work to resume in waters up to 500 feet deep while maintaining a moratorium on deepwater drilling.
The White House says President Barack Obama will return to the Louisiana Gulf Coast Friday. This will be Obama's third trip to the region, and it's his second visit in a week.
Fitch became the first credit ratings agency to downgrade BP, noting the extreme financial risks tied to the ongoing Gulf oil spill. "The company has so far repeatedly failed to stop the resultant oil leak and has instead reverted to containment methods that are yet to be fully implemented and are subject to potential weather-related disruption," the ratings agency says. Fitch says further downgrades are possible. Fitch estimates that BP's efforts to plug the well and clean up the oil will cost between $2 billion and $3 billion this year.
The University of Texas System is laying off some more employees. UT System Chancellor Francisco G. Cigarroa says in the current economic climate, the UT System must implement savings, wean programs that have fulfilled their purpose and look to the future. Under the plan, 19 full-time positions will be cut, including some executive offices and positions. The reduction is in addition to the recent transfer of the Institute for Public School Initiatives to the College of Education at UT-Austin and the recent system reorganization of its Distance Education and Online Learning Office. The moves reduced 119 full-time jobs. The realignment of personnel and offices is effective September 1st and is expected to lead to $2.2 million in recurrent savings.
Americans spent with caution in May after shopping more actively in April. Retailers' May sales reports underscore how fragile the consumer spending recovery remains. The International Council of Shopping Center index for revenue at stores open at least a year rose 2.6 percent in May. Among the bright spots were Victoria's Secret parent Limited Brands and T.J. Maxx parent TJX, both of which reported bigger-than-expected increases. Spending was dampened by cool weather and a quirk in the calendar: a late Memorial Day weekend that hurt May's business but should boost June's figures.
New claims for unemployment insurance fell for the second straight week, fresh evidence the job market is slowly improving. The Labor Department says initial claims for jobless benefits dropped last week by 10,000 to a seasonally adjusted 453,000. That nearly matches analyst forecasts. Still, the declines come after a sharp increase three weeks ago, and claims remain at elevated levels. Initial claims are closely watched by economists because they are considered a gauge of layoffs and a measure of companies' willingness to hire new workers.
The government reports that productivity slowed more than initially estimated in the first quarter of the year, a sign that employers are struggling to squeeze more work out of leaner staffs. The number of people filing first-time jobless claims dipped for the second consecutive week but remains elevated for the year. Productivity advanced at an annual rate of 2.8 percent. That's the slowest pace in a year and lower than the 3.6 percent rate the government initially reported last month. Labor costs declined at a 1.3 percent annual rate, slower than the 1.6 percent drop initially estimated.
The state's business tax is coming in short of budgeted projections. New revenue figures from the Texas Comptroller's Office show $3.6 billion has been collected from the business tax as of the mid-May payment deadline. The Austin American-Statesman reported the figures in its online edition. State budget estimates projected the total collection for the 2010 fiscal year would be $4.3 billion. More business tax revenue will roll in through August, but the experience over the past two years indicates about 95 percent of the total collection arrives in May. If that trend continues, Texas would be down another $500 million in revenue for the current budget.
A federal judge says she is not getting involved in whether an insurer should pay for jailed Texas financier R. Allen Stanford's latest criminal defense team. During a court hearing in Houston, U.S. District Judge Nancy Atlas said any disagreements between Stanford and the insurer, Lloyd's of London, will have to be worked out between themselves. But Atlas questioned whether Stanford's current criminal defense team was bloated with too many individuals and whether it was being efficiently run. The insurer is refusing to approve Stanford's newest criminal attorney, saying it's already spent more than $6 million on lawyers to defend Stanford in criminal and civil cases related to charges he bilked investors out of $7 billion in a ponzi scheme.
A prestigious research panel says a combination of already available technologies could significantly cut fuel consumption by cars and light trucks. The National Research Council says that fuel consumption can be dramatically reduced--in some cases by nearly half--without sacrificing safety or performance. But the technology comes at a price--anywhere from a few hundred dollars to several thousand dollars per vehicle. The report was immediately pounced on by offshore oil drilling critics as evidence there are options other than drilling to solve the nation's energy woes.
A union says it has "suspended"' a tentative agreement with American Airlines for a new contract covering about 10,000 baggage handlers and other workers. The Transport Workers Union says its president reversed a decision by a union bargaining team to send the proposed agreement to a membership vote even though it opposed the deal. Union President James C. Little says if the union can't recommend the deal, it won't send it to rank-and-file members for a vote. The union's decision is a setback for American, which is locked in difficult contract talks with pilots and flight attendants but had been making progress with ground workers.
The government says U.S. airlines operated more flights on-time in April and far fewer passengers were stuck in long tarmac delays. The 18 airlines that report statistics to the Department of Transportation were on-time 85.3 percent of the time in April, compared with a rate of 79.1 percent a year earlier and 80 percent in March. U.S. Airways posted the best on-time rate among major mainline carriers. It's third in the overall rankings behind Hawaiian and Alaska Airlines. American Airlines reported the worst on-time rate of big U.S. carriers. Regional affiliate American Eagle was last among all airlines reporting. Only four planes were stuck on the tarmac for more than three hours, down from 25 in March. One flight was stuck for more than four hours.
Treasury Secretary Timothy Geithner says the world's major economies disagree over taxing banks to pay for future bailouts. But he said the differences are narrowing in other areas of financial reform. Geithner says he did not think the group of 20 major industrial and developing countries would reach agreement at upcoming meetings in South Korea over the question of imposing a new tax on banks. But he says differences were narrowing in other areas, including how to stiffen standards on how much capital banks need to protect against a future financial crisis.
Federal Reserve Chairman Ben Bernanke says restoring the flow of loans to creditworthy small businesses would help the economic recovery. More so than big companies, small businesses rely on bank loans to expand operations and hire. Small businesses usually help drive job creation during recoveries but credit clogs have hurt hiring. Lending to small businesses is declining even though the economy is improving. In prepared remarks in Detroit, Bernanke said lending has dropped from almost $700 billion in the second quarter of 2008 to $660 billion in the first quarter of this year. Bernanke says it's hard to say whether the decline in lending is because of weaker demand or reduced supply because loans are harder to get.
Rates on 30-year fixed mortgages ticked up this week from the lowest level of the year. Freddie Mac says the average rate rose to 4.79 percent, up from 4.78 percent last week. A year ago, the rate averaged 5.29 percent. Rates dropped to a record low of 4.71 percent in December, pushed down by a Federal Reserve program that reduced borrowing costs for consumers. That campaign ended in March. Rates have fallen as investors, wary of European turmoil, shifted money into the safety of U.S. Treasury bonds. Mortgage rates tend to track the interest rates paid on long-term Treasury bonds.
Agriculture Secretary Tom Vilsack says the Obama administration's new investments in rural America will help reverse the economic decline of small towns. Vilsack laid out the administration's plan at a summit on rural economic issues in Hillsboro, Missouri, about an hour south of St. Louis. Vilsack says new investments in broadband Internet, biofuels plants and small-scale farming will help create jobs in rural areas. After touring rural areas in 22 states, Vilsack says he consistently heard complaints that small towns are losing population because they can't sustain economic growth. He says that hurts city dwellers by threatening their food supply. About 400 people attended the summit held at Jefferson College.