Tuesday PM June 8th, 2010

The man heading the Obama administration's response to the oil spill in the Gulf of Mexico says a containment cap installed on the BP rig is helping to limit the leak. Speaking at a Washington briefing, Admiral Chad Allen of the Coast Guard said that more than 14,800 barrels of oil have been kept out of Gulf waters in the last 24 hours. Allen told reporters the amount of oil kept from spilling into the Gulf "has climbed steadily" from the first day the containment cap was installed. He also said officials will be meeting with BP to assess how well it is handling claims for relief from people hurt by the spill. Allen said the aim is "to see if we need to provide any oversight." He had says BP was struggling to handle claims.

A member of the team trying to determine how much oil is gushing from BP's broken wellhead says the ultimate figure could be higher than current estimates. University of Texas engineering professor Paul Bommer says that the latest numbers are reasonable but that "we will probably have some numbers that bounce." He couldn't say how likely it was that the numbers would be a lot higher but says the cap BP is using has made a "dent" in reducing the flow. He declined to release any numbers the team is working on. Officials have said the flow rate increased after crews recently cut a damaged pipe to fit a containment cap over it. They recently estimated that the cap is collecting a third to three-quarters of the oil spewing out.

The government says water tests have confirmed underwater oil plumes as far as 142 miles from the BP oil spill, but that concentrations are "very low." NOAA administrator Jane Lubchenco said that the tests conducted at three sites by a University of South Florida research vessel confirmed oil as far as 3,300 feet below the surface 42 miles northeast of the well site and also oil below-surface oil 142 miles southeast. Lubchenko said the analysis "indicate there is definitely oil sub surface. It's in very low concentrations" of 0.5 parts per million. BP had questioned whether oil actually was forming below water.

President Barack Obama is defending his response to the oil spill in the Gulf of Mexico, telling NBC he was visiting the region "before most of these talking heads were even paying attention." In a Today show interview airing today, Obama said he's "not concerned" about the damage the crisis may be doing to his presidency, despite polls suggesting that most Americans think he has handled it poorly. He's critical of BP and its chairman in the interview. Obama says Tony Hayward "wouldn't be working for me" after predicting that environmental impact of the Gulf of Mexico oil spill would likely be "very, very modest."

Tony Hayward, the embattled CEO of BP, will make his first appearance on Capitol Hill since the catastrophic Gulf oil spill when he testifies before a Congressional committee next week. Hayward is scheduled to appear at a House Energy and Commerce Oversight and Investigations subcommittee hearing June 17th. The subject of the hearing is the role of BP in the Deepwater Horizon explosion and oil spill. Hayward enraged some when he said, "I'd like my life back." He's sure to receive pointed questions from lawmakers about the cause of the accident and the response to it.

Senate Democrats are moving to quintuple the tax that oil companies pay into an oil spill liability fund. The move would raise $15 billion over the coming decade as Congress seeks to shore up the fund in the wake of the catastrophic spill in the Gulf of Mexico. But it's also being used to ease a tax hike passed by the House on investment fund managers. The new legislation would raise the tax on oil produced offshore from 8 cents to 41 cents per barrel. That's nine cents higher than legislation that passed the house last month. The tax changes are being made as the Senate again takes up grab-bag legislation extending unemployment benefits and a variety of expired tax breaks enjoyed by both individuals and businesses.

Alabama Governor Bob Riley has called out the National Guard to help spread the word among coastal residents that they can apply to BP for oil spill compensation. Riley says that fewer than 30 people have applied for lost rental revenue out of 17,000 condominiums in the region. And he says only 70 applications have been filed be fishing captains even though the state has about 1,000 charter fishing boats. He says guardsmen will go through communities for three weeks telling people about the claims process. The governor says BP has promised to take two days or less to decide on applications.

British officials reacting to the Gulf of Mexico oil spill say they plan to double the number of inspections carried out at oil rigs in the North Sea. Britain's Department of Energy says the average number of annual environmental checks aboard the country's roughly 24 drilling rigs would rise from eight to 16. The department says it's hiring three extra inspectors to help pursue the more aggressive program. The department did not provide details of the inspections, but said they involved visits to each rig. Britain's energy secretary says that while the nation's offshore energy industry rules are robust, the catastrophic Gulf incident is worth some extra thought.

Officials with Natchez-based Callon Petroleum, which has deep-water wells in the Gulf of Mexico, say they don't have immediate plans that will be affected by the six-month moratorium on offshore drilling. Callon spokesman Terry Trovato tells the Natchez Democrat that the company has not drilled any offshore wells in the Gulf in the last 18 months and has no plans to do so for the remainder of the year. Trovato says operations at its two major oil-producing wells, Medusa and Habanero, have not been affected by the continuing BP oil spill. He says 94 percent of Callon's budget for capital expenditure for 2010 is being spent in the Permian Basin of West Texas and in the Haynesville shale in northern Louisiana.


Job openings jumped in April by the most in 16 months, a sign that hiring by private employers is healthy despite last week's disappointing jobs report. The Labor Department says the number of jobs advertised at the end of April rose to 3.1 million from 2.8 million in March. That's the most openings since December 2008. Job openings have risen by about 740,000 since bottoming out at about 2.3 million in July. But they remain far below pre-recession levels of about 4.5 million openings per month. The biggest increases in available jobs were in professional and business services, leisure and hospitality and education and health services. Government job openings fell by 36,000.


The White House is trying to show federal agency bureaucrats that President Barack Obama is serious about his promise to freeze most domestic agency budgets. Budget chief Peter Orszag is directing agencies to target less effective programs for cuts as the administration puts together a budget plan for the fiscal year starting September, 2011. As he did last year, Orszag is pressing agencies to cut five percent so that savings could be used to boost other programs. But the White House is resisting calls from Republicans to cut spending immediately by rescinding already appropriated money. The administration is instead seeking to add billions in new stimulus money to legislation pending before Congress.


General Motors is recalling about 1.5 million vehicles worldwide to address a problem with a heated windshield wiper fluid system that could lead to a fire. The recall affects several pickup trucks, sport utility vehicles and passenger car models from the 2006 to 2009 model years. GM conducted a similar recall in 2008 but came across new reports of fires in vehicles that had been fixed. GM plans to disable the heated washer fluid system module that could lead to fires. GM will pay owners and those leasing vehicles $100 since the feature is being disabled. GM says there are no known injuries or crashes reported. GM is aware of five fires. Nearly 1.4 million vehicles are in the U.S. more than 100,000 vehicles are in Canada, Mexico and elsewhere.

About 900 General Motors dealerships that the company had planned to cut loose appear to be getting a reprieve. GM North America President Mark Reuss tells the Associated Press that the automaker should wind up with about 5,000 dealers in July. That's the end of a process that allows dealers to appeal GM's decision. The company originally planned to have only 4,100 dealers across the country. GM says it wanted to avoid the expense and time of the closures. Reuss and other new leaders at the company also feel shedding dealers isn't critical for GM to achieve profitability. GM won't estimate how many jobs the decision will save, but an auto industry trade group says about 50 people work at an average new-car dealership.


The government says it will auction 2.62 million warrants it received from Houston-based Sterling Bancshares as part of its effort to recoup costs of the $700 billion financial bailout. The Treasury Department says the auction of the warrants will take place on Wednesday. It set a minimum bid price of 85 cents per warrant. A warrant gives the purchaser the right to buy common stock at a fixed price. The government obtained the warrants when it provided sterling Bancshares with $125.2 million at the height of the financial crisis in December 2008. The bank repaid its bailout in May 2009.


Earnings

Luxury retailer Neiman Marcus reports fiscal third-quarter net income of $18.5 million in contrast to a loss of $3.1 million a year earlier as revenue improved. Luxury retailers have seen business perk up as wealthy shoppers abandon their more cautious spending as the economy improves. The privately held retailer says revenue in stores open at least one year rose 9.1 percent. That metric is a key indicator of a retailer's performance because it excludes results at newly-opened or closed stores.


 

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