Tuesday PM June 29th, 2010

BP and the Coast Guard are sending oil-scooping skimming ships in the Gulf of Mexico back to shore because nasty weather is churning up rough seas and powerful winds. U.S. Coast Guard Lieutenant Dave French says that all efforts had been halted for now off the Louisiana coast. Although Tropical Storm Alex was projected to stay well away from the spill zone before possibly making landfall as a hurricane over Mexico, its outer edges were causing problems out in the Gulf. Wayne Hebert, who helps manage skimming operations for BP, says all near-shore skimmers are idled off the coasts of Florida, Alabama and Mississippi. Waves were as high as 12 feet in some parts of the Gulf. The surging waves and nasty weather make skimming work unsafe and ineffective, and also can mangle oil-soaking boom.

BP is floating a financial lifeline to the owners, operators and suppliers of the gas stations around America that bear its name and have been struggling because of boycotts prompted by the Gulf spill. The head of a trade group that represents distributors of BP gasoline in the U.S. tells the Associated Press that the company is in the process of informing outlets that they will be getting cash in their pockets, reductions in credit card fees and help with more national advertising. John Kleine of the BP Amoco Marketers Association says the cash component will be based on distributors' volume and will be more for outlets in the Gulf than for those elsewhere in the country. He estimates the total package BP is offering at roughly $50 million to $70 million.

A federal appeals court in New Orleans will hear the government's appeal of a ruling overturning the deepwater drilling ban in the Gulf of Mexico on July 8th. The six-month moratorium was ordered in late May by the Barack Obama's administration after the Deepwater Horizon disaster. A group of offshore petroleum service companies sued, saying the government had not justified the widespread ban. They also said the moratorium would inflict long-term economic damage. U.S. District Judge Martin Feldman agreed with the companies and barred enforcement on June 23rd. The clerk's office at the 5th U.S. Circuit Court of Appeals said the court has not yet decided whether the case will be heard by a single judge or a three-judge panel.

BP has met its July 1st deadline to pay the federal government for the initial costs of responding to the Gulf oil spill. The Obama administration says BP paid two bills totaling about $71 million earlier this month. The government had set a Thursday deadline for the largest of the two bills, which charged the company $69 million. The administration says the oil company is still reviewing and processing a third bill for $51.4 million. The White House has long said that as the responsible party, BP must pay all costs associated with the response to the spill.

A senior American energy official says the oil gushing in the Gulf dramatically illustrates the need for investing in renewable sources of energy. David Sandalow, an assistant energy secretary, says the oil spill is a "tragic situation" that "underscores the need for a transition to a clean energy economy." Sandalow was speaking during a meeting of international officials in Abu Dhabi, the capital of the United Arab Emirates. the oil-rich sheikdom is investing heavily in renewable energy projects. This week's meeting is meant to lay the groundwork for a clean energy summit to be held in Washington next month.

Senators say President Barack Obama is insisting that any energy legislation put a price on carbon emissions--something many Republicans call an energy tax they can't accept. Senators John Kerry and Joe Lieberman told reporters after meeting with the president that Obama was clear an energy bill must cap and price the carbon emissions blamed for global warming. But Kerry and Lieberman, the authors of proposed climate legislation, say they saw potential for compromise with the GOP and were willing to scale back their aims. Republican Senators said after the meeting that they could only accept a bill without what they called an energy tax. That left the path to compromise unclear despite urgency from the Gulf oil spill.


The House has rejected an extension of unemployment benefits because of concerns about the growing national debt, meaning payments will continue to phase out for more than 200,000 people a week. The last extension expired at the end of May. House Democrats said more than a million people who have been laid off for long stretches have already lost benefits. The bill would have extended benefits through the end of November, at a cost of $33.9 billion. Democrats brought up the bill under a special procedure in which no amendments were allowed and debate was limited. Under the procedure, the bill needed a two-thirds majority to pass.


A monthly survey shows consumers' confidence in the economy tumbled in June as worries about jobs and the overall strength of a recovery flared. The Conference Board says that its consumer confidence index dropped almost ten points to 52.9, down from the revised 62.7 in May. Economists surveyed by Thomson Reuters had been expecting the reading to dip only slightly to 62.8. June's reading marked the biggest drop since February, when the index fell ten points. The index had risen for three straight months. 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 in April rose for the first time in seven months as government tax incentives helped to bolster the housing market. The Standard & Poor's/Case-Shiller 20-city home price index posted an 0.8 percent gain. It had fallen in each of the past six months. Eighteen of 20 cities showed price increases month over month. Only Miami and New York recorded price declines. The gains highlight the impact of the federal tax credits for homebuyers. Buyers rushed to purchase before the tax credits expired at the end of April. Nationally, prices have risen 3.8 percent from their April 2009 bottom. But they remain 30 percent below their July 2006 peak.


Top United Nations economic officials urge less global dependence on the U.S. dollar in a report that calls for broad changes to the world's financial policies and markets. A major economic and social survey criticizes use of the dollar as the global reserve currency. It says the dollar ties the global economy to a U.S. monetary policy that is "based only on the state of the United States economy." Instead, senior UN economic officials recommend greater reliance on an alternative to the U.S. dollar known as Special Drawing Rights. The International Monetary Fund uses SDRs as an accounting unit to let nations hold funds within the IMF based on a basket of major currencies. Several countries including China and Russia have called for an alternative to the dollar as a reserve currency and suggested using the IMF's internal accounting unit. The UN survey also proposes a new international agency to coordinate financial regulation of global currency reserves.


Today was the deadline day for Texas Lottery bids. Companies competing to run the $3 billion lottery had through this afternoon to enter bids with the state. Three firms were expected to submit proposals: Scientific Games, Intralot and GTECH, which holds the current contract. The Texas Lottery operations contract is a big one, and it rarely comes up for bid. So the stakes are high. The winning company could make as much as $100 million per year. The bidding has been caught in controversy this year because a consulting company the commission hired to help write the bid request had been doing business with GTECH. That led to questions about whether GTech has an unfair advantage. The Texas Lottery Commission has canceled the consultant company's deal.


Fans of Texas peaches have reason to rejoice. Experts say the 2010 harvest could mean a bumper crop. Gary Hutton of Hutton Farms, the largest peach producer in Parker County, says it's been 2006 since his crop was this good. The former banker says peaches should be plentiful for the July 10th Parker County Peach Festival in Weatherford, about 30 miles west of Fort Worth. His family has operated orchards for 30 years. Jim Kamas is a fruit specialist with the Texas Agrilife Extension Service office in Gillespie County, where about 40 percent of the Texas peach crop is produced. Kamas says "it's going to be a banner year" for peaches. The Texas A&M assistant professor says the weather cooperated in 2010, after several years of late spring frosts, flooding and even drought.


Arkansas-based Allens has announced plans to expand its vegetable plants in Arkansas and New York and to buy a plant in Texas. The Siloam Springs Company said in a news release it will spend $13.5 million to expand its sweet potato canning plant in Van Buren. It will spend another $2.2 million to expand its plant in Oakfield, New York, with canned and frozen vegetable operations. Allens also said it is purchasing a former Conagra plant in Fort Worth, for use as a distribution center. A purchase price was not disclosed. The company says 100 jobs will be added at the Texas plant. No job additions were announced for the plants in Arkansas and New York.


A new study says American farmers are producing more food than ever but agricultural research is too focused on production and should pay more attention to its unintended consequences. The report was released by the National Academies' National Research Council. The group advises the federal government on science and engineering. The report's authors say U.S. farmers grow 158 percent more food than they did 50 years ago. But they say research is too focused on clearing hurdles to greater production. The report calls for a broader approach to research that spends more time and money on trying to figure out what kind of problems that heavy production can lead to.


Online video site Hulu has launched a $9.99-per-month paid section, under pressure from its media company parents to generate a profit. A new tab opened up on the site directing users to Hulu Plus, a section that shows current season episodes of "Glee," "The Office," "House," and other shows from broadcasters ABC, Fox and NBC. The service also allows viewing of multiple back seasons of shows. The new site is initially available by invitation only on computers, Apple.'s iPad, iPhones and on TV using certain Samsung Blu-Ray players. It's coming soon to Sony's Playstation 3, and there are plans to launch on Microsoft's XBox early next year. A free, ad-supported version of Hulu remains available, but with only recent episodes of shows.


 

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