Wednesday PM July 21th, 2010

Storms are threatening to delay BP's undersea efforts to permanently plug the leaky well in the Gulf of Mexico. The federal government's oil spill chief says that if a storm moves into the Gulf, ships would have to leave and BP couldn't observe the capped well. They could decide to open the cap that's choked off the flow of oil for nearly a week. Scientists are closely watching to determine if the cap is displacing pressure and causing leaks underground. Federal forecasters say the storm system is weakening as it moves over Puerto Rico, Haiti and the Dominican Republic and toward the Gulf, but it has a 60 percent chance of becoming a tropical storm by Friday.

BP says it has reduced the number of boats skimming for oil in the Gulf of Mexico by more than a quarter. The move comes after BP stopped oil from barreling into the Gulf of Mexico last week. It has some worried the oil giant is forgetting its promises to heal the region. About 1,600 boats are now operating daily in waters off Alabama, Florida and Mississippi on any given day. The director of BP's "vessels of opportunity" program in the region says it's a reduction of about 600 boats per day from a week ago. Matt Kissinger says less oil has been spotted in recent days, so fewer boats are needed to skim for the time being.

The House has passed legislation that promotes new ways to clean up oil spills and approved a bill that aims to make deepwater drilling safer. The measures responding to the BP oil spill in the Gulf of Mexico cleared the House by voice votes Wednesday and now go to the Senate. The first bill would increase from $22 million to $48 million the amount of federal money spent on research and development of new cleanup methods and technologies. The second bill promotes research on devices designed to prevent accidents, such as the blowout preventer that failed in the explosion of the Deepwater Horizon rig. And it deals with backup systems intended to shut off wells in an accident.

The government's point man on the oil spill is downplaying worries that BP's capped well is buckling under the pressure. Retired Coast Guard Admiral Thad Allen says at least five leaks have been discovered around the well machinery, but he dismissed them as "very small drips," like an oil leak in a car. Allen also says seepage detected along the sea floor less than two miles away is coming from an older well no longer in production. Over the past few days, since a 75-ton cap was placed over the mile-deep well to keep the oil bottled up inside, BP and government engineers have been watching closely to see whether it would hold. a rupture could cause a bigger and harder-to-control disaster. Allen has granted BP repeated 24-hour extensions to keep the cap in place. BP says the relief wells remain on track.

BP acknowledges it posted on its Website an altered photo that exaggerates the activity at its Gulf oil spill command center in Houston. The picture posted over the weekend showed workers monitoring a bank of ten giant video screens displaying underwater images. Spokesman Scott Dean says that two screens were blank in the original picture and a staff photographer used Photoshop software to add images. Dean says the company put the unaltered picture up Monday after a blogger for the Website Americablog wrote about telltale discrepancies. He says the photographer was showing off his Photoshop skills and there was no ill intent. Dean says BP has ordered workers to use Photoshop only for things like color correction, cropping and removing glare.

President Barack Obama has signed into law an overhaul of banking and Wall Street regulations that he says will create the strongest financial protections for consumers in history. The law is a legislative victory for the president, who has made tightening restrictions on banks a signature issue since taking office amid the nation's financial meltdown. Obama says the reforms will end many of the Wall Street practices that sent the economy into the worst recession since the Great Depression. In an ironic touch, Obama signed the bill in the Ronald Reagan building, named after a president who championed deregulation. Obama was joined by scores of consumer advocates, business executives and lawmakers who supported the bill.

Applications for home loans rose last week as rates on 30-year and 15-year fixed-ate loans sank to the lowest levels on the survey's record. The Mortgage Bankers Association says overall applications increased nearly 7.6 percent from a week earlier. That incorporates an adjustment for the Independence Day holiday. Applications to refinance home loans climbed 8.6 percent. applications taken out to purchase homes rose 3.4 percent. The average rate for a 30-year fixed loan fell to 4.59 percent last week and the rate for a 15-year fixed loan dropped to 4.05 percent. Both were the lowest rates recorded in the MBA's survey, which has been conducted since 1990.

A government watchdog says there has been little impact from the multibillion-dollar effort to help at-risk homeowners avoid foreclosure. Special inspector general for the financial bailouts Neil Barofsky says the program has not "put an appreciable dent in foreclosure filings." He says the Treasury Department has ignored earlier demands that it set clearer goals for the program. The homeownership program aims to reduce mortgage payments for millions of homeowners who can't afford their monthly bills. Recent data suggest it has helped about 400,000 households avoid foreclosure. About 530,000 have fallen out of the program. Barofsky is testifying before the Senate Finance Committee. The committee also will hear from leaders of two other bodies that oversee the $700 billion bailout program.

Federal Reserve Chairman Ben Bernanke tells Congress the economic outlook remains "unusually uncertain," and the Fed is ready to take new steps to keep the recovery alive if the economy worsens. The Fed chief, in prepared testimony to the Senate Banking Committee, says record low interest rates are still needed to bolster the economy and pledges once again to keep them there for an "extended period." Although Bernanke downplays the odds that the economy will slide back into a "double-dip" recession, he acknowledges that the "economic outlook remains unusually uncertain." Given that, the Fed is "prepared to take further policy actions as needed" to keep the recovery on track, he says. He doesn't outline specific measures.

A popular tariff reduction bill has cleared the House after Republican opposition to the measure wilted. Republican leaders had pushed for lawmakers to vote against the tariff bill, saying that reducing tariffs for certain U.S. industries violated the GOP's self-imposed moratorium on all special interest earmarks. But the legislation had strong support from Republican allies in the business community, which said it supported tens of thousands of jobs, and in the end, a majority of Republicans and all but one Democrat voted for it. It passed on a vote of 378-43. The bill would reduce or suspend tariffs on 639 items, mostly chemicals and other components used in manufacturing processes. The last time it came up, in 2006, it passed 412-2. It now must be considered by the Senate.

Pennsylvania regulators are lifting their hold on some drilling permits filed by a natural gas company they blame for contaminating the drinking water of 14 homes in Dimock. The State Department of Environmental Protection says it’s taking the steps to reward Houston-based Cabot Oil & Gas for plugging three problem wells and repairing a fourth. Cabot was ordered to take the action in April. Officials continue to hold up Cabot's drilling permits in the affected area, which is in Susquehanna County in northeastern Pennsylvania. Cabot is still working to permanently fix the polluted water wells. A resident's well exploded on New Year's Day 2009, prompting a state investigation that found Cabot had allowed combustible gas to escape into the region's groundwater supplies.

The U.S. Environmental Protection Agency is preparing this week for a third round of hearings--this time in Canonsburg, Pennsylvania--on the controversial natural gas drilling technique called hydraulic fracturing, or "fracking." A wealth of natural gas is locked into the Marcellus shale deep beneath Pennsylvania, New York, West Virginia and Ohio. Some geologists estimate it's enough to supply the entire East Coast for 50 years but there are fears fracking could pollute water above and below ground and deplete aquifers. The process is currently exempt from federal regulation. The oil and gas industry says it's been safe for many years and is needed to keep the nation on a path to energy independence.

A new report says more than 1,000 counties across the United States could face potential water shortages by mid-century as warmer temperatures deplete supplies and agricultural and consumer demand for water rises. The report, released by the Natural Resources Defense Council, says some regions including the northeast could see a boost to water supplies as climate change shifts weather patterns. But for much of the rest of the country, the group paints a sobering picture of warm temperatures further taxing aquifers already stressed by heavy use. The report did not factor in future improvements to water supply systems. Fourteen states were highlighted as being most at risk: Arizona, Arkansas, California, Colorado, Florida, Idaho, Kansas, Mississippi, Montana, Nebraska, Nevada, New Mexico, Oklahoma and Texas.

American Airlines is losing less money these days. but it's still on a losing streak that's approaching two years. The nation's second-largest airline says it lost $10.7 million in the second quarter. That compares to a loss of $390 million a year earlier. Parent AMR says revenue rose 16 percent from a year ago.

American Airlines orders 35 Boeing jets to upgrade its fleet and phase out gas-guzzling planes. American says the Boeing 737-800 jets will be delivered in 2011 and 2012. American has a commitment to finance all 35 planes but did not disclose details. The order adds to those for 84 other 737s American started receiving in April 2009. the Boeing jets replace MD-80 series aircraft that burn more fuel and have been the subject of safety investigations. American estimates the new planes will save 800,000 gallons of fuel per plane each year. Fuel and labor are an airline's top expenses. CEO Gerard Arpey said it wasn't easy to decide to order new planes during a weak economy. AMR has lost more than $4 billion since the start of 2008.

Aircraft orders at the Farnborough International Airshow this week have reached $25 billion, indicating a rapid recovery in the sector, and more are expected. Excitement about the strong start of announcements for commercial aircraft has been dampened by a depressed outlook for defense sales, as many governments are cutting spending as economies recover from recession. But commercial plane orders have so far shown a rebound in global demand. Air Lease Corporation has been the star buyer, dividing orders for 115 planes worth $8.6 billion among Boeing, Airbus and French-Italian regional turboprop manufacturer ATR.

Federal officials are ordering U.S. Airlines to step up inspections of more than 100 Boeing 767 airliners for cracks that could cause their engines to fall off. The cracks can occur in the pylons that attach engines to wings. The safety order issued by the Federal Aviation Administration affects 138 planes registered in the United States out of a global fleet of 314 planes. Aviation officials in other countries usually follow the FAA's lead on safety of U.S.-manufactured planes. The order only applies to 767s that have the original pylon design. Boeing changed the design after the problem first became known.

Nolan Ryan is urging a bankruptcy judge to auction off the Texas Rangers on August 4th as planned, saying a delay could hurt the team and maybe even cost them slugger Josh Hamilton. The Hall of Fame pitcher testified in his capacity as Rangers team president. He and Pittsburgh sports attorney Chuck Greenberg have the endorsement of Major League Baseball to buy the team, but the sale has wound up in a contentious bankruptcy proceeding. Creditors and even the court-appointed restructuring officer want a delay so other bidders can line up financing. Ryan says the auction should be held as planned to avoid distractions as the Rangers make a run for the American League West title. He also worries about having financing in order for next season and told the judge he was specifically worried about keeping Hamilton. Through Tuesday, Hamilton was leading the majors with a .357 batting average.

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