Oil prices are higher after a government report showed gasoline inventories were unchanged when a significant increase had been expected. The Energy Information Agency, the statistical arm of the Energy Department, reports that gasoline inventories were flat last week. Analysts had expected an increase of two million barrels. On the other hand, the EIA says crude stockpiles rose while a draw was predicted. According to the EIA, crude oil stockpiles rose 100,000 barrels, compared with an average survey estimate of a 400,000-barrel draw. Distillate stocks, which include heating oil and diesel fuel, climbed 300,000 barrels, compared with forecasts of a 1.5 million barrel build. Refinery operations dropped to 89.2 percent of capacity from 89.6 percent the week before. Analysts had expected an eight-tenths of a percent increase.
The Senate is working on a wide-ranging energy bill that requires a big jump in fuel efficiency for cars, SUVs and light trucks. With consumers groaning every time they see the cost of a gallon of gas, the measure calls for a increase in fuel economy to a fleet average of 35 miles per gallon by 2020. That's 30 percent more than what cars now have to get and more than a 50 percent jump for SUVs and pickup trucks. Auto industry executives warned last week that those requirements may not be achievable. The Senate bill also calls for greater use of ethanol, and would make oil industry price gouging a federal crime. Republicans plan to push for more domestic production of oil, natural gas and coal as well as expanding nuclear power. Senate Minority Leader Mitch McConnell says the Democratic bill doesn't deal with increased production and "won't do a solitary thing to reduce gas prices.''
Retailers saw business picking up last month by more than twice the amount economists expected, with the biggest jump since January of last year. The Commerce Department says retail sales rose 1.4 percent in May, following a revised one-tenth of a percent decline in April. Excluding autos, retail sales gained a strong 1.3 percent. Analysts were expecting an overall increase of six-tenths of one percent, and a seven-tenths-of-a-percent increase when auto sales are excluded. The figures are a strong sign the economy was rebounding from its first-quarter sluggishness. It suggests Americans are spending their money, and consumer spending is a big part of the economy. It accounts for about 70 percent of the gross domestic product, which is the scoreboard for the economy.
Businesses inventories increased in April at a bigger-than-expected rate. The Commerce Department reports businesses increased their unsold stocks of goods by four-tenths of a percent in April. Wall Street was looking for stockpiles to move up three-tenths of a percent during April. The Commerce Department also says inventories were unchanged in March, an upward revision from the one-tenth-of-a-percent decline reported earlier. The bigger-than-expected inventory growth is a positive sign for the economy, adding to evidence the inventory correction is about finished.
Southwest Airlines' CEO said that revenue isn't growing as much as the Dallas based airline had planned. Joe Kelly told the Merrill Lynch Global Transportation Conference in Chicago that the lagging revenue is jeopardizing Southwest's ability to meet its earnings growth target. He adds it could potentially lead to a reduction in capacity growth. Kelly said that discount carrier needs unit revenue growth of five percent to meet its target of a 15 percent return on invested capital. Based on the airline's performance so far this year and projections for the rest of 2007, Kelly said Southwest won't meet that target. Southwest is one of several U.S. carriers that in recent weeks have pointed to a weakening domestic revenue environment. That has helped push airline stocks sharply lower.
TXU Corporation says it will add systems designed to reduce emissions of mercury from its coal-fired power plants. Dallas-based TXU says it's the country's largest voluntary program to reduce mercury pollution emissions. TXU is scheduled to ask state regulators to approve a new coal-fired plant that's raised environmental concerns. TXU was joined in its announcement by private equity firms Kohlberg Kravis Roberts and Texas Pacific Group. The two are trying to close their $32 billion purchase of TXU. Waco Mayor Virginia DuPuy says TXU is making a significant commitment to cleaner air ahead of new rules by the Environmental Protection Agency. Waco is among the cities closest to the proposed location of two new coal-burning units at Oak Grove, which is up for state review.
More now-former Swift meatpacking plant workers in Cactus have been sentenced in an illegal immigration investigation. A federal judge in Amarillo this week sentenced 13 ex-employees. Twelve pleaded guilty to using fraudulently obtained identity documents to secure employment. Their sentences range from six months, to one year and one day behind bars. Another person received an eight-month prison term for falsely representing a social security number as belonging to him. In all, 53 people were arrested during the December 12th raid. All but four who pleaded guilty--have been sentenced. No charges were filed against Swift.