Another former Enron executive has been ordered behind bars for securities fraud. Kenneth Rice, the former CEO of Enron's broadband unit, was sentenced to 27 months in prison for lying about the division's capabilities to Wall Street to inflate the company's stock. He could have gotten a ten-year prison term, but Rice had made a plea deal and testified for federal prosecutors in the trial of former Enron CEO Jeff Skilling and company founder Ken Lay. Rice will also turn over a Ferrari, a Colorado vacation home and jewelry he bought for his now ex-wife. Rice touted the unit's bandwidth trading operations, saying the fledgling network was up and running even though it was still in testing stages. Before sentencing by U.S. District Judge Vanessa Gilmore, Rice apologized for his role in the corporate scandal that led to Enron's 2001 collapse, and acknowledged his involvement in the scheme. He is the last of 15 former Enron executives to be sentenced after pleading guilty to crimes.
A fresh survey of the nation's service stations finds regular unleaded averaging just above $3 a gallon. That marks a decline from the peak of nearly $3.23 a gallon on May 24th. The survey is from AAA and the New Jersey-based Oil Price Information Service. In about 30 states, gasoline is now averaging below $3 a gallon.
The oil industry may scale back its plans for refinery expansions. Analysts say that's because of a push from Congress and the White House for huge increases in biofuels, such as ethanol. With President Bush calling for a 20 percent drop in gasoline use and the Senate now debating legislation for huge increases in ethanol production, oil companies see growing uncertainty about future gasoline demand and little need to expand refineries or build new ones. Valero Corporation is the nation's largest refiner. The San Antonio-based company recently boosted production capacity at its Port Arthur refinery, but spokesman Bill Day says some additional expansions have been postponed. That could be bad news for consumers. Continued limited refinery capacity could keep gasoline prices high, possibly for years to come. A shortage of refineries frequently has been blamed by politicians for the sharp price spikes in gasoline. Consumer advocates maintain the oil industry likes it that way. Statistics from the National Petrochemical and Refiners Association, Renewable Fuels Association and the Senate Energy and Natural Resources Committee indicate there are 149 refineries in the United States that are producing 136 billion gallons a year. American consumers use 143 billion gallons a year, with imports making up the difference. Annual ethanol production today is around five billion gallons. The annual ethanol production requirements being considered by Congress are 15 billion gallons by 2015 and 36 billion gallons by 2022.
A very slow week ahead in terms of economic reports. It gets started Tuesday when the Commerce Department releases figures on new home construction and building permits during May. Later in the week, we'll get updates on oil inventories, initial claims for unemployment benefits and a look into the economic crystal ball by way of the Conference Board's Index of Leading Economic Indicators.