Thursday PM October 25th, 2007

BP agrees to fines and restitutions from Texas City refinery blast, Alaskan oil spills and price manipulation case...Pemex says rescuers found two more survivors of collision between drilling rig and oil platform in Gulf of Mexico...Sales of new homes edged higher last month, but housing market still seen in slump...

Federal officials say BP will pay $373 million in fines and restitution under a deal announced today. The deal ends a federal investigation into whether the British oil giant manipulated energy markets in 2004. Also, an official says four ex-BP employees are expected to be indicted by a grand jury in Chicago on mail and wire fraud charges. Feds have been investigating whether BP traders tried to pump up profits by cornering the propane market. BP also is grappling with fallout from earlier problems, such as an Alaskan oil spill and a fatal 2005 blast at its Texas City refinery. Both have resulted in ongoing higher maintenance costs. Officials say part of the fines that BP has agreed to pay will settle a related investigation into the deadly Texas City refinery blast that killed 15 people and injured more than 170. Acting Attorney General Peter Keisler says the federal probe of BP and its executives will continue during a three-year probationary period. In a statement, a top BP executive issued an apology, saying the company's operations failed to meet its own standards and the requirements of the law.


Pemex says rescuers have found two more survivors of a collision between a drilling rig and oil platform in stormy Gulf of Mexico seas. Mexican authorities say another body has been recovered--bringing the death toll to 19. Four people are still missing. Pemex director Jesus Reyes Heroles told Mexican senators there would be an investigation of the tragedy, which occurred Tuesday during stormy weather. More than 60 workers have been rescued. Dozens of workers and five rescue personnel abandoned a subcontractor's drilling rig known as the Usumacinta on Tuesday--after it hit the Kab 101 light-production platform. Pemex has said it will take several days to control the leak of mainly gas and some oil.


The government says sales of new homes edged higher last month, but the housing market is still seen in a deep slump. The Commerce Department says new home sales surged 4.8 percent. But it revised August's sales lower, dropping to the slowest pace in more than a decade. It was in August that the credit crunch was most severe. The September rebound was said led by a nearly 38 percent gain in the west. National Association of Home Builders chief economist Dave Seiders says the reported increase is suspect. Seiders also says the government report fails to take into account sales cancellations. He says reports from builders indicate that cancellations were moving up aggressively over the past couple of months. Even with the latest modest increase, the level of new home sales last month was 23 percent below a year ago. The National Association of Realtors this week said sales of previously-owned homes fell 8 percent last month.


Oil futures rose in Asia, extending a price increase that came after figures showed large and unexpected declines in U.S. crude and gasoline inventories last week. Analysts say the decline in crude supplies was largely because of a drop in imports. They say the recent rise in crude prices may prompt an increase in imports and supplies in the weeks to come. Energy Secretary Samuel Bodman renewed his call on OPEC to produce more oil, and several Organization of Petroleum Exporting Countries ministers appear willing to comply. Dow Jones Newswires says that some OPEC officials may ask the oil cartel to agree to a production increase of 500,000 barrels a day at its November meeting.


Bank of America says it will eliminate 3,000 jobs. The announcement comes less than a week after the nation's second-largest bank reported a huge drop in earnings for the third quarter. The cuts will affect less than two percent of the company's staff. Most of them will be from Bank of America's global corporate and investment banking unit. The Charlotte-based bank also says it's launching a strategic review of its investment banking business. Gene Taylor, head of global corporate and investment banking, will retire at the end of this year. He will be replaced by Brian Moynihan, who ran the company's global wealth and investment management business.


Losses from the devastating southern California wildfires are pegged at $1 billion in San Diego County alone. And the tally will only go higher as other areas add up the costs to rebuild. Still, while the impact is huge, experts say the region's strong economy should make for a fairly quick rebound. Stephen Levy, senior economist at the Center for Continuing Study of the California Economy, says while "it's a human tragedy, it's not an economic tragedy." Levy says, "it's asset losses, it's property damage--probably a lot less than what people have lost through foreclosures.'' About 1,500 homes and more than 410,000 acres have been scorched across seven southern California counties plagued by the wind-driven fires.


The Small Business Administration is providing federal disaster aid to Galveston and Jefferson Counties. Governor Rick Perry says the aid comes at his request to help recovery in the wake of Hurricane Humberto. The hurricane struck the upper Texas Gulf Coast and left damage from High Island to Beaumont and into Louisiana. The designation also makes neighboring Texas counties of Brazoria, Chambers, Hardin, Harris, Liberty and Orange eligible for the same disaster aid. Perry's also asked for recovery assistance from other state and federal agencies.


House Democrats are unveiling a trillion-dollar tax plan designed to lower taxes for lower- and middle-income people. New York Congressman Charles Rangel, the party's top tax writer, says the changes would reduce taxes for almost all families with incomes under a half-million dollars. Some 91 million families would receive tax relief. The plan would repeal the alternative minimum tax and would be paid for by taxing the wealthy, some corporations and investors more. The package includes a one-year temporary measure to shield middle-income families who might get hit by the alternative minimum tax. It would also extend several dozen specific tax credits for teachers, veterans and those with education expenses. The more far-reaching changes are not likely to come up for a vote until next year. House Republicans quickly voiced opposition to the long-term plan, calling it "the largest individual income tax increase in history."


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