Americans are not known for belt-tightening, but there are signs some folks are trying to improve their personal balance sheets so they're ready for tougher times that might lie ahead. An advertising executive in Illinois says she's decided to keep her 12-year-old vehicle with 125,000 miles instead of taking on a new car payment. Her husband says he's "aggressively paying off credit card debt.'' Jobs are getting harder to find. The mortgage crunch has made it more difficult for homeowners to borrow against their homes, shutting off what has been a major source of extra cash. Budgets are also being squeezed by rising food and energy prices. But Americans are historically much better spenders than they are savers. Greg McBride at bankrate.com says people will say they need to cut back, but often lack the willpower to do it. One financial planner says "if you're living on the edge when times are good, just what are you going to do when they get bad?''
The credit crisis is walloping more victims, with the nation's largest consumer bank and its cross-town rival taking a financial beating over the past few months. Bank of America says its earnings from October to December spiraled down 95 percent compared to the same period in 2006. Wachovia reports its fourth-quarter earnings tumbled 98 percent from one year earlier. Shares of the two Charlotte, North Carolina banks were shedding value in response. Bank of America says the bank is "cautiously optimistic about 2008,'' but acknowledges "economic growth will be anemic at best in the first half.'' It's the latest slide in earnings reported by U.S. banks, with blame landing on a wilting economy, weak credit markets and Americans who can't pay their bills.
National Semiconductor will cut 115 jobs at its Arlington computer chip factory. That's about one-fourth of the plant's 469 workers. The plant makes analog chips used in cell phones. The Arlington reductions are part of 200 job cuts nationwide that the California-based company announced on Monday. Officials say they're eliminating the use of older technology. Recently, analysts have given a more cautious outlook for the semiconductor industry because of concern over higher inventories and the possibility of slower demand. This month, Banc of America Securities downgraded the shares of National Semiconductor, industry leader Intel, Dallas-based Texas Instruments and several other chipmakers.
The Texas PetroIndex is reaching record highs. Economist Karr Ingham is the author of the index produced by the Texas Alliance of Energy Producers.
"The Texas E&P economy--according to my calculations per the Texas PetroIndex, a representative tracking device for the Texas oil and gas exploration and production industry—indicates just over eight points, just over eight percent increase in 2007 compared to 2006. This, of course, comes on the heels, though, of four years of strong growth prior to that in which we had double-digit year-over-year growth in the petroleum index, so the aggregate result of all of that is a very stoutly-growing Texas oil and gas economy over the last five years or so."
Ingham says it's interesting to see how oil prices are so closely tied to other segments of the economy.
"I'm continually frustrated by what appears to be the utter disconnect among most folks between these various markets and what they mean to one another. And then once you branch out of the energy world and then connect energy markets and what's going on in terms of energy prices to the overall economy, you know all you have to do is turn on the television and listen to some talking head on the business news prognosticate about what the likely effects of energy prices are going to be on the overall economy. Are rising energy prices going to cause a recession, are they going to cause inflation? Well, there's the connection, right there! Of course, we've had turmoil in the financial markets globally and then here in the U.S., which caused an immediate three or four dollar-a-barrel drop in the price of crude oil just on the, just on the notion that slowing economies result in lower demand for energy products."
Crude oil ended 2007 at 50 percent higher at year-end. Rig counts ended 2007 at ten percent higher than last year. Total production value for oil and gas last year was nearly $65 billion.
Alaska lawmakers and four of the state's ex-governors say the Exxon Valdez tanker spill violated a social contract between ExxonMobil and the state. That's the contention they make in a brief filed with the U.S. Supreme Court. The brief says that as a result, the Irving-based oil company should be subject to punitive damages for the environmental catastrophe. The tanker Exxon Valdez hit a reef in Alaska's Prince William Sound in 1989, causing an 11-million-gallon oil spill. The high court is scheduled to hear oral arguments in Exxon's appeal on February 27th. The oil giant's been appealing the case since a federal jury in Anchorage returned a $5 billion punitive damage award against Exxon in 1994. In 2006, the 9th U.S. Circuit Court of Appeals cut the award to $2.5 billion. That decision was appealed to the Supreme Court by Exxon.
ConocoPhillips has taken a half ownership stake in a proposed oil pipeline that would deliver Canadian crude to U.S. refineries. Houston-based ConocoPhillips and Alberta-based TransCanada Corporation made the announcement. In 2005, the companies signed an agreement to use the Keystone pipeline to deliver crude to ConocoPhillips' Wood River, Illinois, and Borger, Texas, refineries, which are being expanded. The deal also gave ConocoPhillips the right to up to a 50 percent ownership stake in the pipeline. Transcanada plans to start construction this spring on the 590,000-barrel-a-day pipeline, a route of nearly 2,200 miles crossing North Dakota, South Dakota, Nebraska, Kansas and Missouri. The South Dakota Public Utilities Commission has wrapped up testimony on TransCanada's construction permit application, but the commissioners have not yet issued a decision.
Brazil's state oil company says it has discovered a huge natural gas reserve off the coast of Rio de Janeiro that could be as big as the recently discovered Tupi oil field. Petroleo Brasileiro said in a news release posted on its Web site that the potential reserves in the new field were located about 16,800 feet below the surface of the Atlantic Ocean. Petrobras did not provide any figures on the size of the reserve, but said "its structure could have dimensions that similar to Tupi.'' Petrobras estimates the ultra-deep Tupi field carries at as much as eight billion barrels of light crude, an amount that could help transform the country into a major world oil exporter. The new gas reserve, apparently comparable by volume and located just 23 miles west of the Tupi field, was found by a consortium comprising Petrobras and Portugal's Galp Energia. Petrobras has an 80 percent stake in the consortium. Brazil's robust industrial sector uses natural gas for power generation, and the fuel is also used by millions of drivers to fuel their cars and by almost all of the nation's nearly 190 million people to cook food. But Brazil currently relies on Bolivia for more than half its natural gas.
American Airlines has begun installing equipment for high-speed Internet service on jetliners used for cross-country trips. The Fort Worth-based airline said that it's finished installation on one Boeing 767. The nation's largest carrier plans to add equipment and test the technology on all 15 of the 767s it uses primarily on transcontinental flights. Aircell is providing the equipment for American and Virgin America. American needs approval from the Federal Aviation Administration before offering the service to customers, who will be charged an as-yet undisclosed fee. Also, a doubling of the fuel surcharge American and other carriers tacked on to most tickets appears to be failing.
American last week raised its fuel surcharge from $20 to $40 for many round trip flights, then some other carriers who'd matched the hike--backed off.
The Retirement Systems of Alabama has become the largest investor in Signal International. The firm employs about 3,000 people in Mobile, Pascagoula and in Texas at Houston, Port Arthur and Orange. The retirement group, or RSA, has bought $100 million worth of shares in the shipbuilding firm. Signal plans to move its headquarters from Pascagoula, Mississippi, to RSA's new skyscraper in Mobile. Signal builds and repairs ships and offshore oil rigs. In the next six to nine months, Signal will move its headquarters from Pascagoula to the 35-story RSA Battle House Tower. The company leased 6,000 square feet of office space.
The Whole Foods Market grocery chain won't be asking you "paper or plastic'' any more. It's phasing out disposable plastic grocery bags, encouraging use of reusable bags instead. The decision covers all of the company's 270 stores in the U.S., Canada and the United Kingdom. Whole Foods says it wants to stop using the plastic bags by Earth Day, April 22nd. An executive with the chain estimates the move will keep 100 million new plastic grocery bags out of the environment between Earth Day and the end of this year alone. It will continue to offer recycled paper grocery bags.