Tuesday PM March 11th, 2008

The cost of filling up your gas tank has hit a new record. Average prices at the pump are at a new high of almost $3.23 a gallon. According to AAA and the Oil Price Information Service, the average national price of a gallon of gas rose half a cent overnight to $3.22. That is slightly higher than the previous record set last May. Gas prices are following crude oil futures into record territory. Light, sweet crude briefly climbed to a new record price of just under $110 a barrel on the New York Mercantile Exchange this morning, before settling back to $108.75 a barrel. The International Energy Agency is warning that there is unlikely to be much relief from current high oil prices because of brisk demand in china and other emerging markets. And analysts aren't convinced that the huge runup in oil prices has run its course.

The White House says that soaring oil prices are "not going to be solved overnight'' and that "it would be wrong'' of President Bush to promise otherwise. Presidential spokeswoman Dana Perino said on Air Force One that "there are some things we cannot do.'' Her comments came as oil prices rose above $109 a barrel for the first time. She said that the White House is concerned about the impact on consumers and small businesses. But she said, "it would be wrong of the president to provide false hope to people to think that we are going to be able to have an immediate impact to reduce gas prices.'' Perino added, ''this is something that we're all going to have to work through.''


The government reports that the United States' trade deficit grew larger in January as imports--including crude-oil prices--zoomed to all-time highs. A new report from the Commerce Department on Tuesday shows the country's trade gap increased to $58.2 billion. That was up from a trade shortfall of $57.9 billion in December and was the highest since November.


The Houston City Council's Public Safety and Homeland Security Committee voted to recommend an ordinance to help control convenience store crime. Store owners will have to register their businesses with the city to establish a data base, as well as install at least two color digital surveillance cameras, a drop safe and a panic button that alerts a security company or the police to a crime in progress. Rules going into effect would also require employee training, signage such as "no loitering" and height strips on doors. Cash registers would have to be visible from outside. About 1,000 robberies and ten homicides occur at convenience stores every year in the Houston area.


The Federal Reserve said Tuesday it has auctioned $50 billion in short-term loans to cash-strapped banks at an interest rate of 2.8 percent. The Fed has been auctioning loans to banks since December with the hope that it will help them get over credit problems and keep lending to customers. Last week, the Fed announced it would increase the size of the two auctions in March to $50 billion a piece, up from $30 billion initially planned.

The Fed said it will make up to $200 billion in treasury securities available to big Wall Street investment houses and banks. The new action is designed to ensure an ample supply of treasury securities. With strains in financial markets, demand has grown for treasuries, considered among the safest investments in the world because they are backed by the U.S. government. Other central banks involved are the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve and the Swiss National Bank. In addition, the Fed has authorized increases in existing programs called "swap lines'' with the European Central Bank and the Swiss National Bank. The Fed has been working to pump billions of dollars into the system in the face of the subprime mortgage crisis and the severe tightening of credit. Wall Street has reacted by sending stock prices up sharply this morning. In the first half hour of trading, the Dow was up about 250 points.


Documents released by Congressional investigators show federal aviation authorities "falsified'' a report that allowed Southwest Airlines to continue flying. That's despite missing required inspections for metal fatigue. The documents released by the House Transportation and Infrastructure Committee also show officials with the Federal Aviation Administration were too cozy with the airlines they regulate. According to the documents, two whistle-blowers told the committee that FAA supervisors and colleagues blunted their efforts to force Southwest to follow an FAA order to re-inspect the planes. Much of the information in the documents released this week came out last week. That's when the FAA announced a $10.2 million fine against Dallas-based Southwest. That's the biggest in FAA history. The documents added new details and tone to the controversy, which has damaged the reputations of both Southwest and the FAA. Southwest has said it plans to appeal the million penalty.

 

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