Top executives of the five biggest American oil companies say they know consumers are feeling the pain of high gasoline prices. But at a Congressional hearing, they deflected any blame, and they argued that last year's profits of $123 billion were in line with other industries. Irving-based ExxonMobil and Houston-based Shell, BP America and ConocoPhillips joined California-based Chevron in earning a combined $123 billion last year because of rising prices. Democratic Representative Edward Markey of Massachusetts, noting the hearing was being held on April Fool's Day, said, "the biggest joke of all is being played on American families by big oil.'' The national average cost of gasoline was hitting a record $3.29 cents a gallon. The oil companies have argued that they need the tax breaks for continued investment in exploration, production and refinery expansion. Lawmakers say the profits they're making should be enough incentive. The House has approved legislation to end the tax breaks but it hasn't made it through the Senate. President Bush has threatened to veto any such bill that does.
Shell Oil President John Hofmeister said in remarks prepared for the hearing that he knows "these cost increases are hitting consumers hard.'' But Hofmeister and the other executives rejected that their profits are extreme. ExxonMobil's J.S. Simon says the earnings, though high in absolute terms, need to be viewed in the context of the scale and cyclical, long-term nature of the industry--plus the huge investment requirements. Simon says ExxonMobil provided $100 million on research into climate change at Stanford University. But Simon says current alternative energy technologies "just do not have an appreciable impact'' in addressing "the challenge we're trying to meet.''
More than 8,000 NASA contractor jobs in the U.S. manned space program could be eliminated after the shuttle program is shut down in 2010. The update came today from NASA. Dramatic cuts are anticipated by private contractors as NASA transitions to the Constellation program. That operation is developing the next-generation vehicle and rockets to go to the moon and later to Mars. Constellation isn't scheduled to begin flights until 2015. Astronauts train at Johnson Space Center in Houston, which is home to Mission Control. Nationally, NASA said the number of full-time civil servants in its manned space program would fall to about 4,100 in 2011--a loss of about 600 jobs from this year. Including outside contractors, the number of jobs would fall to an estimated 12,500 to 13,800. About 21,000 are currently employed.
Senate leaders have reached a deal on advancing legislation to ease the nation's home foreclosure crisis. The bill has not been written yet, but Republican leader Mitch McConnell of Kentucky and Democratic leader Harry Reid of Nevada defused a GOP filibuster threat that stymied a Democratic plan a month ago. The chairman of the Senate Banking Committee, Connecticut Democrat Christopher Dodd, and the panel's top Republican, Richard Shelby of Alabama, were told to forge a compromise by midday Wednesday. The legislation would provide billions of dollars to buy up foreclosed homes.
Dell says it will save as much as $3 billion over the next three years as it cuts costs and lays off more workers. The world's number-two computer maker has announced plans to close its desktop manufacturing facility in Austin. Round Rock-based Dell is also reaffirming a plan--announced last year--to cut at least 8,800 jobs, or about ten percent of its work force. In the last nine months of fiscal 2008, the company cut 3,200 jobs. Dell plans a broad range of cost cuts in design, manufacturing and logistics, materials and operating expenses to stay competitive. Dell is also reviewing alternatives for its financial services business, especially its consumer and small to medium business revolving credit financing receivables.
Challenges for the automakers aren't limited to those based in Detroit. While Ford's U.S. sales dropped 14 percent last month, Toyota's fell ten percent. General Motors' U.S. sales fell 19 percent last month. A GM executive says the automaker remains hopeful the federal economic stimulus package will help sales in the second half of the year. Demand for trucks and sport utility vehicles plummeted amid high gas prices and a slowdown in home construction. Consumers' worries about the economy were expected to make March one of the worst months for automakers since 2005, when a wave of summer discounts led to a huge drop in fall sales. Toyota beat Ford to become the number two automaker by U.S. sales last year and it held onto its lead in the first quarter. Small cars fared best as consumers focused on fuel efficiency. The Ford Focus saw sales jump 24 percent for the month, while Toyota's subcompact Yaris saw sales rise 83 percent. Ford's truck and SUV sales dropped 16 percent versus March 2007. Truck sales have been hit by the slowdown in home construction. Ford's overall sales for the first quarter were down nine percent.
Banks being sued by Clear Channel Communications and the private equity firm that wants to buy the company fired back Monday, asking a New York state court to dismiss the suit and to ignore requests for an expedited hearing. The equity buyers, led by Bain Capital and Thomas H. Lee, filed suit last week against six banks, claiming they were reneging on their commitment to help fund the $19.5-billion buyout. The banks contend they were still negotiating and anxiously awaiting documents needed to back the loans when they got word through a news release they had been sued in New York and Texas last week. Clear Channel joined the banks in a separate lawsuit in Texas court. A judge in that case set an April 8th court hearing date and issued a temporary restraining order against the banks barring themfrom intentionally sinking the deal.