Tuesday PM August 5th, 2008

Energy and chemical companies resume drilling and production operations after Tropical Storm Edouard's passage…Utility crews work to restore power…Federal Reserve leaving interest rates unchanged…

Houston-based oil companies are bringing their Gulf of Mexico drilling and production operations back up to normal, following the passage of Tropical Storm Edouard. Shell Oil is returning 43 workers evacuated early this morning from its platforms. BP, Chevron and Noble had also evacuated some workers, but most oil and gas infrastructure was unaffected by the fast-developing storm, except for smaller operators closer to shore. Refineries and chemical companies have longer lead times for shutting down equipment. Valero Energy’s refineries in Port Arthur, Texas City and Houston have been running at slightly reduced rates, with port closures delaying crude supplies to Texas City. Marathon Oil started shutting down its Texas City refinery on Monday. Dow Chemical shut down plants in Clear Lake and La Porte. Dow’s Freeport plant has been running with reduced staff.

CenterPoint Energy reported about 13,000 customers without power as a result of strong wind, lightning and heavy rain. Power losses are primarily in the southeast portion of CenterPoint’s service territory. The company first restores service to facilities vital to safety health and welfare, such as hospitals, water treatment plants and public service facilities. Ten it repairs major lines and circuits that will restore power to the greatest number of customers in the shortest amount of time.

The Federal Reserve, confronted with the perils of a slumping economy and rising inflation, has decided for a second straight meeting to leave interest rates unchanged. The Fed announced that it was keeping its target for the federal funds rate, the interest that banks charge each other, at two percent. The decision has been widely expected by financial markets. The Fed is caught between what many economists believe is a recession and rising inflation pressures, triggered by this year’s huge run-up in energy prices. The Fed decision means that commercial banks’ prime lending rate, the benchmark for millions of consumer and business loans, will remain unchanged at five percent–its lowest level since late 2004.

A private research group says the U.S. services sector contracted in July as new orders decreased and prices rose, stifling growth for truckers, retailers and insurers. The Institute for Supply Management, a trade group of purchasing executives, says its reading of the services sector was 49.5 in July, up from 48.2 in June. That’s better than the 49.0 reading economists expected, but still indicates shrinkage. A reading below 50 signals contraction, while a reading above 50 indicates growth. But the ISM report contains upbeat data on inflation. The trade group’s gauge for prices paid by non-manufacturers fell to 80.8 from June’s 84.5, which was the highest on record. The decline indicates an easing of inflation.

image illustrating Sucker City a magazine spoofing Circuit City's sense of a saleExecutives at Circuit City stores are apologizing to Mad magazine for banishing its August issue from dozens of its stores. It happened to be the edition featuring a four-page parody of Circuit City, titled “Sucker City.” The Virginia-based electronics retailer says it’s restocking the magazines and apologizing for its “knee-jerk reaction.” A spokesman says the Mad spoof was “very clever,” adding that “most” people at Circuit City have a “rich sense of humor.” Mad magazine released a statement saying staffers were “shocked and confused by this entire incident” — mainly because they had no idea Circuit City sells magazines.

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