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Friday PM August 8th, 2008

Houston bus in wreck that killed church goers in Sherman wasn't properly licensed…Gasoline retail average drops seven cents in Texas over past week…Even with upcoming tax free weekend, retailers see grim outlook for back-to-school shopping season…


Federal records show the bus that wrecked in an accident that killed 13 members of a Houston church was not properly licensed to operate. The bus was operated by Iguala Busmex of Houston, according to licensing information on the vehicle. Records show that the company has an application pending with the Federal Motor Carrier Safety Administration but has not been approved for operation. The charter bus was carrying a Vietnamese Catholic group to an annual pilgrimage early Friday when it slammed onto its side and then skidded off U.S. 75, killing at least 13 people and injuring more than 40, authorities said. The company sought certification from the agency June 26th, just weeks after it filed incorporation papers with the Texas Secretary of State. The company’s owner and address is the same as another bus company, Angel Tours. That was forced by the FMCSA to take its vehicles out of interstate service June 23rd as a result of an unsatisfactory compliance review in May. Outside a Houston building at that address, a weathered plywood sign bore the name “Angel Tours.” A man inside declined to identify himself and told the Associated Press he had no comment when asked if he was affiliated with the company or if it owned the bus involved in the crash.

The average price for a gallon of gasoline in Texas has dropped below $3.74–a drop of seven cents over the last week. AAA Texas said that’s down nearly a quarter from the record average high of nearly $3.99 a gallon on July 17th. Houston’s average is down seven cents from last week to below $3.72 a gallon. Nationally, prices fell to $3.85 a gallon, down 26 cents a gallon since the high of $4.11 a gallon, also on July 17th. At just below $3.68 a gallon, Corpus Christi has the least expensive gas in the state. That’s down almost eight cents in one week. El Paso is once again has the most expensive at just above $3.80 a gallon. That’s a drop of six cents since last week–the smallest decrease in the state.

The efficiency of America’s workers grew in the spring at a slightly slower pace as companies sought to produce more with leaner work forces. The Labor Department reports that productivity–the amount an employee produces for every hour on the job–grew at an annual rate of 2.2 percent during the April-to-June quarter. That was down from a 2.6 percent growth rate logged in the first three months of this year. Economists were expecting productivity to pick up slightly to a 2.7 percent pace in the spring.

After two decades, Iraq is exploring for more oil reserves. The country has confirmed reserves of an estimated 115 billion barrels. But experts believe actual reserves could be twice as high. During a ceremony attended by nation’s oil minister, a seismic team began work in a field in Nasiriyah in southern Iraq. The oil ministry says that particular field has a confirmed reserve of one billion barrels, but the ministry believes that “it will be doubled after this exploration mission.” Three groups of geophysicists, geologists and engineers will explore oil fields in the Nasiriyah area. The other two teams will search in fields that officials believe could have reserves of eight billion barrels. Years of U.N. sanctions and war have prevented Iraq’s oil industry from keeping pace with other major producers such as Saudi Arabia.

The outlook for the back-to-school shopping season seems grim. July sales reports from retailers show an increasing shift toward buying only necessities at discounters and away from discretionary spending on clothing. Wal-Mart, the world’s largest retailer, and Costco posted solid gains, but Wal-Mart’s July results fell slightly short of Wall Street forecasts. And the company projects that sales will slow this month as the benefits from the stimulus checks dry up. Many mall-based apparel stores including Limited Brands and Gap reported deep declines, with shoppers buying only what they need. Luxury stores also struggled with weaker sales as even affluent shoppers pull back. The International Council of Shopping Centers-UBS sales tally of 38 stores reported a 2.6 per cent increase in July same-store sales. Those are sales at stores open at least a year, a key indicator of a retailer’s health.

Tax free weekend for Texas kicks off August 15th through the 17th. The law exempts most clothing and footwear priced under $100 from sales and use taxes, which could save shoppers $8 on every $100 spent. Backpacks under $100 and used by elementary and secondary school students are also exempt.


Business at the Golden Arches is still going strong, even with consumers cutting back on dining out to save money in tough economic times. McDonald’s enjoyed an eight per cent gain in July same-store sales, largely because of breakfast items and the classic Big Mac sandwich. Same-store sales, or sales at stores open at least 13 months, grew 6.7 per cent in the U.S. Same-store sales are a key indicator of restaurant performance because the measure growth at existing locations rather than newly opened ones. Total sales worldwide soared 15.9 per cent. The world’s biggest hamburger chain attributes the strong domestic performance to its focus on breakfast, chicken and drink items. McDonald’s rolled out a new chicken biscuit breakfast sandwich, a chicken sandwich for lunch and espresso-based coffee drinks in certain locations. The fast-food chain says advertising for its Big Mac sandwich also boosted results in July.

Mortgage finance company Fannie Mae says it swung to a second-quarter loss that was more than triple what Wall Street expected as conditions in the housing market continued to deteriorate. The largest U.S. buyer and backer of home loans has posted a loss of 2.3 billion, compared with a profit of $1.95 billion in the period last year. Fannie Mae President and Chief Executive Officer Daniel Mudd says “credit performance has continued to deteriorate” and more losses are expected.

The number of rigs actively exploring for oil and natural gas in the United States rose by 16 this week to 1,967. Of the rigs running nationwide, 1,571 were exploring for natural gas and 387 for oil, Houston-based Baker Hughes reported. Nine were listed as miscellaneous. A year ago, the rig count stood at 1,798. Texas gained 12 rigs. Wyoming lost three and Colorado and Louisiana each lost two. Baker Hughes has tracked rig counts since 1944. The tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted several record lows in 1999, bottoming out at 488.

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