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Tuesday PM August 12th, 2008

BP shuts down Georgia pipeline from Caspian Sea to Black Sea…Congressional Budget Office says at least $85 billion spent on military contracts in Iraq…HISD raising cost of school meals due to soaring food prices…


BP says it has shut down a pipeline that runs through Georgia as a precautionary measure, but says that it is unaware of any Russian bombing of pipelines in the region. The London-based oil company says it closed the 90,000-barrel-a-day oil pipeline running from Baku on the Caspian Sea to Supsa on Georgia’s Black Sea coast earlier Tuesday. It had just been restarted last week after 19 months of repairs. BP spokesman Robert Wine says that the line was closed because it runs through the center of Georgia where there is greater risk of conflict. BP and StatoilHydro also halted natural gas exports from Azerbaijan through the South Caucasus pipeline.

BP will also assess the damage to an oil pipeline in eastern Turkey after an August 5th explosion. The fire was extinguished Monday. The pipeline links Azerbaijan through Georgia with the Turkish port of Ceyhan. The Kurdistan Workers’ Party claims responsibility.

Russia now supplies some 25 percent of Europe’s oil and half its natural gas. Some Congress members are worried that Moscow’s real motive in the Georgia campaign may be to blunt western control of a pipeline carrying oil from other Asian countries to a Turkish port that bypasses Russian control. The fear is that Russia’s domination in European energy could bring cold, dark winters if Moscow closes the valves for NATO members. It’s already used oil as a political weapon: Russia reduced its supply to the Czech Republic after it agreed to host a radar base for a missile system that Russia opposes. Turkmenistan, Khazakhstan and Azerbaijan are wary of Russia, and want signs from the west that it’s serious about building more pipelines before making moves that would anger Moscow.

Russian hackers are continuing to attack Georgian Web sites, including one hosted in the United States. A Web-hosting firm says the Georgia president’s Web site is the target of a flood of traffic from Russia aimed at overwhelming it. The site was transferred to Atlanta-based Tulip Systems from servers in the former Soviet republic on Saturday. A company executive says bogus traffic outnumbers legitimate traffic 5,000 to 1 at the website. Tulip’s firewall is blocking most of the malicious traffic to the site. The U.S.-based Shadowserver Foundation, which tracks Internet attacks, says they noticed commands to attack Georgian sites being issued over the weekend to “botnets.” Those are networks of computers that have been surreptitiously subverted by hackers. The attacks have been reported to the FBI.

The United States has spent $85 billion on military contracts in Iraq. That’s the finding in a report released by the Congressional Budget Office. It will likely give new fodder to critics who have accused contractors of over billing and providing shoddy work. Of the total, an estimated $6 billion to $10 billion went to security performed by contractors. The study did not include figures for 2008, so the total paid since the invasion of Iraq in 2003 is higher. The United States has leaned heavily on contractors in Iraq to provide services ranging from food service to guarding diplomats.

The government says the federal budget deficit soared in July, pushed higher by economic stimulus payments and $15 billion in outlays to protect depositors at failed banks. The Treasury Department reports that the deficit for July totaled $102.8 billion, nearly triple the $36.4 billion deficit recorded in July 2007. The deficit beats the $97 billion gap that Wall Street economists had been expecting for July.

The U.S. Supreme Court refused to decide whether ExxonMobil must pay interest to victims of the nation’s worst oil spill. That interest would roughly double the $507 million judgment the justices approved in June against the Irving-based oil company. In a brief order, the court said the 9th U.S. Circuit Court of Appeals in San Francisco should decide the matter of interest arising from the 1989 Exxon Valdez disaster. The issue is whether interest has been accruing since 1994. That’s when a federal jury first awarded punitive damages for the supertanker’s spill of 11 million gallons of crude oil into Alaska’s Prince William Sound. The fishermen and other victims of the spill said that if interest is not owed from that date, the value of the award when adjusted for inflation would be cut in half. Exxon has argued that no interest is due.

The Houston Independent School District is raising the cost of school meals this year because of soaring food prices. Superintendent Abelardo Saavedra is asking the school board to raise the price for reduced-price lunch from 20 cents to 40 cents. Full-sized lunches would increase from $1.40 to $1.60 for elementary students and from $1.50 to $1.70 for secondary students. Adult lunches would increase from $2.35 to $2.65 under the proposal. Breakfast at HISD schools will continue to be offered free of charge to all students under the plan.

The government says there may be lower prices for grain on tap. The Agriculture Department says farmers are on track to grow the second-largest corn crop and the fourth-largest soybean crop in history. These are the first estimates of the year based on field visits and farmer surveys. The department is raising its estimate of corn production, saying “nearly ideal” weather has helped Midwestern farmers recover from June’s devastating floods. That recovery is expected to lead to lower prices for corn, soybeans and wheat. That could spell relief for meat producers who use corn and soybeans for feed and for makers of corn-based ethanol, as well as for consumers.

The Government Accountability Office is releasing a report that says most U.S. corporations pay no federal income taxes. And most foreign companies that do business in the U.S. aren’t paying corporate taxes. The study says about two-thirds of American corporations paid zero income taxes to Uncle Sam between 1998 and 2005. An even higher percentage of foreign corporations avoided federal corporate taxes. At the same time, says the GAO, the firms had trillions of dollars in sales. The study was requested by Democratic Senators Carl Levin of Michigan and Byron Dorgan of North Dakota. Dorgan says “it’s shameful that so many corporations make big profits and pay nothing to support our country.” The report doesn’t name names and the Congressional agency didn’t investigate why corporations aren’t paying corporate or income taxes. But the GAO says it could be because of operating losses and tax credits.