Wednesday PM August 20th, 2008

CSB investigates June 11th Goodyear plant explosion…Revenue projection for state’s new business tax lowered by another $1.5 billion…HAR says upper-end market contributes to all-time high median home price; overall sales fall 11th consecutive month…

The Chemical Safety and Hazard Investigation Board says the June 11th Goodyear plant explosion that killed one employee and injured seven others could have been caused by a blocked pressure-release valve. Investigators will likely focus on the company’s pressure relief systems and how it trains operators and accounts for workers during emergencies. CSB officials have finished conducting interviews at the plant and gathering other evidence, including the rupture of a heat exchanger. The body of production supervisor Gloria McInnis was found about seven hours after the morning blast. The plant was evacuated for several hours after the explosion.

The government says the number of workers killed on the job annually dropped to a historic low in 2007. The number of worker deaths dropped to 5,488 last year, the fewest deaths since the Bureau of Labor Statistics began keeping track in 1992. That’s down six percent from the 5,840 deaths reported in 2006. Still, the government found significant increases in some types of fatal injuries: a record number of workers died from falls and the number of workplace homicides increased 13 percent. The nation’s most dangerous jobs: fishers and related fishing workers; logging workers; aircraft pilots and flight engineers and structural iron and steel workers. Construction continued to have the most number of deaths of any private-sector industry. The numbers are preliminary, with a final report on 2007 due next year.

A lawsuit alleges a family living by a Valero Energy refinery near the Houston Ship Channel got sick from the release of a toxic chemical in an August 4th blast. Elizabeth Salgado says her family suffered eye problems, breathing ailments and skin trouble from the chemical release. Salgado appeared at a Houston news conference organized by Texas Environmental Justice Advocacy Services. The 19-year-old woman says her family didn’t hear a warning or siren after a fire sent sulfur into the air. Bill Day with San Antonio-based Valero Energy told the Houston Chronicle that residents near the plant were alerted to the sulfur release and were given a shelter-in-place order. He said it was issued by local authorities, not Valero.

The revenue projection for the state’s new business tax has been lowered again–this time by about $1.5 billion. The state’s chief revenue estimator—John Heleman—offered the update in Austin to legislators. State income from the newly revised business tax was expected to reach almost $6 billion for the current fiscal year. But Heleman says the number will likely be closer to $4.5 billion. Heleman says it’s a brand new tax with a different base and a different set of rates. About half of the money is slated to go to the state’s property tax relief fund. The fund was created under a court order in 2006 to help school districts buy down property tax rates. The new tax was intended to overhaul the state’s old franchise tax, which critics said was full of loopholes.

A robust upper-end market in Houston contributed to an all-time high median home price in July, according to the Houston Association of Realtors. But sales fell for the 11th month in a row. The median price jumped 3.4 per cent to $161,370, as home sales fell 12 per cent. But sales for homes in the $80,000 to $150,000 range dropped 21.8 per cent in July, compared with the same month in 2007.

Royce Builders has trimmed its staff of 220 employees to about 60, as it winds down operations. According to the Houston Chronicle, the company’s credit lines have been cut as its lenders limit exposure to real estate. Royce is working with its lenders to complete 60 to 80 homes currently under construction.

Mortgage application volume fell last week to the lowest level in nearly eight years. The Mortgage Bankers Association says the business is down 61 percent from this year’s peak in February. Not only are fewer new homes being built, but fewer people are refinancing existing mortgages. The Commerce Department said July construction of new homes and apartments fell to the lowest level in more than 17 years.

Four National Associations of Real Estate Appraisers have asked Congress for major regulatory reforms in the wake of an Associated Press investigation that identified key failings within the existing system. Led by the Chicago-based appraisal institute, the groups said they want the Congress to approve more money so that state appraisal boards can boost enforcement efforts. They also called on lawmakers to increase the oversight authority of the federal agency charged with monitoring the appraisal industry. The AP’s investigation found that since 2005, more than two dozen states and U.S. territories have violated federal rules by failing to investigate and resolve complaints about appraisers within a year. The AP also found that the only tool federal regulators have to force states into compliance has never been used.

The world’s major industrial countries are calling for increased economic support for war-torn Georgia. Finance ministers from the group of seven leading industrial countries issued a joint statement pledging support for Georgia’s economy and its financial system. They also urged other countries and institutions to assist in the effort. “We, the G-7, stand ready to support Georgia in order to promote the continued health of the Georgian economy, maintain confidence in Georgia’s financial system and support economic reconstruction,” the financial officials said.

BP says testing is beginning on the closed Baku-Tbilisi-Ceyhan oil pipeline, which runs through conflict-stricken Georgia, ahead of a move to restart full operations as early as next week. BP spokeswoman Sheila Williams says that the testing will involved “limited and interim flow” of oil through the BTC line, which usually provides a million barrels of Caspian crude to international markets. The line has been closed for more than two weeks after a fire on the Turkish stretch. Kurdish rebels have taken responsibility for the blaze. Williams adds that the port in Ceyhan, Turkey has been given orders to restart work from the beginning of next week, giving an indication of when the pipeline is likely to be fully operational again.

A new Reuters/Zogby poll finds that the state of the U.S. economy is the top issue for nearly half of likely voters, as the November presidential election approaches. The index, which measures American confidence, has increased slightly to 91.9—up from 88.7 in July. Most of the 1,089 surveyed give their personal financial situation a negative rating.

The Energy Department says crude oil inventories rose more than expected last week. At the same time, gasoline supplies fell. The Energy Information Administration says crude supplies rose by more than nine million barrels. Analysts had expected a much smaller build. Gasoline supplies dropped by more than six million barrels, about twice the decline expected. Demand for gasoline over the previous month was down 1.6 percent from a year earlier. Distillates, which include diesel fuel and heating oil, rose by 500,000 barrels.

AAA says the average price for unleaded gasoline is just under $3.72 a gallon, down more than a cent overnight. That’s down from the record of $4.11 a gallon last month.

Energy companies have placed $487.3 million in winning bids for the right to drill in the western Gulf of Mexico, knowing that they may get a chance later to also explore in other areas that have been off limits for decades. The Minerals Management Service says 47 companies put up sealed bids for 319 tracts over the 18 million acre region. The lease sale was the first to take place since President Bush last month lifted an executive ban on oil drilling off the Atlantic and Pacific coasts. Since then, politicians in both parties have signaled that they are willing to expand offshore exploration. That region has recently attracted both deepwater explorers and those wanting to return to shallow areas in the hunt for natural gas. Interior Secretary Dirk Kempthorne called the sale a step toward more domestic oil production. He acknowledged, however, that some of the purchased leases may not end up producing oil. Offshore wells now provide 27 percent of the nation’s domestic oil. Last year’s sale in the Western Gulf nabbed $290 million for 282 leases.

New York’s Mayor Michael Bloomberg is proposing putting windmills on city bridges and rooftops as part of an ambitious push for renewable energy. Bloomberg outlined his plan at a Las Vegas conference on alternative energy. The mayor says he will approach private companies and investors to study how such turbines can be built throughout the city. On Tuesday, the city also issued a formal request to companies around the country for ways to build wind, solar and water-based energy sources in the city. It would take years to turn New York City into a major source of wind power. But Bloomberg, who has 18 months left in office, says he is committed to getting the discussion going.

American Airlines has expanded the availability of in-flight Internet access. The Fort Worth-based airline announced that it’s launched airborne e-mail, Web and other online services on some of its longer, nonstop flights. The move could create a new stream of revenue for the nation’s biggest airline as the aviation industry faces high fuel prices and other challenges. American tested in-flight access on two flights on June 25th. With this launch, the airline is making service available for $12.95 per flight on its Boeing 767-200 aircraft flying between New York and Los Angeles, San Francisco and Miami.


Limited Brands says its profit fell by more than half in the second quarter amid a difficult retail environment, but results beat expectations as the company kept a tight rein on its inventory and expenses. The Columbus, Ohio-based company, which operates Bath & Body Works and Victoria’s Secret, said profit fell 61 per cent to $102 million from $264.4 million last year. Revenue fell 13 per cent to $2.28 billion from $2.62 billion. Analysts polled by Thomson Reuters expected revenue of $2.31 billion.

Subscribe to Today in Houston

Fill out the form below to subscribe our new daily editorial newsletter from the HPM Newsroom.

* required