Retail gasoline prices rose 2.2 cents overnight to $2.25 a gallon—about 17 cents higher than a week ago, according to AAA, Wright Oil and the Oil Price Information Service. The average price of a gallon is up nearly 40 per cent from the start of the year. Gasoline jumped 13 cents this week across Texas to hit $2.17 a gallon. Houston drivers are paying $2.11 a gallon on average—up from $1.93 last week. AAA Texas credits higher retail prices to the rising cost of crude, plus the switchover by companies to the summer blend of gasoline. Spokeswoman Sarah Schimmer says many gas stations are raising prices in anticipation of Memorial Day weekend travel. Crude oil prices are 80 per cent higher than in December. The amount of oil in storage passed the one billion barrel mark, setting the ninth-straight weekly record on May 1st—the highest levels since Iraq invaded Kuwait in 1990.
The CEO of ConocoPhillips says the U.S. oil and gas industry must do a better job of explaining its vital role in the global economy’s future. Jim Mulva spoke in Houston at the company’s annual shareholder meeting. Mulva says he understands the emphasis being placed on renewable energy as President Barack Obama shapes his energy roadmap. But Mulva says making it more difficult for companies like Conoco to find and produce new sources of crude and natural gas–doesn’t make sense. One shareholder, Thomas Borelli of Potomac, Maryland, told Mulva he was placing the company’s future in jeopardy by supporting a measure that could reduce fossil-fuel consumption. Borelli urged Mulva to be more vocal about the industry’s contributions. Conoco has cut 1,300 jobs this year and reduced its 2009 capital spending budget by more than one-third.
Retail sales fell for a second straight month in April–a disappointing performance that raised doubts about whether consumers were regaining their desire to shop. A rebound in consumer demand is a necessary ingredient for ending the recession. The Commerce Department says retail sales fell 0.4 per cent last month–much worse than the flat reading economists expected. The April weakness followed a 1.3 per cent drop in March that was worse than first estimated. Retail sales had posted gains in January and February after falling for six straight months, raising hopes that the all-important consumer sector of the economy might be stabilizing.
Businesses slashed their inventories for a seventh consecutive month in March, the longest stretch in seven years, as companies struggled to cope with a prolonged recession. The Commerce Department says inventories dropped one per cent in March. That matched economists’ expectations and followed a 1.4 per cent drop in February. Total business sales fell 1.6 per cent in March after being flat in February. Businesses have been struggling to reduce their stockpiles of unsold goods in the face of declining sales.
An Iraqi oil official says U.S. oilfield services company Weatherford International has won a $224.4 million contract to drill in southern Iraq. The official with state-run Maysan Oil said the Houston-based company has 24 months to drill 20 wells in the Southern Buzurgan oil field in Maysan province. The official, speaking on condition of anonymity because he was not authorized to comment, said the wells will boost the field’s current output of 80,000 barrels per day by at least 40 per cent. The deal–ratified by the Iraqi cabinet–is part of an accelerated plan to raise Iraq’s output from its current level of 2.4 million barrels per day by 2010. Maysan is about 200 miles southeast of Baghdad.
The Department of Homeland Security is awarding an additional $4.73 million to the Port of Houston Authority to help return the port and ship channel areas to pre-Hurricane Ike conditions. Representative Gene Green says the grant will help clean up the berthing areas and channels and help increase the flow of commercial traffic in and out of the port. The funds will help in the removal and disposal of submerged debris, carry out dredging operations, handle and maintain steel pipeline work and pay for sampling water quality and sediment in the area. The funds are in addition to the $98.3 million already secured through the American Recovery and Reinvestment Act of 2009.
A new report shows the number of households faced with losing their homes to foreclosure rose 32 per cent in April compared to a year earlier. RealtyTrac says Nevada, Florida and California topped the list of states with the highest rates. More than 342,000 households received at least one foreclosure-related notice in April. That’s one in every 375 and is the highest monthly rate since the California-based foreclosure listing firm began its report in January 2005. Still, the April figure is less than one per cent worse than the number for March. Nearly 64,000 homes were actually repossessed in April. And that’s down from more than 71,000 in March. But RealtyTrac’s Rick Sharga expects the number to go up. He notes that the mortgage industry is cracking down again on delinquent borrowers after a temporary halt. Help could be on the way, though, with a massive incentive program announced by the Obama administration.
With nearly 14 million Americans unemployed, a growing number of people are competing for a dwindling number of job openings. And that’s allowing some employers to drive down pay and benefits for new hires. The latest government figures show competition for jobs intensified in the first few months of 2009. Roughly five workers are competing for each opening, on average, compared with less than two for each job about a year ago. Employers are laying off workers and taking other steps to cut costs as they grapple with the recession, the longest since the Great Depression.
Continental Airlines said it’s closing a call center in Tampa, Florida, and laying off 500 reservation agents companywide. The Houston-based carrier cited a weak economy and customers’ growing preference for Web-based reservations. A Continental spokeswoman says about 100 of the eliminated positions will be in Tampa. The company is offering a number of voluntary programs to employees, including “early out” severance and leave of absence programs. Spokeswoman Kelly Cripe says the closure will be completed by July 19th. Some Tampa-based reservations agents will also have the option of transferring to other reservations centers in Houston and Salt Lake City. It says it’ll also offer relocation assistance to affected employees.
AT&T says it made its best and final contract offer to wireline workers in its southwestern region. But the union calls the proposal a “major” step backward. Dallas-based AT&T says it offered raises of two per cent now, and 2.25 per cent each in 2010 and 2011, plus a $500 bonus if workers ratify the contract by June 5th. It also said lower-paid employees would pay less in health care deductibles and out-of-pocket expenses, and the offer preserved contributions to 401(k) retirement accounts. AT&T this week made the latest offer to the Communications Workers of America. The previous contract for employees in Texas, Arkansas, Oklahoma, Kansas and Missouri expired last month. AT&T is negotiating separately with wireline workers in five districts.
Auto suppliers are appealing to Congress for federal support. They warn that the U.S. supply base could buckle under from the declining fortunes of General Motors and Chrysler. But it’s not just the big Detroit automakers that are suffering. Several small auto suppliers told a Congressional hearing that Chrysler’s bankruptcy has left them in limbo, with some waiting on payment for millions of dollars worth of parts. If General Motors is forced into bankruptcy, they said some suppliers could be forced to shut their doors. Chris Norch is president of Denison Industries. The company employs 125 workers in Denison. Norch says a “`recovery plan for Chrysler and GM is simply not viable unless it takes into account the entire automotive supply chain.”
The Treasury Department wants a central electronic system to track the buying and selling of over-the-counter derivatives, a class of financial instruments that includes the risky contracts that helped bring down AIG. In a draft letter to Congress obtained by the Associated Press, Treasury says the goal would be to bring transparency into the market. Current law largely excludes the privately traded derivatives from regulation.
The government-installed head of AIG is telling Congress the insurance giant is selling many of its foreign assets to repay U.S. taxpayers, but a key lawmaker questions whether the plan makes sense. American International Group Chief Executive Edward Liddy says the company has reduced, but not eliminated, the risk its failure could pose to the global economy despite getting more than $180 billion in federal bailout aid. But Representative Edolphus Towns of New York, chairman of the House Oversight and Government Reform Committee, says Congress needs “to understand what the long-range plan is for AIG,” and asked whether it makes sense to sell off assets in a bear market where prices are depressed.
The CEO of Internet travel site Travelocity says misguided criticism of business travel has led to a lot of confusion about what’s acceptable. Sam Gilliland spoke to the Senate Subcommittee on Tourism. Gilliland and other travel officials say those who have criticized some business travel as too lavish and excessive because of the global economic crisis do not appreciate how important business travel is for both business and the economy. Senator Amy Klobuchar of Minnesota, the subcommittee’s chairwoman, said excesses of a few bad actors have unfairly tarnished business travel. Gilliland and other witnesses say business travel is down across the board. Gilliland finds that troubling, saying such travel produces thousands of jobs.
Earnings
Whole Foods Market says its profit fell 32 per cent in its second fiscal quarter as shoppers cut back on spending during the recession. The Austin-based grocery chain said it earned $27.3 million for the quarter. That’s down from $40 million for the same quarter last year. The company’s quarterly sales were flat at $1.9 billion. Analysts expected revenue of $1.87 billion. The company said its same-store sales decreased 4.8 per cent in the quarter. Same-store sales, or sales at stores open at least a year, are a key measure of retailer performance.