Monday PM September 14th, 2009

Retail gasoline price continues dropping…Venezuela signs with five mainly Russian energy companies to exploit its heavy crude oil…Chevron announces development plan off northwest Australia…

The average price of regular gasoline in the U.S. is down about a nickel from three weeks ago to $2.59 a gallon. That’s according to the national Lundberg Survey of fuel prices released Sunday. Analyst Trilby Lundberg says the average price for a gallon of mid-grade was $2.72. Premium was at $2.84. St. Louis had the lowest price, $2.26 a gallon for regular. Anchorage was the highest at $3.27.

The number of new cars, trucks and SUVs sold in the ten-county Houston metro area in Austin jumped 49.1 per cent from July, according to Tex Auto Facts Report, published in Sugar Land. But sales still trailed August 2008 by 6.5 per cent. The Greater Houston Partnership’s Skip Kasdorf says the 25,683 new vehicles sold in August represents the largest monthly total since last August. The cash for clunkers program is credited with the sales increase.

Natural gas prices are spiking more than 13 per cent, even though there’s a current glut in supply. Natural gas storage is 17 per cent greater than it was last year, according to the U.S. Energy Information Administration, and expects another 12 per cent buildup in October.

Venezuela says it has signed a deal with five mainly Russian energy companies to exploit its deposits of heavy crude oil. State-run Petroleos de Venezuela says its agreement is with a consortium of Russian oil and gas companies. A British-Russian joint venture also is participating. The joint enterprise will exploit an area of Venezuela’s heavy-oil producing Orinoco oil belt, where they expect to pump 400,000 to 450,000 barrels a day. Venezuela will have a 60 per cent stake in the venture and its partners will share the remaining 40 per cent. In a statement released over the weekend, Petroleos de Venezuela says the partners will also invest in a facility to turn the heavy crude into lighter oil.

Chevron has announced that the Gorgon gas project will be developed off northwest Australia. Chevron Australia, which owns a half share in the project and is the field operator, said in a statement that it had agreed with its partners ExxonMobil and Royal Dutch Shell to develop the gas field. The project appeared certain last month when Petrochina, Asia’s largest oil and gas company, agreed to buy 2.25 million tons of liquefied natural gas per year from the gas field, in Australia’s biggest-ever export deal.

ExxonMobil has drilled the first section of its first production well at the Point Thomson Field on Alaska’s North Slope. The Anchorage Daily News reports that Irving-based ExxonMobil plans to complete the well by the end of next year and begin production by the end of 2014. The well is part of the first phase of Exxon’s planned $1.3 billion natural gas cycling project at Point Thomson. Exxon says the field on the Beaufort seat coastline about 60 miles east of Prudhoe Bay holds an estimated eight trillion cubic feet of gas. That’s about a quarter of all the known gas reserves on the North Slope. Exxon says it also holds an estimated 200 million barrels of condensate or liquid hydrocarbons. The gas is a crucial part of a proposed multibillion-dollar natural gas pipeline.

President Barack Obama says he sees new signs of the kind of high-risk business behavior that nearly caused a financial meltdown a year ago and is warning Wall Street there won’t be another bailout. In a widely anticipated speech in the heart of New York’s financial district, Obama also said he feels confident that the country’s financial system has been steadied. But he urged Congress again to pass legislation putting stronger controls on the system, saying that the piecemeal approach in place when things cascaded toward meltdown last year must be corrected. Obama says Wall Street must take steps on its own to rebuild trust with the public, and not wait for Congress to legislate the tighter oversight of the industry. He says many of the firms now seeing improvement in their finances owe a debt to the American people, who financed a $700 billion bailout last year. The president says Wall Street need not wait for changes he outlined in a speech to become law. Obama says the industry should start using plain language with consumers and let shareholders vote on senior executive bonuses. He also says firms don’t have to wait to overhaul their pay systems to reward employees for long-term performance instead of short-term gains.

A new poll suggests the economy still troubles most Americans one year after Wall Street teetered on the brink of collapse. According to a new Associated Press-GFK poll, seven out of ten Americans lack confidence the federal government has taken safeguards to prevent another financial industry meltdown. Even more–80 per cent–rate the condition of the economy as poor and a majority worry about their own ability to make ends meet. The pessimistic outlook sets the stage for President Barack Obama as he attempts to portray the financial sector as increasingly confident and stable and presses congress to act on new banking regulations. Half of those surveyed said deficit reduction should be a national priority over increased spending on health care, education or alternative energy.

President Barack Obama is defending his decision to impose punitive tariffs on imported Chinese tires. In a speech in New York, Obama said he took action because trade agreements must be enforced in order for trading systems to work. He says he did not act to be provocative or to promote protectionism. China is calling for talks with Washington in the World Trade Organization over the newly imposed U.S. tariffs. Monday’s announcement by the Commerce Ministry said the tariffs approved Friday by President Obama violate WTO rules. The Chinese government earlier criticized the tariffs as trade protectionism. The tariffs were imposed after a labor union complained to Washington that surging imports of Chinese tires were wiping out American jobs. In his remarks, the president said expanded trade and new trade agreements are essential to U.S. economic growth. He also says enforcing trade agreements is part of maintaining an open and free trading system.

Drugmaker Eli Lilly says it will eliminate thousands of jobs and reorganize into five business units in an effort to slash costs and speed up development of potential new drugs. The Indianapolis company says it will reduce its work force to 35,000 by the end of 2011. It has about 40,500 now, according to Thomson. Lilly hopes to cut annual costs by $1 billion per year over the same time, and will organize itself into five units: cancer, diabetes, established markets, emerging markets, and Elanco, its animal health business. Key Lilly products like the anti-psychotic drug Zyprexa will lose patent protection starting in 2011. CEO John Lechleiter believes the company’s best path to profit growth involves focusing on its early and mid-stage drug candidates. This morning’s announcement by Eli Lilly continues what Challenger, Gray & Christmas calls a dramatic rise in pharmaceutical industry downsizing. Through August, firms in this sector announced 53,004 job cuts—113 per cent more than for the time period last year.

Military officials say a civilian contractor from Louisiana was shot and killed on a U.S. installation in the Iraqi city of Tikrit–and an American soldier has been detained. The contractor was shot yesterday morning while at Camp Speicher. Houston-based KBR confirms the man killed was one of its employees, 27-year-old Lucas Vinson. A statement from the family e-mailed to the Associated Press says Vinson was from Leesville, Louisiana. KBR spokeswoman Heather Browne says the army is leading the investigation and the company is cooperating. Major Derrick Cheng confirms a soldier had been detained in connection with the incident. Further details were not immediately released. KBR is the primary support contractor in Iraq, providing troops with services including housing, meals, mail delivery and laundry.

Jury selection is under way in the civil trial over New Orleans’ problem-plagued crime camera system. The trial stems from a lawsuit filed in 2007 by two companies that allege the system they’d developed was misappropriated by people within and with ties to the city’s technology office. Southern Electronics Supply and Active Solutions also allege a conspiracy with Dell to sell the system. Dell has disputed this. The case has played out in recent months against the backdrop of a federal criminal investigation involving the technology office and crime camera contracts. An attorney for Mayor Ray Nagin’s former technology chief Greg Meffert has said Meffert is a target of that probe. The trial could last at least two weeks.

Barnes & Noble is holding a Grand Opening Preview at its new River Oaks Shopping Center location tomorrow evening. A portion of the evening’s proceeds benefit the Houston Real Men Read mentor program, which organizes volunteers from the business community and government to come schools to read to children. State Senator Rodney Ellis, Houston Real Men Read Honorary Chair, will attend. The bookstore formally opens the new outlet on Wednesday, while closing its store on South Shepherd Drive.

The number of businesses with perfect ratings based on lesbian, gay, bisexual and transgender workplace policies and benefits rose by 20 per cent in the past year, according to the Human Rights Campaign Foundation,. That’s despite the serious economic downturn. Eleven of the top 20 Fortune-ranked companies received 100 per cent ratings. Eighty-seven per cent of American Lawyer magazine’s 200 largest law firms received top ratings.

Microsoft is testing a way to display some search results as galleries of moveable images instead of text links. That’s part of the ongoing attempt to differentiate Microsoft’s Bing search engine from Google. Bing’s new visual search page lets people flip through pictures to track down where and when a popular movie is playing, read up on baseball players or shop for items like digital cameras. Microsoft picked about 50 categories and worked with outside companies, including shopping sites, to pull in the necessary pictures and descriptions. The function was being unveiled at a conference staged by the TechCrunch blog in San Francisco.

This promises to be a busy week for economic reports, which will be closely followed by investors. Beginning tomorrow, the government releases the producer price index, as well as August retail sales. Wednesday, the consumer price index, follows. And the Federal Reserve also reports on industrial production. Thursday, the Commerce Department provides an update on home construction with housing starts, and the Labor Department releases the weekly jobless claims.

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