Monday PM April 19th, 2010

Contract worker dies in Port Arthur Motiva Enterprises refinery mishap…Governor Perry critical of Obama's omission of JSC in NASA speech…Airlines seek EU compensation for delays from volcanic ash…


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An industrial accident at the Motiva Enterprises refinery in Port Arthur has claimed one life. Justice of the Peace Tom Gillam told KFDM-TV that a contract worker died in the accident this morning. The plant is the site of a $7 billion expansion project to double capacity to nearly 600,000 barrels a day. A statement from Motiva confirms a fatality involving a contract worker happened around 8:30 a.m. in an area where the refinery is being expanded. Motiva says the circumstances of the incident are under investigation. Further details were not immediately released.

Reliant Energy is buying Texas renewable energy credits to meet the estimated electrical needs for all customers across the state on Earth Day, April 22nd. Reliant says it will make a $25 donation to EarthShare of Texas for each customer who signs up for a new 100 percent wind plan between April 18th and 24th.

The government says Toyota has agreed to pay a record $16.4 million fine for failing to properly notify federal authorities about a dangerous pedal defect. The fine is the largest-ever penalty paid by an automaker to the U.S. government. Transportation Secretary Ray LaHood says that by failing to report safety problems, Toyota put consumers at risk. The penalty is connected to a January recall of 2.3 million vehicles with sticking accelerator pedals. The government says Toyota knew about the problem in late September and failed to report the defect within five business days, as required by law.

The Conference Board says its leading economic indicators, a gauge of future activity, jumped 1.4 percent in March, the fastest pace of growth in at least seven months. The index’s surge suggests economic growth is likely to continue in the next three to six months. Economists polled by Thomson Reuters had expected the index to grow 0.9 percent last month. The report says the leading indicators’ growth was 0.4 percent in February and 0.6 percent in January, up from previous estimates of 0.1 percent and 0.3 percent. Seven of the ten indicators increased in March.

President Obama will open the first meeting of his commission to tackle the soaring budget deficit. The panel convenes next week to begin the difficult job of coming up with a bipartisan debt reduction plan in a polarized election year. The 18-member panel also will hear from Federal Reserve Board Chairman Ben Bernanke, who has been issuing increasingly dire warnings about the dangers of the budget deficit. It reached $1.4 trillion last year. Bernanke speaks to the panel on April 27th. Obama has asked the panel to come with a plan to cut the deficit to three percent of the size of the economy within five years. It’ll take agreement among 14 members to produce a plan, including at least half of the panel’s Republicans.

A new paper from Federal Reserve says an early warning system to detect financial problems before they reach crisis proportions must allow policymakers to better pinpoint areas of excessive risk-taking. The staff paper says more up-to-date statistics–both at the level of individual companies and products as well as the big-picture, industry-wide information–are needed. The paper says policymakers’ analysis of the information should focus on recurring themes associated with financial instability such as excessive risk-taking by investors. Fed Governor Donald Kohn and two staffers wrote the paper to be presented at a conference this week in Frankfurt, Germany.

The Federal Reserve is starting work on a new nationwide financial snapshot of Americans–what they own, how much they borrow and how they bank. The survey of consumer finances–the most comprehensive look at Americans’ finances–comes out every three years. The new snapshot will be published in 2012 and also will include information on small businesses. Fed Chairman Ben Bernanke is urging Americans to participate in this year’s survey. A letter was mailed to 13,000 randomly selected households. Bernanke says in the letter the survey is “one of the nation’s primary sources of information on the financial condition of different types of households.”

Governor Rick Perry says President Barack Obama “has put a target on Texas’ back” and illustrated it by not mentioning NASA’s Johnson Space Center in Houston while announcing new space agency initiatives in Florida. Perry spoke Saturday at Texas Motor Speedway, where his 2010 gubernatorial campaign was to sponsor a car in the NASCAR Sprint Cup race. The comments were the latest criticism of Obama by Perry amid growing speculation that the Texas leader might consider a run for president in 2012. Perry is set to appear on the cover of an upcoming issue of Newsweek. Perry says Obama’s announcement Thursday in Florida of more NASA jobs in that state left the impression that the president didn’t care about Texas.

As airline losses from the volcanic ash cloud spiral over $1 billion, the industry is demanding EU compensation. They’re also critical of European governments for relying too much on scientific theory–not fact–in their decisions to shut down airspace across the continent. Shares of some European airlines fell as flight disruptions from the volcanic cloud moved into a fifth day, and the International Air Transport Association complained of “no leadership” from government leaders–one of whom admitted to EU dissension about how to respond. A senior western diplomat told the Associated Press that several NATO F-16 fighter jets had suffered engine damage after flying through the cloud, suggesting government caution was warranted. The official declined to provide more details on the military flights, except to say that glasslike deposits were found in the planes’ engines after they patrolled over unspecified European airspace.

New York Senator Charles Schumer says five major airlines have agreed they aren’t going to charge passengers for their carry-on bags. Schumer says he’s gotten commitments from American, Delta, JetBlue, United and US Airways. He reached out to the companies’ CEOs after Spirit Airlines recently announced it would charge up to $45 for passengers who bring a bag on board and put it in the overhead compartment. The Democratic Senator says he hopes other carriers will follow. He says he plans to meet with the leadership of Spirit Airlines in the coming week. Add-on fees have been an important source of revenue for airlines since oil prices soared to an all-time high of $147 a barrel in July 2008. Those fees became a mainstay for airlines’ bottom lines even after fuel prices plunged.

Russian Energy Minister Sergei Shmatko says that colleagues from the world’s biggest natural gas-producing countries, worried about slumping prices, have agreed to try to index gas to oil. Shmatko was speaking to reporters at a meeting in Algeria of the Gas Exporting Countries Forum, which brings together 11 ministers from countries accounting for some 70 percent of the world’s natural gas reserves. “All ministers agreed and supported that we continue our efforts to achieve indexing gas to oil,” the Russian minister said without giving a timeframe for when this could happen. He also said he was “concerned about the existing idea to impose carbon taxes” on natural gas, which he called the most ecologically friendly fossil fuel.

Algerian Energy Minister Chakib Khelil says OPEC production quotas are not responsible for the recent increase in oil prices and that the cartel has no intention of reviewing output levels before its next meeting planned in October. Khelil says members of the Organization of Petroleum Exporting Countries still have surpluses of about six million barrels per day and contends that “speculators” are to blame for prices recently rising above $80 per barrel. The small drop in oil prices since airlines were grounded in Europe because of volcanic ash is “a case study” of how speculators on the oil market overreact both ways to economic data, Khelil told reporters after presiding over a forum of gas exporting countries.

A newspaper is reporting that federal authorities are picking up the pace in a criminal investigation of Countrywide Financial and its role in the meltdown in 2007 and 2008 of the U.S housing and finance industries. The Wall Street Journal cited anonymous sources in reporting Sunday that one of several federal investigations now under way is a criminal probe of countrywide. The paper didn’t offer details on what charges could emerge. The paper said a grand jury began hearing testimony about Countrywide last year. No criminal charges have been filed against corporate leaders in the larger federal probe. Three Countrywide executives face a civil lawsuit the securities and exchange commission filed last year.

Economic reports this week cover wholesale prices and home sales. Later in the week, the Labor Department releases the producer price index, seen rising 0.5 percent. Existing home sales and new home sales will also be released, along with durable goods orders.

Halliburton says its first-quarter profit slumped nearly 46 percent with the industry still recovering from last year’s drop in oil drilling. The Houston oil services company Monday reported earnings of $206 million in the first three months of the year. That compares with $378 million in the prior-year period. Revenue fell four percent to $3.76 billion, compared with the first quarter of last year. Halliburton said it would have earned 28 cents a share excluding special charges related to the recent devaluation of Venezuela’s currency. Analysts, which typically exclude one-time items, had expected revenue of $3.76 billion.

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