Wednesday PM April 21st, 2010

Rescuers search for missing oil rig workers in the Gulf after fire and explosion…ConocoPhillips pulling out of Saudi Arabian project…New counterfeit-thwarting $100 bill unveiled…

Rescuers have been searching waters off Louisiana’s coast for 11 missing oil workers after an explosion and fire on a Transocean offshore drilling rig Deepwater Horizon. The drilling rig is about 50 miles southeast of New Orleans. Transocean’s David Rainey… “We experienced a fire and explosion onboard the Deepwater Horizon yesterday at around 10 p.m. Central time. The operation on the rig immediately prior to the incident was running and cementing a production casing. This was conducted according to plan, with appropriate testing completed, with no indication of any problems. We don’t know what caused the incident. Our efforts firstly concentrated on caring for the people and secondly securing the rig.” The Coast Guard says there were 126 people on the platform at the time of the explosion and 115 have been accounted for. Seven workers are reported to have been critically injured. Two were taken to a trauma center in Mobile, Alabama, which has a burn unit, though there’s no word on the nature of their injuries. Senior Chief Petty Officer Mike O’Berry says rescuers are hoping the missing workers escaped in a life raft. He says the rig is still burning and is now listing about ten degrees. There’s no estimate on when the fire will be extinguished. The rig’s owner says it had been drilling but was not in production, and the cause of the blast is not yet known. Coast Guard environmental teams are on standby, however, and will assess any environmental damage once the fire is out.

ConocoPhillips announces it will pull out of a multibillion-dollar project in Saudi Arabia. The Houston-based company is working cut many of its ties to the struggling refining industry. The decision by ConocoPhillips to drop the Yanbu project comes as energy demand remains weak in the U.S. and Europe. ConocoPhillips built itself into a major player as energy prices increased during the past few years. But as refineries posted loss after loss, the company recently decided to shrink its downstream operation. Senior Vice President Willie Chiang says that stepping away from the Yanbu project fits with those goals. The ConocoPhillips partner in the deal, Saudi Arabian Oil Company, said it was “evaluating options” on what to do next. The Yanbu project was expected to begin fuels production in 2014.

Federal Reserve Chairman Ben Bernanke says it’s a challenge for the government to stay ahead of counterfeiters as technology becomes more sophisticated and more dollars flow overseas. Bernanke’s brief remarks come at the unveiling of a redesigned $100 bill. The government hopes the new bills will make it harder for high-tech counterfeiters to knockoff. The Fed chief says staying ahead of bogus bills is a job that has become “more complex in recent years as technology advances and U.S. dollar flows expand and increase.” He says as many as two-thirds of all $100 bills circulate outside the United States. The new bills go into circulation on February 10th, 2011.

Dozens of tax exemptions drew scrutiny as the Texas House Ways and Means Committee prepares to deal with an estimated budget shortfall of $11 billion. About 150 lobbyists and interest groups filled a hearing room in Austin. Coffee manufacturers, solar power industries and agriculture interests were among the industries that packed into the legislative hearing. Among the exemptions on the table are those on stored offshore drilling equipment and the downtown Austin state PTA office building. A representative from the State Comptroller’s Office said Texas lost $2.7 million in potential tax revenue in 2009 from exemptions on solar and wind energy devices. But Steve Taylor with solar manufacturer Applied Materials and others urged lawmakers to take the long view–to attract such companies to Texas. Committee Chairman Rene Oliveira said lawmakers won’t remove property tax exemptions on veterans or churches and won’t raise taxes on the sick, food or healthcare. Removing tax exemptions would be one of many options lawmakers weigh to deal with the shortfall, but that won’t be nearly enough to patch the budget hole. Some estimates have pegged the shortfall at more than $15 billion as lawmakers prepare for the 2011 legislative session.

A Senate panel has approved legislation that would limit the ability of Wall Street banks to trade complex financial tools called derivatives. The bill offered by Senate Agriculture Committee Chairman Senator Blanche Lincoln of Arkansas would also improve transparency of most derivative trades. Lincoln’s proposal is more sweeping than those offered by the Obama administration and the House. Derivatives are financial products–such as corn futures–that rely on the value of some underlying investment. Companies use them to hedge against risks. But derivatives have become a vehicle for speculation, with critics blaming them for contributing to the financial crisis. The measure is expected to be included in the financial overhaul bill in the Senate.

A new report shows taxpayers got a record $47.4 billion last year in earnings from the Federal Reserve. The payment to the Treasury Department is slightly higher than the $46.1 billion first estimated in January. The new figure is based on more complete information contained in audited financial statements for the fed’s 12 regional banks and related units. The amount handed over to Treasury last year is $15.7 billion more–or a 50 percent increase–from 2008, the Fed says. The bigger windfall to taxpayers reflects gains from the Fed’s efforts to fight the financial crisis and revive the economy. Critics have worried that the Fed’s actions could put taxpayers at risk by reducing the amount turned over to treasury coffers.

The International Monetary Fund says Europe’s economic recovery outlook faces increased uncertainty because of Greece’s crippling debt crisis, continuing banking woes and debt troubles for businesses and consumers. The IMF put the pace of recovery for the countries that use euro at only one percent for 2010, far lower than the three percent in the United States and 6.9 percent in Asia. The IMF’s latest world economic outlook say potential spillover from the Greek debt crisis threatening “normalization in financial market conditions.”

Continental Airlines says its dispatchers have ratified a new four-year collective bargaining agreement for 111 Houston employees. The dispatchers are represented by the Transport Workers Union.

The president of Spirit Airlines says there’s been no significant fallout from his new charge for carry-on bags. Ben Baldanza defends his business model in a nationally broadcast interview while acknowledging it didn’t sit well in some quarters. He joked that he’d never consider charging for bathroom use. Appearing with Baldanza on NBC’s Today show, Senator Charles Schumer said Spirit set a bad precedent by charging up to $45 for carry-on bags and said he hopes competitors don’t follow suit. The New York Democrat said there might be legislation if the trend continues. Baldanza said carry-on fees “can cause some outrage,” but said Spirit simultaneously lowered its air fare and its passengers aren’t paying appreciably more than before.


The parent of American Airlines says it lost $505 million in the first quarter as traffic stabilized but didn’t improve much. AMR was also hurt by the February snowstorms that closed airports and forced thousands of flights to be canceled along the East Coast, and by earthquakes in Haiti and Chile. American says the natural disasters cost it between $20 million and $25 million. The loss was larger than the $375 million loss of a year ago.

Dallas-based AT&T says its earnings fell 21 percent in the latest quarter because of a charge for health care benefits. The country’s largest telecommunications provider says it earned $2.48 billion in the first three months of the year. The results included a previously announced charge of $995 million, or 17 cents per share, to reflect a change in the health care reform package regarding the tax treatment of benefits. Revenue was $30.6 billion, flat with a year ago and slightly below analyst expectations for $30.7 billion.

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