Monday PM May 10th, 2010

BP continues exploring options for capping leaking Gulf oil spill…Retail gasoline prices jump seven cents in past two weeks…Rate of late mortgage payments drops for first time since 2006…


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A BP official says the company is considering more options to stop the flow of oil spewing at the bottom of the Gulf of Mexico. Chief Operating Officer Doug Suttles said Sunday that BP is thinking about putting a smaller containment dome over the massive leak after a four-story, 100-ton box became clogged with ice-like crystals a day earlier. BP believes a smaller dome would be less vulnerable because it would contain less water. The company is also now debating whether it should cut the riser pipe undersea and use larger piping to bring the gushing oil to a drill ship on the surface. Suttles says cutting the pipe is tough, and it’s considered the less desirable option.

A BP official is telling the Associated Press that the company has received federal approval to continuously spray chemicals underwater on the massive oil leak. BP’s Mark Proegler said the company received Environmental Protection Agency approval and began pumping dispersant on the site starting at 4:30 this morning. The company plans to continue spraying and taking tests. The dispersants had never been tried at such depths before this spill and officials have been worried about the effect on the environment. Officials with BP have been encouraged by the underwater spraying, saying it prevents some of the oil from reaching the surface. An EPA spokeswoman didn’t immediately return a telephone call or e-mail.

The Gulf of Mexico’s wetlands have been weakened by hurricanes, erosion and flood-control projects. Now they face another test as a monster oil slick creeps closer. About 40 percent of the nation’s coastal wetlands are clumped along southern Louisiana in the path of oil that’s gushing from a ruptured underwater well. Experts say if the vegetation could suffocate if it gets soaked with oil. That would leave nothing to hold the wet soil in place. Coastal wetlands are crucial nesting and spawning areas for birds and fish, including some endangered ones. Construction of flood-control levees over the years has prevented the Mississippi River from depositing new layers of sediment that could replenish the marshes.

BP says the Gulf spill has cost the company $350 million so far. In an update this morning, BP says the current tally includes the cost of the immediate response, containment, relief well drilling, commitments to the Gulf Coast states, and settlements and U.S. federal costs. The company doesn’t speculate about the final cost.

A BP shareholder has filed suit against the corporation’s executives because of the offshore rig disaster that led to the spill. Filed in federal court in New Orleans, the lawsuit by Pennsylvania resident Katherine Firpo accuses BP of ignoring safety issues on rigs such as the Deepwater Horizon, which exploded April 20th. And the suit accuses BP of pursuing cost-cutting measures at the expense of safety, while lobbying authorities to decrease safety regulation. Among other things, the lawsuit seeks court-ordered changes in BP’s corporate governance. A BP spokesman declined comment. The lawsuit is among a flurry of lawsuits filed by rig workers or their families and by fishermen and business owners claiming economic damage.

Several hearings on the still-gushing oil leak in the Gulf of Mexico are set for this week. Lawmakers who flew over the Gulf on Friday came away shocked at the magnitude of the problem. Now they want straight answers not only from the oil industry but also the relevant government agencies as to what went awry and why. Officials from BP, Halliburton and Transocean are to appear before lawmakers. Other witnesses will talk about the effect the spill is having on local economies, wildlife and the environment.

The average price of regular gasoline in the United States has jumped more than seven cents over a two-week period to $2.92. 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 is $3.05. Premium is at $3.16. Denver had the lowest average price among cities surveyed at $2.71 a gallon for regular unleaded. Chicago was highest at $3.22. The average for diesel nationwide was $3.15, up about seven cents from two weeks ago.

The White House’s Homeland Security and Counterterrorism adviser says there is no evidence that a cyber attack was behind the chaos that shook Wall Street last Thursday. John Brennan told Fox News Sunday that officials have uncovered nothing to suggest that cyber attacks caused turbulence that sent the Dow Jones industrials plunging almost 1,000 points before staging a partial recovery. Regulators and market officials are scouring millions of trades to understand what caused the volatility. The Securities and Exchange Commission and the Commodity Futures Trading Commission are relying on self-regulatory offices at the New York Stock Exchange and elsewhere to help them identify questionable trades.

The chairman of the Senate Banking Committee says federal regulators need to take a close look at computer-based high-speed trading and whether that new phenomena triggered the dizzying plunge on Wall Street last week. Senator Chris Dodd says the Securities and Exchange Commission needs to come up quickly with regulations to ensure there is no repeat of the chaos Thursday when the market fell nearly 1,000 points in a matter of minutes. Dodd said that while he plans hearings on the market fall, he doesn’t see a need for legislation. The Connecticut Democrat appeared on CBS’ Face the Nation.

The rate of late mortgage payments has dropped for the first time since 2006. The 60-day delinquency rate has slipped to 6.77 percent, from 6.89 percent in the fourth quarter of 2009. Transunion, the credit reporting agency, says that’s the first decline after 12 consecutive quarters of increases. Still, that rate’s higher than a year ago, when delinquencies were at 5.22 percent. But Transunion says the drop is a “very, very strong sign” that the economy may be turning around. He added the agency expects another decrease in this quarter, and then for the rate to stabilize for the rest of the year. Transunion measures the rate using mortgage payments that are 60 days late. Historically, mortgage delinquencies have hovered around 1.5 or 2 percent.

Fannie Mae has again asked taxpayers for more money after reporting a first-quarter loss of more than $13 billion. The mortgage finance company, which was rescued by the government in September 2008, said it needs an additional $8.4 billion from the government to help cover mounting losses. That will bring its total request for aid to about $88 billion. Fannie Mae says it lost $13.1 billion in the January-March period. That takes into account $1.5 billion in dividends paid to the Treasury Department. It compares with a loss of $23.2 billion in the year-ago period.

It may sound strange coming from the head of the Federal Reserve, but Ben Bernanke says money can’t buy happiness. In a weekend speech to graduates of the University of South Carolina, Bernanke said people are happy when they do what they love. The Fed chairman says getting a better-paying job is one of the main reasons to go to college. But he warns graduates to “be careful” if they’re tempted to take a job only because the pay is high. He says having a larger income is exciting at first, but “the thrill quickly wears off.” Bernanke says studies have found that six months after winning a large lottery prize, people reported being not much happier than before. Bernanke says being unhappy sometimes can be good, too. He says “doing the ethical thing” might make you feel unhappy, but in the end, “it’s essential for a well-balanced and satisfying life.”

Many farmers say that without immigration reform, they’ll be facing a labor shortage. Farmers say most Americans shy away from jobs such as cutting cabbage because the work is seasonal, physically tough, out in the elements and often in remote areas. They want the federal government to make it easier for them to get qualified, legal foreign workers. That includes passing an “agjobs” bill enabling farm workers to get some kind of legal status and simplifying a visa program for temporary workers. The Center for Immigration Studies, which advocates tougher immigration laws, thinks the problem is farmers are addicted to cheap, foreign labor and haven’t been forced to raise wages.

Sometimes being impulsive comes in handy. JetBlue is selling all remaining seats on nonstop flights Tuesday and Wednesday to 59 destinations for $10 each way. The airline didn’t specify how many seats are available in the sale. JetBlue Airways, based in Forest Hills, New York, serves 61 cities in the U.S., Caribbean and Central America with 650 daily flights.

The coming week doesn’t bring much in the way of economic reports. The government tomorrow reports on the nation’s trade gap for March as well as on wholesale inventories. Also due this week, are readings on retail sales, industrial production and business inventories as well as a weekly look at new unemployment claims.

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