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Wednesday PM May 12th, 2010

BP prepares to position second container over Gulf oil leak…U.S. trade deficit rises to 15-month high…Texas House Speaker Joe Straus tells budget writers to handle state shortfall of at least $11 billion without new taxes…


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BP says a second, smaller container has reached the seafloor, but it hasn’t yet been placed over the blown-out well fouling the Gulf of Mexico. BP spokesman Bill Salvin says that the two-ton box reached the seabed overnight. He says it hasn’t been positioned over the well yet because engineers want to make sure everything is hooked up correctly. Officials want to avoid the same icy, slushy buildup that thwarted their first attempt at using a much larger box that weighed about 100 tons. This box will be connected to a ship on the surface by a pipe-within-a-pipe when it’s lowered. Crews plan to pump in heated water and methanol so ice won’t build up. Salvin says undersea robots will position the box over the gusher by Thursday.

Louisiana wildlife officials say they have found tar balls at the mouth of the Mississippi River in the state’s southeastern tip. The Louisiana Department of Wildlife and Fisheries says that the dark, sticky balls of oil had washed up in South Pass. An oil sheen had already made its way into the pass after the oil spill that has spewed more than four million gallons of crude into the Gulf. The blown-out well continues to gush about 210,000 gallons of oil a day into the sea. Tar balls have washed up in areas from Louisiana to Alabama. The South Pass is a major channel that runs through Louisiana’s salt marshes and is a breeding ground for crab, oysters, shrimp and other seafood.

A federal official says a blitz inspection of deepwater drilling rigs in the aftermath of the Gulf disaster turned up only “a couple of minor issues.” Michael Saucier of the Minerals Management Service testified at a hearing in Kenner, Louisiana. At the same hearing, Coast Guard Captain Hung Nguyen said the government may not have an effective safety net for making sure blowout preventers are safely manufactured and installed on oil rigs. Saucier testified that the government isn’t required to inspect the safety devices before they are installed. Meanwhile, a Congressional investigation has revealed that there was a hydraulic system leak in the blowout preventer aboard the rig that exploded in the Gulf. It had last been inspected about 20 days before the blast.

Representative Henry Waxman says that his committee’s investigation into the Gulf oil spill reveals that a key safety device, the blowout preventer, had a leak in a crucial hydraulic system. The California Democrat says that the investigation also discovered that the well had failed a negative pressure test just hours before the April 20th explosion. He cites BP documents received by the Energy and Commerce Committee that showed there was a breach in the well integrity that allowed methane gas and possibly other hydrocarbons to enter the well.

The White House is asking Congress to raise a liability cap that could limit how much BP has to pay in economic damages in the Gulf oil spill. The administration also wants to increase a per-barrel tax on oil companies to replenish a clean-up fund likely to be tapped to pay for the massive spill. And the White House wants Congress to approve more unemployment assistance, help for fishermen and money for food stamps–a total of $118 million in new spending, though administration officials insisted most of the new costs will be born by BP. Jeff Liebman, acting deputy director of the Office of Management and Budget, said the administration hopes to get it passed in the next few weeks.

Environmentalists hope the Gulf oil spill will invigorate the movement and finally persuade Americans to change their energy-dependent lifestyles. The ruptured well has poured more than four million of gallons of crude into the sea and counting. But activists worry that the full effect of the spill might not be felt on land if there aren’t startling images to support it. So far, relatively few birds with oil-stained feathers have been brought in for treatment. And the thickest oil still hasn’t reached land. Green groups are trying to capitalize by letting people know how much the spill will affect the seafood-friendly region’s ecosystem and economy.

The International Energy Agency says it has slightly lowered its forecasts for the rise in global oil demand for 2010 by a daily 220,000 barrels, to 86.4 million barrels a day. The Paris-based agency says the change is based on fresh forecasts of rising economic growth–resulting in more oil demand–tempered by expectations of higher oil prices, which would dampen appetite for crude and its products. In its monthly report on the oil markets, the IEA also expresses “serious concerns” about the high public debts levels seen in Eurozone countries, which pose a “clear and present danger” to the global economy. The IEA also says that overzealous efforts to regulate excessive speculation in the futures market could backfire and reinforce volatility.

Plans for a pipeline to carry Canadian oil across six U.S. states are attracting concerns in Nebraska. About 100 people attended a U.S. State Department hearing in York, Nebraska, on Monday that focused on Transcanada’s plan to build a pipeline from Alberta to oil refineries in Oklahoma and Texas. Landowner Randy Tthompson of Martell says he’s concerned about the pipeline’s proximity to the Ogallala aquifer. The vast natural underground reservoir provides drinking and irrigation water in parts of eight states. Transcanada Representative Jeff Rauh says the pipeline would include an integrated leak detection system to spot problems. Nineteen hearings are being held through May 20th in affected states. Comments also are being accepted online or through fax or mail.

The U.S. trade deficit rose to a 15-month high as rising oil prices pushed crude oil imports to the highest level since the fall of 2008, offsetting another strong gain in exports. The larger deficit is evidence of a rebounding U.S. economy. The Commerce Department says the trade deficit rose 2.5 percent to $40.4 billion in March, close to the $40.1 billion deficit economists had expected. It was the biggest monthly trade deficit since December 2008. Exports of goods and services rose 3.2 percent to $147.87 billion, the highest level since October 2008. Imports were also up strongly, rising 3.1 percent to $188.3 billion.

An expansion of gambling has been suggested as Texas faces a projected shortfall that some lawmakers say could hit $18 billion. Speaker Joe Straus has told Texas House budget writers that they’ll have to handle a state shortfall of at least $11 billion without new taxes. Straus also raised the possibility of unpaid furloughs and four-day workweeks for state workers. Details came during a hearing in Austin by the House Appropriations Committee. Committee Chairman Jim Pitts of Waxahachie says legalized gambling would be a possible money-raising option. But Lieutenant Governor Dewhurst and Governor Rick Perry both say they oppose any expansion of gambling in Texas. State agencies have submitted proposals to cut current-year budgets by five percent. Officials have said those savings will only amount to about $1.7 billion.

The head of the Securities and Exchange Commission has told a Congressional panel regulators need more time to figure out what caused last week’s stock market plunge. SEC Chairman Mary Schapiro says her agency has yet to pinpoint the exact reason for the sell-off that sent the Dow down nearly 1,000 points in less than half an hour. Schapiro says the agency’s review finds no evidence of terrorist activity or computer hacking. She says there was no indication that something “malicious” was responsible. Six major U.S. securities exchanges on Monday agreed in principle to a uniform system of “circuit breakers,” which could slow trading during sharp market swings. Most of the 50 U.S. exchanges regulate themselves and design their own tools for slowing or halting trading.

The Senate voted unanimously Tuesday to peer into Federal Reserve decision-making. It authorized an examination of the central bank’s emergency lending to financial institutions in the months surrounding the 2008 financial crisis. Separately, the Democrats rejected a Republican proposal to end the government’s support of mortgage giants Fannie Mae and Freddie Mac. The vote was 56-43. Instead, the Senate voted to instruct the Treasury to recommend how the government can end its relationship with the two housing finance companies. The GOP plan also would have repealed the companies’ mandate to promote affordable housing. Republicans said the Democratic plan simply put off a decision that should be addressed in conjunction with new financial regulations. The taxpayer bill for rescuing the two stands at $145 billion.

Microsoft is rolling out a new edition of its Office programs to businesses. And for the first time it’s offering versions of Word and other programs that work in a Web browser, for free. Office 2010 marks a milestone in Microsoft’s efforts to keep up with an industry shift from programs that run on PCs to free, Web-based ones that can be accessed from any computer. And yet Microsoft must be careful not to undermine its lucrative desktop software business, which accounted for 29 percent of Microsoft’s revenue and 51 percent of its operating income in the most recent quarter. Consumers can start buying Office 2010 or using the free applications on the Web in June.

Chick-fil-A has opened its 50th Houston location, on the Northwest Freeway. This is the chain’s third stand-alone restaurant to open in the Houston area in six weeks. Nearly 200 jobs have been added to the local economy with the three openings.

Plant pathologists are already recommending farmers and gardeners take steps to avoid another outbreak of late blight. The disease destroyed millions of dollars worth of tomatoes in the eastern U.S. last summer. Cornell University plant pathologist Meg McGrath says tomato growers can spray pesticides to try to prevent infection, but once late blight takes hold, the plants are lost. Late blight flourishes in cool, wet conditions and can survive during the winter in living tissue, such as potatoes buried underground. McGrath says growers need to destroy any potatoes left from last year before planting this spring. She also says they need to watch for black patches on tomato stems, leaves and fruit. Infected plants must be pulled up, bagged and thrown out.

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