Friday PM May 21st, 2010

BP targets Tuesday to try “top kill” method to plug Gulf oil leak…Houston unemployment rate drops slightly to 8.5 per cent…Retail gasoline prices fall across Texas for second week in a row…

Live Web images of oil continuing to gush from a blown out well in the Gulf of Mexico are now online. BP concedes that more oil is flowing from the leak than previously estimated. Thick, sticky oil is creeping deeper into delicate marshes of the Mississippi Delta, an arrival dreaded for a month since the crude started spewing into the Gulf. Drip by drip, day by day, the oil gushing into the Gulf of Mexico is adding up to mind-boggling numbers. Using worst case scenarios calculated by scientists, a month’s worth of leaking oil could fill enough gallon jugs to stretch more than 11,300 miles. That’s more than the distance from New York to Buenos Aires, Argentina, and back. That’s just shy of 130 million gallons. If the government’s best case scenario is used–and only 5.25 million gallons have spilled–those milk jugs would cover a bit more than a roundtrip between New York and Washington. But the government is revising that number, with a team of scientists working around the clock to come up with a more realistic and likely higher figure.

BP now says it will likely be at least Tuesday before engineers can shoot heavy mud into a blown-out well spewing oil into the Gulf of Mexico. Three ultra-deepwater rigs and other equipment are at the site where the Deepwater Horizon oil platform exploded April 20th. They’re preparing for a delicate procedure called a “top kill” that BP hopes will stop the flow of oil from the well. Crews will pump in heavy drilling mud, which is a thick, viscous fluid that’s twice the density of water. That should stop the oil, and then they’ll use cement to keep more from gushing out. BP’s Doug Suttles says this hasn’t been tried at 5,000 feet underwater before, so engineers want to make sure everything is just right.

The executive heading up BP’s fight to stop a massive underwater oil spill says he’s very optimistic that the Gulf of Mexico will recover. BP Chief Operating Officer Doug Suttles said on the CBS Early Show that in the worst case scenario, the oil leak that has already lasted a month will continue until early August. That’s when a new well currently being drilled could be finished and cap the flow. Suttles also said the best case scenario is that an effort to plug the well by injecting heavy mud Sunday or Monday will stop the gusher. Asked if he thinks the Gulf environment will survive the spill, Suttles said he has been told by experts that the Gulf has several factors in its favor. He said that included its large size and the fact that its waters are warm.

A stockholder lawsuit claims “gross mismanagement” by top BP officials has severely damaged the company’s reputation and hurt its value. The lawsuit, filed in superior court in Anchorage, alleges the officials did not take the necessary steps to ensure BP compliance with safety rules and environmental safeguards, citing last month’s oil rig explosion in the Gulf of Mexico, a 2005 refinery blast in Texas and concerns U.S. Representative Henry Waxman and Bart Stupak raised earlier this year about BP operations on Alaska’s North Slope. A spokesman for BP in Alaska has declined comment on pending litigation. Defendants in the suit include BP Chief Executive Tony Hayward; members of BP’s board of directors; Lamar McKay, president of BP America; and John Minge, head of BP Exploration Alaska. The named plaintiff is Jeffrey Pickett, identified as a BP shareholder since at least late 2000 acting “for the benefit” of BP. California-based attorney Patrick Coughlin said funds that hold BP stock are interested in joining the lawsuit.

Kentucky’s Republican Senate candidate Rand Paul is criticizing President Barack Obama’s handling of the Gulf oil debacle as putting “his boot heel on the throat of BP.” Paul says Obama’s criticism of the oil company sounds like an attack on business and “really un-American.” In an interview on ABC’s Good Morning America, Paul says the president’s response is part of the “blame game” that’s played in the U.S. Paul said that leads to the thinking that tragic incidents are “always someone’s fault” and added, sometimes accidents just happen. Paul began the interview on the defensive when GMA host George Stephanopoulos tried to clarify Paul’s position on whether civil rights laws should apply to private businesses. Paul, who won the Kentucky GOP primary Tuesday, asked when his honeymoon with the media started.

Unemployment rates fell in a majority of states last month as improved economic conditions spurred hiring. The Labor Department says that 34 states and the District of Columbia reported their jobless rates fell in April. Six states reported higher rates, while ten saw unemployment hold steady. That marked an improvement from March when 16 reported declines in unemployment, 22 saw increases, and 12 had no change, according to revised figures. South Carolina’s rate fell to 11.6 percent in April, from 12.2 percent in March, marking the largest monthly drop of any state.

A state agency says Texas unemployment rose slightly to 8.3 percent in April, although the number of jobs grew for the fourth consecutive month. The Texas Workforce Commission says the jobless rate jumped from 8.2 percent in March. The state added 32,500 nonagricultural jobs in April for a total increase of 79,000 jobs in 2010, according to commission figures. The commission says the work force in Texas grew by 51,000 in April, outpacing the increase in jobs. The Texas jobless rate remained below the national unemployment figure of 9.9 percent. Workforce Commission Chairman Tom Pauken says the April employment results were “mixed.”

Houston added 2,700 new jobs in April, according to the TWC. That helps push the Houston area unemployment rate down slightly to 8.4 percent in April.

Retail gasoline prices fell across Texas for a second week in a row. The weekly AAA Texas gasoline price survey shows the average price for a gallon of unleaded regular fell five cents this week to $2.74. Nationally, the average price fell five cents to $2.84 per gallon. The lowest gasoline prices in the survey this week are in Houston, where the average price fell five cents to $2.69 per gallon. The most expensive is in El Paso, where the average price fell a penny to $2.80 per gallon. The auto club statement cites sharp price drops over the past three weeks in crude oil prices, while oil and gasoline inventories remain abundant.

The Lexus recall has officially begun. Toyota is recalling 4,509 Lexus cars in Japan because of a computer problem affecting the model’s steering system, with a similar recall to follow in the U.S. The carmaker says another 7,000 cars are affected in the U.S., China, Europe and other regions. The recall affects Toyota’s luxury Lexus LS line and involves a computerized system that oversees how the steering wheel controls the tires. After being hit with a record $16.4 million fine in the U.S. for being slow to carry out an accelerator pedal recall and facing strong criticism both at home and abroad Toyota is trying to react more quickly.

The Treasury Department says it expects the financial bailouts to cost taxpayers billions less than its earlier estimate. The problem is that its revised forecast assumes Treasury’s shares of bailed-out companies are gaining value despite this week’s plunge in stock prices. Treasury predicts taxpayers will lose $105.4 billion on the bailouts. That’s down $11.4 billion from a February projection by the Obama administration. Most of the expected savings depend on Treasury’s ability to profit once it sells its stakes in Citigroup, General Motors and Chrysler. Treasury’s analysis is based on conditions as of March 31st. That was before the European debt crisis roiled markets. The tumble in stock prices makes Treasury’s projected gains appear far less likely.

The House and Senate must now get to work reconciling different versions of the financial overhaul bill. The measure passed by the Senate gets tougher on both borrowers and lenders it also shines more light on complex but hidden financial instruments, the “derivatives” that made long-odds bets on whether Americans could make payments on mortgages they never should have qualified for. A key House negotiator is predicting the bill will be on President Barack Obama’s desk by the Fourth of July. It would enact the most sweeping changes in the rules governing big banks since the Great Depression. Four Republicans broke ranks. Senators Charles Grassley of Iowa, Scott Brown of Massachusetts, and Olympia Snowe and Susan Collins of Maine voted in support of the measure. The legislation aims to prevent a recurrence of the near-meltdown of big Wall Street investment banks and the resulting costly bailouts. Senator John Cornyn of Texas says the bill fails to end “too big to fail” and guarantees future taxpayer bailouts for large financial firms.

Treasury Secretary Timothy Geithner will confer with finance officials in Britain and Germany about ways to restore global confidence in the financial system on a trip to Europe next week. The Treasury Department announced the trip after a rough day on global financial markets. In a statement, Treasury said Geithner would meet with European officials “to discuss the economic situation in the region and the measures being taken to restore global confidence and financial stability and to promote global recovery.” Investors are concerned that the debt problems in countries like Greece and Portugal will spill over to other parts of Europe and threaten to derail the economic recovery in the United States and elsewhere. Geithner’s trip will occur after he and Secretary of State Hillary Rodham Clinton hold high-level talks with Chinese officials in Beijing on a range of economic and foreign policy issues. Federal Reserve Chairman Ben Bernanke is scheduled to participate in those talks as well on Monday and Tuesday.

The Internal Revenue Service is releasing new guidelines small companies can use to apply for tax credits to spur medical research. The credit–for up to $5 million per company–will cover up to 50 percent of the cost of qualifying biomedical research. The credit is only available to businesses with fewer than 250 employees. The IRS released the rules companies will need to follow to apply to have their research projects certified as eligible to participate in the government’s therapeutic discovery project program. The tax credit, which will be available for investments made in 2009 and 2010, was included in the new health care overhaul legislation.

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