Wednesday PM June 2nd, 2010

Saw sticks while cutting through well pipe in Gulf; President calls for roll-backs of oil company tax breaks…Grant to help space shuttle workers find new jobs…Hiring pickup: unemployment rates drop in over 90 percent of largest metro areas…

Coast Guard Admiral Thad Allen is saying that a saw has become stuck as it was cutting through a pipe on a busted well, stalling the latest attempt to contain the Gulf oil gusher. Allen says the goal is to free the saw and finish the cut later in the day. This is the second major cut in the effort to contain–not plug–the nation’s worst spill. Allen says the first cut with giant shears was successful overnight. The best chance at plugging the leak involves a relief well that is at least two months from completion. Admiral Allen says crews are shooting chemical dispersants at oil that began leaking when the saw became stuck. This is the second major cut in the effort to contain–not plug–the nation’s worst spill. Allen says the first cut with giant shears was successful overnight. The best chance at plugging the leak involves a relief well that is at least two months from completion.

President Barack Obama says the country’s dependence on fossil fuels jeopardizes national security, the economy and the environment–and must be ended. Obama spoke to an audience in Pittsburgh as the broken oil well in the Gulf of Mexico continued to spew oil unchecked. He called for rolling back billions of dollars in oil company tax breaks and using the money on clean-energy technologies. And Obama pledged to find the votes for Congress to pass a sweeping energy bill that’s stuck in the Senate. The president said that without a major change in energy policy America will continue to send money overseas for fuel.

Federal regulators have approved the first new Gulf of Mexico oil well since President Obama lifted a brief ban on drilling in shallow water. The Minerals Management Service granted a drilling permit sought by Bandon Oil and Gas for a site about 50 miles off the coast of Louisiana. Obama has extended a moratorium on wells in deep water like the BP one that blew out in April, but the president quietly lifted a brief ban last week on drilling in shallow water. The new permit allows drilling in a water depth of 115 feet. Bandon oil and gas first sought the permit in April, shortly after the Deepwater Horizon exploded and sank.

Two Democratic Senators are pressing BP to delay plans to pay shareholder dividends worth an expected $10 billion or more until the full costs for cleaning up the oil spill in the Gulf of Mexico are calculated. Senators Charles Schumer of New York and Ron Wyden of Oregon called it “unfathomable” that BP would pay out a dividend to shareholders before the total cost of the cleanup is known. In a letter to BP CEO Tony Hayward, the lawmakers said taking action to “move money off of the company’s books” will make it more difficult for BP to pay the U.S. government, fishermen and others affected by the environmental disaster. BP has paid an estimated $1 billion to clean up the oil leak and expects to spend billions more. A BP spokesman declined to comment about the Senate letter. The company paid $10.4 billion in dividends last year.

A spoof on BP’s oil spill public relations has brought in $10,000 for a nonprofit conservation group for the Gulf of Mexico. Gulf Restoration Network official Aaron Viles says the person who has been tweeting as “bpglobalpr” put $10,000 into the organization’s Paypal account. And Viles says there’s a promise of more if the tweeter’s t-shirts satirizing BP keep selling. The mock BP Twitter account has gained nearly 104,000 followers since it started May 19th with the tweet, “we regretfully admit that something has happened off of the Gulf Coast. More to come.” The creator has refused to be named in media interviews. He sells $25 t-shirts emblazoned with a black BP logo and the smudged words “BP cares.” He says all proceeds go to the Gulf Restoration Network.

NASA workers facing the end of the space shuttle era are getting $15 million from the federal government to help them find new jobs. The grant is in addition to $40 million in aid to retrain workers that President Barack Obama promised when he visited Kennedy Space Center in April. Secretary of Labor Hilda Solis announced the emergency grant at Kennedy Space Center in Florida. She said the grant will assist about 3,200 workers who will be affected by the soon-to-be-retired shuttle program. Solis said the grant will assist about 3,200 contractors who work on the shuttle program full time, including those from major aerospace companies such as ASRC Aerospace, Boeing and United Space Alliance. As many as 20,000 contract and subcontract workers could be laid off by the end of the shuttle program. The two remaining shuttle missions are scheduled for this fall. It’s all part of plans set forth earlier this year by President Obama to revamp the human space program.

A rush of homebuyers aiming to meet a deadline to qualify for a federal tax credit pushed the number of signed sales contracts to the highest level since October. The National Association of Realtors says pending home sales rose six percent in April. The rise marked the third consecutive month of increases, all of them aided by federal tax credits of up to $8,000. But the tax credits expired on April 30th. Many analysts expect sales to drop in the coming months. Even though mortgage rates are near record lows and home prices have declined dramatically, potential buyers are unlikely to act if they don’t have jobs or fear that their jobs are in jeopardy.

Unemployment rates fell in April for more than 90 percent of the nation’s 372 largest metro areas as hiring picked up around the country. The Labor Department says the jobless rate dropped in 346 areas last month. It rose in only 12 and remained flat in 14. That’s much better than March, when unemployment fell in 257 areas and rose in 89. Much of the improvement was seen in Midwestern regions with significant manufacturing operations. Manufacturers are benefiting from increasing overseas sales and efforts by retailers and other U.S. companies to restock their warehouses. The nation’s economy generated a net gain of 290,000 jobs in April. But that wasn’t enough to hold down the unemployment rate, which rose to 9.9 percent.

Billionaire investor Warren Buffett says few could have predicted the depth of the housing crisis. He says that CEOs of rating agencies shouldn’t be fired for missing the warning signs. Buffett says “they made the wrong the call,” referring to the agencies’ inaccurate ratings of mortgage-related investments. But Buffett says he counts himself among those who failed to see the downturn coming. He called it the “greatest bubble” he had ever seen. Buffett is testifying before Financial Crisis Inquiry Commission alongside Moody’s. Buffett’s investment firm is Moody’s largest shareholder. Rating agencies have been criticized for giving high ratings to complex investments backed by risky mortgages. When homeowners defaulted, the agencies downgraded billions of dollars of investments at once. That helped spark the financial crisis.

Strong demand for new models and higher fleet sales lifted General Motors’ sales 17 percent in May. The improvement is a sign that automakers are benefiting from a weak but improving economy. Consumers even shrugged off an eight percent decline in the stock market to buy more cars and trucks. Ford says its May sales rose 22 percent from a year earlier, boosted by strong demand for the F-series pickup and new Ford Mustang. Ford says it was the sixth straight month that sales have increased more than 20 percent over the previous year, when the industry was in a severe downturn. And Chrysler says its sales rose 33 percent in May, the first month it has sold more than 100,000 vehicles in more than two years. The automaker says strong sales of its Jeep Wrangler, pickup trucks and minivans helped to drive the increase. It was the second straight month that Chrysler posted sales gains over the previous year. Toyota says its May sales in the U.S. rose seven percent on strong demand for its Lexus luxury brand, but the increase lagged behind rivals. The Japanese automaker says Lexus sales jumped 31 percent due to a slate of generous incentives designed to spur sales following the recall of the GX 460 SUV. GX sales more than doubled during the month. But sales of Toyota brand vehicles rose only 3.6 percent, while sales of some sedans like the Camry and the Avalon declined. Toyota has been using heavy incentives on its Toyota brand cars and trucks to drum up sales after the company recalled millions of vehicles due to faulty accelerator pedals. But May’s mixed results indicate the incentives could be losing their effectiveness.

Ford says it will end production of its Mercury brand by the end of this year. Ford’s board of directors approved ending the brand this morning. Ford plans to make up for the lost sales by expanding its luxury Lincoln brand. Mercury sold just over 92,000 vehicles last year. Ford has 1,712 dealerships currently selling Mercurys. Some will continue selling Lincolns and Fords and some could be consolidated into existing Ford dealerships. Ford didn’t say how much it expects to pay to close the dealerships. But Americas President Mark Fields said the closure doesn’t affect the company’s forecast that it will be solidly profitable in 2010. Ford says it doesn’t plan to lay off any workers at its Dearborn, Michigan, headquarters.

The Obama administration wants to raise the amount airlines have to compensate passengers bumped from full flights to as much as $1,300. They pay up to $800 now. The Transportation Department’s proposed changes also would give passengers 24 hours to cancel reservations without penalty. And the new rule would require airlines to fully and prominently disclose baggage fees, prohibit price increases after a ticket is purchased, and give passengers timely notice of flight status changes. The proposal would also extend to foreign airlines a three-hour limit on the time airlines can keep passengers waiting on airport tarmacs.

Texas taxpayers will be footing the first $25 million of the tab to bring the new Formula One United States Grand Prix to Austin. The Austin American-Statesman reports that the money will pay London-based Formula One Group the sanctioning fee it charges to host the first of ten annual F1 races planned for Austin starting in 2012. State officials had said last week that the money would go to local governments to reimburse them for costs incurred in hosting such large sporting events. State officials consider the money an investment that will be repaid when several hundred thousand race fans flock to Austin to watch the racing event. Texas Comptroller Susan Combs says it’s going to be wonderful for Texas. No state money will be used to build the track, estimated at $250 million.