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Tuesday PM June 22nd, 2010

Federal judge blocks six-month deepwater offshore drilling moratorium…Sales of previously occupied homes drops 2.2 percent…Southwest Airlines launches 72-hour sale to celebrate 39th year in business…


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A federal judge in New Orleans has blocked a six-month moratorium on new deepwater drilling projects that was imposed in response to the massive Gulf oil spill. The White House says President Barack Obama’s administration will appeal. Several companies that ferry people and supplies and provide other services to offshore drilling rigs had asked U.S. District Judge Martin Feldman in New Orleans to overturn the moratorium. The administration halted the approval of any new permits for deepwater drilling and suspended drilling at 33 exploratory wells in the Gulf. Feldman says in his ruling that the Interior Department failed to provide adequate reasoning for the moratorium. He says it seems to assume that because one rig failed, all companies and rigs doing deepwater drilling pose an imminent danger.

The head of a company that provides services to offshore oil rigs says he’s looking forward to getting back to work. Todd Hornbeck of Hornbeck Offshore Services is praising today’s ruling. Hornbeck says the decision is “the right thing for not only the industry but the country.” His company and others had challenged the moratorium. In his ruling, the judge said the administration had improperly concluded that because one drilling rig failed, others were in danger of doing so. The mayor of Lafitte, Louisiana, is also cheering the ruling. Tim Kerner says it’s “great” for the jobs in his community. His constituents make their living primarily from commercial fishing or oil.

Government and industry leaders are exploring a new way to capture oil gushing from the blown-out. Coast Guard Admiral Thad Allen says they’re looking into whether pipelines could be extended from the leaking well to several production platforms elsewhere in the Gulf where the flow could be captured or sent down to a different reservoir. The idea emerged during a meeting in Washington last week and is still in the early stages. If it works, the option would allow oil to be contained even if the surface ships now siphoning it from the leaking well need to flee a hurricane. Scientists estimate anywhere from 67 million to 127 million gallons of oil has spewed into the Gulf since the offshore rig Deepwater Horizon exploded April 20th.

A BP executive has been heckled at the London oil conference while standing in for embattled CEO Tony Hayward. BP Chief of Staff Steve Westwell was interrupted twice during his address by protesters shouting “we need to end the oil age!” The hecklers were escorted out of the central London hotel by security. Westwell says Hayward is “genuinely sorry” not to be at the conference, where he had been due to give a keynote address on about the global responsibilities of international oil companies. Hayward pulled out of the conference Monday after stinging criticism for spending Saturday at England’s Isle of Wight to see his yacht compete in a famous race. The outing drew an acerbic response from the White House.

Add taxes to the list of worries for Gulf Coast residents whose livelihoods have been threatened by the massive oil spill. Accountants have been trying to nail down the implications after President Obama said BP would create a $20 billion disaster fund for the Gulf. But people getting money from BP say they’re surprised and frustrated to learn they may have to pay taxes on it. Many were already angry about how long the oil giant took to cut the checks. So when they’ve gotten money–generally about a few thousand dollars each so far–they’ve spent it fast.

Sales of previously occupied homes dipped 2.2 percent in May, suggesting that a boost from government home-buying incentives is winding down earlier than expected. The National Association of Realtors says last month’s sales fell to a seasonally adjusted annual rate of 5.66 million. April’s results were revised upward to 5.79 million. Economists polled by Thomson Reuters had expected sales to rise to a rate of 6.12 million. The federal government had boosted home sales by offering buyers tax credits of up to $8,000. The deadline to get a signed sales contract and still qualify was April 30th. Buyers must close their purchases by end of this month.

Treasury Secretary Timothy Geithner says taxpayers are recovering their investment from the financial bailouts as the program is wound down. But he acknowledges there likely will be a loss from the rescue of insurer American International Group. Geithner told a watchdog panel that banks have repaid about 75 percent of the bailout money they received, and the government’s investments in aided banks have brought taxpayers $21 billion. Geithner also says in prepared testimony that the auto industry has made significant structural changes and the prospects for General Motors and Chrysler for repaying the bailout money have improved. His remarks were prepared for a hearing of the Congressional Oversight Panel.

Southwest Airlines has launched a 72-hour sale to celebrate its 39th year in business, with fares starting at $39 each way. For travel up to 450 miles, fares are $39 one-way. For travel between 451 and 1000 miles, fares are $79 each way. Fares are $119 each way for travel greater than that. The fares are available through 11:59 p.m. Pacific time on Thursday for travel September 8th through November 17th.

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