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Wednesday PM June 23rd, 2010

BP removes containment cap because of rising gas through vent used to prevent ice-like crystals; New order imposing deepwater drilling moratorium expected…Sales of new homes sinks 33 percent to lowest level on record…International Energy Agency forecasts world oil demand to grow by 1.4 percent annually through 2015…


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The Coast Guard says BP has been forced to remove a cap that was containing some of the oil gushing into the Gulf of Mexico. Coast Guard Admiral Thad Allen says an underwater robot bumped into the venting system. That sent gas rising through vent that carries warm water down to prevent ice-like crystals from forming in the cap. Allen says the cap has been removed and crews are checking to see if crystals have formed before putting it back on. In the meantime, a different system is stilling burning oil on the surface. Before the problem with the containment cap, it had collected about 700,000 gallons of oil in the previous 24 hours. Another 438,000 gallons was burned.

Interior Secretary Ken Salazar says he will issue a new order imposing a moratorium on deepwater drilling after a federal judge struck down the existing one. Salazar says that the new order will contain additional information making clear why the six-month drilling pause was necessary in the wake of the Gulf oil spill. The judge in New Orleans who struck down the moratorium earlier in the day complained there wasn’t enough justification for it. Salazar pointed to indications of inadequate safety precautions by the industry on deepwater wells. He said he would issue a new order in the coming days showing that a moratorium is needed. The White House also is appealing the judge’s ruling.

BP’s new point man for the oil spill won’t say if the giant company will resume deepwater drilling in the Gulf of Mexico after a judge lifted a White House moratorium. Bob Dudley, managing director of BP, was asked on NBC’s Today show if BP would start drilling again. Dudley says they will “step back” from the issue while they investigate the April 20th rig explosion that killed 11 workers and triggered the worst offshore oil spill in U.S. history. BP is the largest oil and gas producer in the Gulf. Dudley told the CBS Early Show he has completed taking over the disaster response and cleanup from the company’s chief executive, Tony Hayward. Hayward repeatedly sparked criticism from the Gulf to the U.S. Capitol for missteps and insensitive comments.

The new director of a government agency that oversees offshore drilling is creating an internal investigations team to help him improve the agency’s performance. Michael Bromwich, the new head of the Interior Department’s Bureau of Ocean Energy Management, says the investigative team will look into allegations of misconduct and respond quickly to emerging problems. In testimony prepared for a Senate subcommittee, Bromwich says the new unit will report directly to him and will help ensure that oil and gas companies comply with laws and regulations, as well as investigate problems within the agency itself. A copy of his testimony was obtained by the Associated Press.

Financial disclosure reports show the Louisiana judge who struck down the Obama administration’s six-month ban on deepwater oil drilling in the Gulf has reported extensive investments in the oil and gas industry. He’s also a new member of a secret national security court. U.S. District Judge Martin Feldman is a 1983 appointee of President Ronald Reagan. He reported owning less than $15,000 in stock in 2008 in Transocean–the company that owned the sunken Deepwater Horizon drilling rig. Feldman overturned the ban yesterday–saying the government assumed that because one rig exploded, the others pose an imminent danger, too. The White House promised an immediate appeal. The Interior Department had imposed the moratorium in the wake of the BP disaster.

Beachfront property sales are slowing to a near stop along the Gulf Coast while oil keeps gushing from BP’s well. Real estate agents say people stopped looking for waterfront condos and other coastal homes when the spill began back in April. The water is clear and the sand is still white along much of the Florida panhandle. But agent Alicia Hollis says her company hasn’t had a sale since the disaster started. It’s terrible timing for agents who thought this would be the year they broke out of the real estate slump.

Sales of new homes collapsed last month, sinking 33 percent to the lowest level on record as potential buyers stopped shopping for homes once they could no longer get government incentives. The Commerce Department says new home sales fell in May from a month earlier to a seasonally adjusted annual sales pace of 300,000. That was the slowest sales pace on records dating back to 1963. It indicates that buyers left the market as federal tax credits of up to $8,000 expired at the end of April. Economists surveyed by Thomson Reuters had expected a May sales pace of 410,000. April’s sales pace was revised downward to 446,000.

The International Energy Agency forecasts world oil demand will grow by an average of 1.4 percent annually through 2015, an upgrade to midterm expectations due to improved economic growth prospects. The IEA, which advises oil-consuming countries, says that oil demand would reach 92 million barrels a day by 2015 assuming annual economic growth of 4.5 percent from 2010. That compares with last year’s forecast of average annual demand growth of 0.6 percent over the 2008-2014 period. The Paris-based IEA said it expects a strong rise in oil demand in China, India and the Middle East, but weaker or flat growth elsewhere, particularly in Europe where the economy is fragile.

A new survey shows the number of CEOs planning to ramp up hiring is at the highest level since mid-2007, suggesting big U.S. companies are growing more confident about the economic recovery. The Business Roundtable, an association of CEOs of big U.S. companies, says its survey shows 39 percent of chief executives expect to boost their payrolls in the second half of 2010. Only 17 percent say jobs will drop, while 43 percent expect no change in their current workforce. The proportion of those planning to hire is at the highest level since mid-2007. Companies are adding jobs as sales recover. Despite renewed market fears of a hit to global growth because of economic trouble in Europe, 79 percent of CEOs say they expect sales to rise in the second half.

A new study says financial services executives believe the proposed financial overhaul will have a negative impact on their businesses. The annual business climate survey conducted by KPMG also finds that executives are bullish about their business prospects this year and next despite concerns about new regulations. The audit, tax and advisory firm says nearly 90 percent of 134 executives polled believe the legislation for financial oversight will be enacted, and more than half said they expect a negative impact. The creation of a consumer protection agency to police lending was cited second-most frequently as likely to hurt their profits. The overall legislation aims to prevent a recurrence of the 2008 financial crisis by requiring more government attention to potential risks to the financial system.

The Harris County Commissioners Court and the Houston City Council have jointly and unanimously re-appointed Jim Edmonds as chairman of the Port of Houston Authority. Edmonds has been with the port commission since October 1996, and became chairman in 2000. PHA commissioners serve two-year terms without pay.

An investigation of mass mailing businesses in the Houston area has led to the indictment of six people in what federal investigators say involves nearly $19 million in fraud. An indictment outlines the investigation linked to counterfeit postal meters. Details were announced by U.S. Attorney Jose Angel Moreno and Chief Postal Inspector William Gilligan, Jr. The suspects are charged with mail fraud, possession of a counterfeit meter and conspiracy in the alleged modification of meters between 2004 to mid-2007, to keep some funds that should have gone to the government.

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