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Monday PM June 28th, 2010

BP within 20 feet horizontally of blown-out well…Consumer spending rises slightly…Supreme Court strikes down part of anti-fraud law enacted in response to Enron and other corporate scandals…


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BP says the rig drilling the relief well that’s the best hope of stopping the Gulf oil spill has made it within about 20 feet horizontally of the blown-out well that’s gushing crude. BP Senior Vice President Kent Wells says that the rig is going to drill an additional 900 feet down before crews cut in sideways and start pumping in heavy mud to try to stop the flow from the damaged well. It’s currently about 16,770 feet down. Wells says BP is moving extremely cautiously to make sure everything is lined up correctly and the relief well is still on target to be finished by early August. A second well is being drilled as a backup. Wells says the company has a high degree of confidence in the relief wells.

BP says the cost of the company’s response to the Gulf of Mexico oil spill has reached about $2.65 billion. The costs include spill response, containment, relief well drilling, grants to Gulf states, claims paid, and federal costs. BP says it has received more than 80,000 claims and made almost 41,000 payments, totaling more than $128 million. BP says the figure does not include a $20 billion fund for gulf damages it created this month. Millions of gallons of oil have spilled since the Deepwater Horizon rig exploded 50 miles off the coast of Louisiana on April 20th, killing 11 workers.

The head of OPEC is saying he hopes the United States will reconsider a temporary ban on new deep-water oil rigs. Abdalla Salem el Badri, secretary-general of the 14-member Organization of Petroleum Exporting Countries, says offshore drilling is an important source of oil and “we should not really ban it.” He told reporters at a press conference in Brussels that OPEC hopes the U.S. government will re-examine President Barack Obama’s six-month ban. A U.S. federal judge struck down Obama’s temporary drilling ban last week as rash and heavy-handed.

Royal Dutch Shell says rising demand means deepwater drilling must continue, but that competitor British Petroleum’s massive Gulf of Mexico spill offers lessons. At a business and political forum in Cape Town, Royal Dutch Shell Chief Executive Peter Voser said Sunday: “given the rise in the population and rise in developing world of energy needs, we will have to develop those resources in deep waters ….” Voser says his company’s safety guidelines are in line with U.S. proposals made in the wake of the BP spill. Voser says, “I think for some companies there will be some learning from this.” Shell Oil, Royal Dutch Shell’s U.S. arm, has been affected by the U.S. government’s suspension of proposed exploratory Arctic Ocean drilling.

You might be able to get rich quick if you can fix the BP oil spill. The X Prize Foundation wants to make fixing the BP oil spill a multimillion dollar competition. It has done the same for space, fuel efficient cars and gene-mapping. Foundation Vice President Francis Beland says his group is kicking around the idea. They’ve already received 35,000 unsolicited ideas for fixing the oil spill in the Gulf of Mexico. Beland told a special oil spill conference that his group is seeking advice from the public on how to handle such a competition. The foundation also has to raise money for a prize. X prizes are usually $10 million or more.

Average retail gasoline prices in Houston have risen about 1.5 cents per gallon in the past week, averaging $2.56 this weekend, according to the Website The national average increased almost a penny nationwide.

The latest Job Search Difficulty Index for major U.S. cities ranked by job search engine has Houston dropping two positions to number 31. That means it’s getting a little tougher to find a job than the previous month. The index measures the difficulty of finding employment calculated by dividing the number of unemployed workers in each state by the number of jobs in the Website’s index. Washington DC continues being the least difficult city to find work.

Consumer spending rose slightly in May, a sign that Americans are cautious about the economic recovery. The Commerce Department says that consumer spending rose 0.2 percent last month, an improvement from April’s reading of no change. Analysts expected spending to edge up only 0.1 percent, according to a survey by Thomson Reuters. But much of the higher spending likely reflects greater use of electricity and other utilities. Spending on goods actually declined. Incomes rose by 0.4 percent, slightly less than expected. They were boosted by the temporary hiring of census workers. The savings rate–or the percentage of income that wasn’t spent–rose to four percent, the second straight increase.

The Supreme Court struck down part of the anti-fraud law enacted in response to Enron and other corporate scandals from the early 2000s. But the court said its decision has limited consequences. The justices voted 5-4 that the Sarbanes-Oxley law enacted in 2002 violates the constitution’s separation of powers mandate. The court says the president must be able to remove members of a board that was created to tighten oversight of internal corporate controls and outside auditors. Congress created the board to replace the accounting industry’s own regulators after scandals at Enron and other corporations. Chief Justice John Roberts said the law will remain in effect, with one change. The Public Company Accounting Oversight Board will continue as before, but the Securities and Exchange Commission now will be able to remove board members at will. Roberts said that change cures the constitutional problem.

Some Texas legislators say it will be tough to keep the current small business tax exemption as the state faces up to an $18 billion shortfall in the next two-year budget period. House Ways and Means Committee Chairman Rene Oliveira of Brownsville says “it’s going to be very hard to maintain it.” The 2009 legislature temporarily exempted businesses from paying the tax if they have $1 million or less in revenue, up from the previous cutoff of $300,000. The San Antonio Express-News reports that spared 40,000 additional businesses, at a cost of $87 million in lost taxes this fiscal year. The million-dollar exemption was enacted for only two years, after which the floor will settle at $600,000 unless the legislature acts. Lawmakers convene in January.

The Supreme Court is entering the nation’s charged debate over immigration, agreeing to hear a challenge from business and civil liberties groups to an Arizona law that cracks down on employers who hire undocumented workers. The justices accepted an appeal from the Chamber of Commerce, American Civil Liberties Union and others to a lower court ruling that upheld Arizona’s law. The measure requires employers to verify the eligibility of prospective employees through a federal database called e-Verify and imposes sanctions on companies that knowingly hire undocumented workers.

The U.S. Supreme Court rejected an appeal from a woman who wants to sue Houston-based Halliburton for the brain injury her husband suffered when a fuel convoy crashed in Iraq. Justices let stand a federal appeals court ruling dismissing the lawsuit filed by Annette Carmichael of Atlanta, on behalf of her husband, Sgt. Keith Carmichael. The Obama administration recommended denial of the appeal. The soldier was a gunner assigned to ride in a tanker truck operated by Kellogg, Brown & Root–Halliburton’s former subsidiary–during the convoy in 2004. He was thrown and pinned beneath the truck when the civilian driver failed to negotiate a curve. According to court documents, Carmichael was left in a permanent vegetative state. Carmichael sued KBR and Halliburton in Georgia state court in 2006. The companies had the suit transferred to federal court where they won dismissal.

President Barack Obama is calling for greater international cooperation in exploring space. Obama says that the United States is no longer “racing against an adversary” in space. He said the U.S. seeks peaceful collaboration with other countries that will ward off conflict and make it easier to expand exploration. He said the United States must do more to address debris and other hazards in space. He also called for a “burgeoning commercial space industry.”

The Obama administration will nearly double the available amount of wireless communications spectrum over the next decade. The White House says President Barack Obama signed a presidential memorandum committing the federal government to auctioning off 500 megahertz of federal and commercial spectrum. The move is an effort to keep up with the ever-growing demand for high-speed video and data transmission to cell phones, laptops and other mobile devices.

One of the biggest ongoing worries about the economy involves the struggling job market. And a key report this week will provide an update. It’s not expected to give much in the way of reassurance about the employment situation. Analysts expect the monthly unemployment rate will be unchanged at 9.7 percent. Payrolls are expected to have contracted during the month. Also due this week, readings on consumer confidence, personal incomes and spending as well as auto sales.