Monday PM November 22nd, 2010

Presidential Oil Spill Commission details BP mistakes after oil spill…Texas firm outlines spending on Marcellus shale natural gas project…Humana purchases Concentra in 790 million deal…

A new study from the Presidential Oil Spill Commission details behind-the-scenes tension and mistakes behind the three-month effort to cap the busted BP oil well, with a lone scientist working from a cell phone photo saving the day. Monday’s draft report said some BP attempts to stop the gusher probably were doomed from the start. That’s because the oil giant had underestimated how much oil was spilling. Both BP and the government were unprepared for capping a blowout well and cleaning up the mess it make, the report said. BP capped the well in July. That cap might have been yanked after a few days if it weren’t for government scientist Paul Hsieh, who showed by analyzing a cell phone photo of pressure readings that the cap wasn’t going to cause a feared bigger spill.

A Texas-based company says it expects to spend $350 million on pipelines and a processing plant for natural gas pumped from the Marcellus shale in West Virginia. The Intelligencer newspaper reports Caiman Energy has already spent $150 million in the state and plans to spend $200 million more in the coming 18 months. All the money is going into Wetzel and Marshall Counties. Chief Executive Jack Lafield says shale deep beneath the two counties is some of the richest in the Marcellus formation, which lies beneath portions of West Virginia, Pennsylvania, Ohio and New York. Caiman says it’s finished 40 miles of gas gathering pipeline and is building 70 more. The pipeline and a processing plant between Moundsville and Cameron are expected to be done in June 2012.

Health insurer Humana says it plans to purchase Texas-based health care company Concentra in an approximately $790 million cash deal. Humana Chairman and CEO Michael B. McCallister says that the acquisition will reinforce Humana’s core business while diversifying revenue and creating expansion opportunities. Concentra, based in Addison, delivers occupational medicine, urgent care, physical therapy and wellness services from more than 300 medical centers in 42 states. Nearly three million Humana medical members live near a Concentra center. The transaction still has to gain regulatory approval but is expected to close next month.

The Obama administration says insurers must spend the premiums they collect on medical care, or give rebates to consumers. The Health and Human Services Department unveiled a new requirement that health insurance companies spend at least 80 cents of every premium dollar on medical care and quality. For employer plans with more than 50 people, it’s 85 cents on the dollar. The rule goes into effect January 1st. Starting in 2012, as many as nine million people could get rebates averaging $164, officials estimate. Part of the new health care law, the requirement is meant to give consumers better value for their premiums.

The Justice Department has collected a record $3 billion in the last year in pursuing cases of health care fraud and other false claims against the government. Assistant Attorney General Tony West says health care fraud, an enforcement priority for the Obama administration, accounted for $2.5 billion in civil settlements and judgments in the last fiscal year, which ended in September. The government collected $1.6 billion in settlements with pharmaceutical and medical device companies in cases alleging fraud against Medicare and other federal health insurance programs. This total includes $669 million in justice’s record settlement with Pfizer, which was accused of marketing drugs for uses not approved by the Food and Drug Administration.

Netflix is raising the prices of some of its subscription plans and is shifting its focus to streaming video as more members move to the Internet to watch movies and television shows. The company said that its subscription plans for unlimited movies and TV shows streamed online and unlimited DVD deliveries–with one DVD out at a time–will increase by $1 a month to $9.99. Prices for other plans allowing for more DVDs out at a time are also going up. Netflix is also launching a $7.99 streaming-only plan in the U.S. to accommodate the online shift. “We are now primarily a streaming video company,” co-founder and CEO Reed Hastings says. Netflix shares jumped 5.6 percent in premarket trading.

The government is reviewing how quickly rental car companies are moving to fix recalled vehicles included in rental fleets. The National Highway Traffic Safety Administration says it wants to know whether many rental car fleets get repaired as part of a recall. The review will cover nearly three million rental cars built by General Motors, Chrysler and Ford. The Federal Trade Commission is considering a petition to force Enterprise Holdings to fix vehicles under recall before renting them out. Safety groups say most consumers don’t know whether the vehicle they pick up at a rental lot has been the subject of a recall, posing a potential safety threat. Enterprise has said it declines to rent out recalled vehicles when automakers make that recommendation to them.

Walmart says it will match competitor prices beginning on Thanksgiving Day and running through the weekend, one of the most popular holiday shopping periods of the year. Retailers traditionally compete for shoppers’ dollars on the Friday after Thanksgiving, known as Black Friday, with early hours and special deals. This year, many are offering deals earlier and some stores, such as Sears and many Walmarts, will be open on Thanksgiving Day. At Walmart stores, customers can bring in competitors ads and Walmart says it will match the price of any identical product at the register. The offer does not apply to online purchases. Walmart is also offering 150 online-only specials on Thanksgiving Day as well as “Black Friday” specials on electronics, clothing and home items in stores the rest of the weekend. Shopper turnout for Black Friday sales will be a strong indicator of whether consumers will spend more this season in the face of economic uncertainty and high unemployment. Shoppertrak, a research firm that tracks sales and traffic at more than 70,000 outlets, earlier this month raised its holiday growth forecast to 3.2 percent from 2.9 percent. That compares with a 0.4 percent decline in 2009, according to Shoppertrak’s calculations.

The humble sweet potato is becoming much more well-traveled. While the vegetable remains a staple of Thanksgiving dinners and southern cuisine, sweet potato consumption in the U.S. has largely leveled off in recent decades. So, when the going gets tough, the spuds get going–to Europe. Demand for sweet potatoes in Europe, especially Great Britain, has skyrocketed in the past five years. Exports of sweet potatoes to the United Kingdom have gone from $5.7 million in 2005 to more than $20 million last year. Other European countries, especially The Netherlands and Spain, are following close behind. Louisiana State University Agricultural Center Professor David Picha attributes the rapid growth to increasing health consciousness among Europeans and better promotion by the sweet potato industry.