Oil prices fell to near $103 a barrel Monday on concern that economic growth will slow across the globe despite a tentative agreement in Washington on a $700 billion bailout package to stabilize the U.S. financial system.
By midday in Europe, light, sweet crude for November delivery was down $3.50 to $103.39 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.13 Friday to settle at $106.89.
In London, November Brent crude fell $3.39 to $100.15 a barrel on the ICE Futures exchange.
Bailout plan goes to House
Congressional leaders and the White House agreed Sunday to a rescue of the ailing financial industry after lawmakers insisted on sharing spending controls with the Bush administration. The biggest U.S. bailout in history won the tentative support of both presidential candidates and goes to the House of Representatives for a vote Monday.
"The bailout package reduces the chance of a complete meltdown," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "But worries on the demand side will continue to weigh on oil prices."
The plan would give the administration broad power to use hundreds of billions of taxpayer dollars to purchase devalued mortgage-related assets held by cash-starved financial firms.
Congress insisted on a stronger hand in controlling the money than the White House had wanted. The government would take over huge amounts of devalued assets from beleaguered financial companies in hopes of unlocking frozen credit.
"It's still a crisis situation," Shum said. "The market is concerned about the depth and breadth of this global downturn."
JBC Energy in Vienna, Austria, also was cautious about the effects the rescue package could have on U.S. economic growth.
"The latest government reports show sales of new homes at a 17-year low in August and orders for durable goods falling stronger than expected," JBC said in a research note. "It is far from certain that (the bailout) will prevent an economic downturn."
Dollar stronger
Prices were also pushed down by a stronger dollar. Investors often buy crude futures as a hedge against a weakening dollar and inflation, and sell when the dollar strengthens.
While the dollar gained as details of the bailout package become known, analysts said the euro was weaker also because of growing economic problems in Europe.
"It is also a question of the euro losing ground due to a continued deterioration in the euro zone," said Olivier Jakob of Petromatrix in Switzerland. "With the rate of bank failures increasing in Europe and the economy slowing more rapidly than expected, pressure will continue to mount on the (European Central Bank) to lower (interest) rates."
The 15-nation euro fell Monday to $1.4361 from $1.4614 on Friday while the dollar rose to 106.23 yen from 106.01.
"The bailout should inject confidence in the markets in the short-term," Shum said. "Longer term, it increases money supply, inflation and likely weakens the dollar - all of which supports oil prices."
Monday, September 29, 2008
Sunday, September 28, 2008
GM to build $370 million engine plant
General Motors Corp. said Thursday it will build a new factory in Flint to make four-cylinder engines for the Chevrolet Volt rechargeable electric car and other models.
GM Chairman and Chief Executive Rick Wagoner said the new plant will build a 1.4-liter four-cylinder engine that will extend the range of the Volt, and a turbocharged version that will power the Chevrolet Cruze, a new compact car to be built in Lordstown, Ohio.
"This will be one of the places. You will be one of the teams that help GM lead into our second century," Wagoner told workers and government officials gathered for the announcement.
Production at the new $370 million plant will begin in 2010, and both cars are slated to go on sale in the same year.
Workers at the nearby Flint Engine North plant, which GM (GM, Fortune 500) is in the process of closing, said the announcement is good news for an area hard hit by auto job losses.
Although GM said the new plant won't create any new jobs, it will retain about 300 hourly positions, and workers said they are hopeful the new plant will create more employment in the industrial city about 50 miles northwest of Detroit.
"This also means that there's a future for our youth in this area," worker Jean Adams-Anderson said.
The state of Michigan on Tuesday approved $132.5 million in tax incentives for the automaker to spend $838 million on the new plant and to upgrade four other facilities, including the Detroit-Hamtramck assembly plant where the Volt will be built.
The Flint investment includes the 552,000-square-foot plant as well as machinery and other equipment. GM says it will invest another $21 million in tooling for its suppliers to support the new Flint factory.
The new plant will double its global production of GM's small four-cylinder engines by 2011, with more than half the increase going into North America.
The factory, GM said, will have 300 flexible work stations that will allow the company to build different four-cylinder engines without retooling.
GM's U.S. sales are down 18% so far this year due to a declining market and high gasoline prices that have caused a dramatic shift away from trucks and sport utility vehicles to smaller, more efficient cars.
The new plant will help GM roll out new models designed to adjust to the shift, which GM and other automakers say is permanent.
The struggling automaker has lost $57.5 billion in the past 18 months, including $15.5 billion in the second quarter. Its U.S. market share has fallen to about 23% this year from a peak of nearly 51% in 1962.
The company is banking on the much-ballyhooed Volt to be its car of the future, although it conceded this week that the Volt won't operate exactly as advertised.
GM initially said the Volt would be able to run 40 miles on its lithium-ion batteries, with a small internal combustion engine recharging the batteries to extend the range hundreds of miles. A top executive said the same thing as recently as last week.
But company spokesman Rob Peterson said Wednesday that engineers changed the design so the Volt engine will power a generator that would run the electric motor after the batteries are depleted. A small amount of power from the generator will recharge the batteries, but most will be used to directly run the car, he said.
He said bypassing the batteries is more efficient, and GM did not intend to deceive people by maintaining that he motor would only be used to recharge the batteries.
"At the end of the day, to the consumer, the vehicle will operate much the same way," he said.
GM Chairman and Chief Executive Rick Wagoner said the new plant will build a 1.4-liter four-cylinder engine that will extend the range of the Volt, and a turbocharged version that will power the Chevrolet Cruze, a new compact car to be built in Lordstown, Ohio.
"This will be one of the places. You will be one of the teams that help GM lead into our second century," Wagoner told workers and government officials gathered for the announcement.
Production at the new $370 million plant will begin in 2010, and both cars are slated to go on sale in the same year.
Workers at the nearby Flint Engine North plant, which GM (GM, Fortune 500) is in the process of closing, said the announcement is good news for an area hard hit by auto job losses.
Although GM said the new plant won't create any new jobs, it will retain about 300 hourly positions, and workers said they are hopeful the new plant will create more employment in the industrial city about 50 miles northwest of Detroit.
"This also means that there's a future for our youth in this area," worker Jean Adams-Anderson said.
The state of Michigan on Tuesday approved $132.5 million in tax incentives for the automaker to spend $838 million on the new plant and to upgrade four other facilities, including the Detroit-Hamtramck assembly plant where the Volt will be built.
The Flint investment includes the 552,000-square-foot plant as well as machinery and other equipment. GM says it will invest another $21 million in tooling for its suppliers to support the new Flint factory.
The new plant will double its global production of GM's small four-cylinder engines by 2011, with more than half the increase going into North America.
The factory, GM said, will have 300 flexible work stations that will allow the company to build different four-cylinder engines without retooling.
GM's U.S. sales are down 18% so far this year due to a declining market and high gasoline prices that have caused a dramatic shift away from trucks and sport utility vehicles to smaller, more efficient cars.
The new plant will help GM roll out new models designed to adjust to the shift, which GM and other automakers say is permanent.
The struggling automaker has lost $57.5 billion in the past 18 months, including $15.5 billion in the second quarter. Its U.S. market share has fallen to about 23% this year from a peak of nearly 51% in 1962.
The company is banking on the much-ballyhooed Volt to be its car of the future, although it conceded this week that the Volt won't operate exactly as advertised.
GM initially said the Volt would be able to run 40 miles on its lithium-ion batteries, with a small internal combustion engine recharging the batteries to extend the range hundreds of miles. A top executive said the same thing as recently as last week.
But company spokesman Rob Peterson said Wednesday that engineers changed the design so the Volt engine will power a generator that would run the electric motor after the batteries are depleted. A small amount of power from the generator will recharge the batteries, but most will be used to directly run the car, he said.
He said bypassing the batteries is more efficient, and GM did not intend to deceive people by maintaining that he motor would only be used to recharge the batteries.
"At the end of the day, to the consumer, the vehicle will operate much the same way," he said.
Saturday, September 27, 2008
Gas prices: 10% down from July high
Gas prices dropped for the ninth day in a row, bringing the total decline to nearly 17 cents over that time period, according to a nationwide survey of credit card swipes at gasoline stations.
The average price of unleaded regular dropped a further 1.7 cents to $3.683 a gallon, from $3.70 a gallon, according to the survey released Friday by motorist group AAA.
Prices are sharply lower from the high levels seen mid-summer and are just 3 cents shy of pre-Ike levels of $3.652 a gallon. Furthermore, gas is now selling for about 43 cents less than the record high price of $4.114 a gallon set on July 17. That remains to be roughly a 10% decline.
Gas prices headed higher following the devastation left behind by hurricanes Ike and Gustav. With the summer season quickly becoming a distant memory, the downward trend may continue. However, hurricane season is only halfway done, so a big storm could quickly change the landscape.
Prices have stayed below the key $4 level for some time now, but they still remain higher from a year ago, when gas was selling for less than $3 a gallon.
Current prices are about 87 cents, or 31%, higher from a year earlier at this time, when gas was selling for $2.81 a gallon.
Prices for gasoline also tend to follow oil prices, which had been moving lower since mid-July amid weakening demand. In fact, crude prices have dropped some 38% from their record settlement of $145.29 a barrel nearly two months ago.
Prices temporarily reversed course on Monday, posting the biggest one-day dollar gain ever. By Tuesday and Wednesday, the euphoria gave way to more somber trading.
Prices edged higher on Thursday as worries that the government's massive $700 billion bailout plan could be in jeopardy and subsequently cut into demand - which had already been a top worry. Crude prices were down $2.50 a barrel to $105.52 early Friday.
Meanwhile, only two states continue to report gas prices above $4 a gallon: Alaska and Hawaii.
Alaska continues to be the state with the most expensive gas prices, at $4.277 a gallon. Oklahoma unseated New Jersey for the second day as the state with the cheapest gas prices, at $3.389 a gallon, according to AAA's Web site.
The average price of unleaded regular dropped a further 1.7 cents to $3.683 a gallon, from $3.70 a gallon, according to the survey released Friday by motorist group AAA.
Prices are sharply lower from the high levels seen mid-summer and are just 3 cents shy of pre-Ike levels of $3.652 a gallon. Furthermore, gas is now selling for about 43 cents less than the record high price of $4.114 a gallon set on July 17. That remains to be roughly a 10% decline.
Gas prices headed higher following the devastation left behind by hurricanes Ike and Gustav. With the summer season quickly becoming a distant memory, the downward trend may continue. However, hurricane season is only halfway done, so a big storm could quickly change the landscape.
Prices have stayed below the key $4 level for some time now, but they still remain higher from a year ago, when gas was selling for less than $3 a gallon.
Current prices are about 87 cents, or 31%, higher from a year earlier at this time, when gas was selling for $2.81 a gallon.
Prices for gasoline also tend to follow oil prices, which had been moving lower since mid-July amid weakening demand. In fact, crude prices have dropped some 38% from their record settlement of $145.29 a barrel nearly two months ago.
Prices temporarily reversed course on Monday, posting the biggest one-day dollar gain ever. By Tuesday and Wednesday, the euphoria gave way to more somber trading.
Prices edged higher on Thursday as worries that the government's massive $700 billion bailout plan could be in jeopardy and subsequently cut into demand - which had already been a top worry. Crude prices were down $2.50 a barrel to $105.52 early Friday.
Meanwhile, only two states continue to report gas prices above $4 a gallon: Alaska and Hawaii.
Alaska continues to be the state with the most expensive gas prices, at $4.277 a gallon. Oklahoma unseated New Jersey for the second day as the state with the cheapest gas prices, at $3.389 a gallon, according to AAA's Web site.
Gas prices fall for 10th straight day
Gas prices fell for their 10th straight day, dropping almost 19 cents during the period, according to a nationwide survey of credit card swipes at gas stations.
The average price of unleaded regular fell by 1.6 cents to $3.667 a gallon on Saturday, from $3.683 a gallon, according to survey results from the motorist group AAA.
Gone are the high prices that followed Hurricanes Ike and Gustav weeks ago. But prices are slightly higher than a month ago, when the national average for a gallon of unleaded was $3.660. They are 30% higher than a year ago, when the average was $2.805.
The record high was on July 17, when the nationwide average for gas prices was $4.114 a gallon.
For now, Hawaii and Alaska are the only two states where gas costs more than $4 a gallon. In Alaska on Friday, the statewide average for unleaded was $4.284 a gallon, according to AAA, and the average was $4.262 in Hawaii.
The cheapest gas was in New Jersey, where the average was $3.394 for a gallon, and in Oklahoma, at $3.370 a gallon.
The average price of unleaded regular fell by 1.6 cents to $3.667 a gallon on Saturday, from $3.683 a gallon, according to survey results from the motorist group AAA.
Gone are the high prices that followed Hurricanes Ike and Gustav weeks ago. But prices are slightly higher than a month ago, when the national average for a gallon of unleaded was $3.660. They are 30% higher than a year ago, when the average was $2.805.
The record high was on July 17, when the nationwide average for gas prices was $4.114 a gallon.
For now, Hawaii and Alaska are the only two states where gas costs more than $4 a gallon. In Alaska on Friday, the statewide average for unleaded was $4.284 a gallon, according to AAA, and the average was $4.262 in Hawaii.
The cheapest gas was in New Jersey, where the average was $3.394 for a gallon, and in Oklahoma, at $3.370 a gallon.
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