Dec 22, 1:19 PM EST
Court Cuts Valdez Judgment Against Exxon
By DAVID KRAVETS
AP Legal Affairs Writer
SAN FRANCISCO (AP) -- A federal appeals court on Friday cut in half a $5 billion jury award for punitive damages against Exxon Mobil Corp. in the 1989 Valdez oil spill that smeared black goo across roughly 1,500 miles of Alaskan coastline.
The case, one of the nation's longest-running, non-criminal legal disputes, stems from a 1994 decision by an Anchorage jury to award the punitive damages to 34,000 fishermen and other Alaskans. Their property and livelihoods were harmed when the Valdez oil tanker struck a charted reef, spilled 11 million gallons of crude oil.
It's the third time the appeals court ordered the Anchorage court to reduce the $5 billion award, the nation's largest at the time, saying it was unconstitutionally excessive in light of U.S. Supreme Court precedent.
This time, in its 2-1 decision, the court ordered a specific amount in damages, while its previous rulings demanded a lower court to come up with its own figures.
"It is time for this protracted litigation to end," the court said.
U.S. District Judge H. Russel Holland of Anchorage begrudgingly complied in 2002, reducing damages to $4 billion. Irving, Texas-based Exxon again appealed.
The following year, the appeals court ordered Holland to revisit his decision, this time balancing it against a new 2003 Supreme Court ruling that said punitive damages usually could not be more than nine times general damages. The Anchorage jury awarded $287 million in general damages - and issued punitive damages that were 17 times that amount.
Holland, appointed by President Reagan in 1984, declared Exxon's conduct "reprehensible" and set the figure at $4.5 billion plus interest, ruling that the Supreme Court's precedent did not directly apply to the case.
Exxon again appealed, and argued that it should have to pay no more than $25 million in punitive damages, which are meant to punish a company for misconduct.
The company, whose $36.1 billion in earnings last year were the highest ever by any U.S. corporation, said it has spent more than $3 billion to settle federal and state lawsuits and to clean the Prince William Sound area. The company earned about $5 billion when the spill occurred.
In October, Exxon Mobil reported earnings of $10.49 billion in the third quarter, the second-largest quarterly profit ever recorded by a publicly traded U.S. company.
In 1994, a federal jury found recklessness by Exxon and the captain of the Valdez, Joseph Hazelwood, who caused the tanker to run aground. That finding of malfeasance made Exxon liable for punitive damages.
The plaintiffs alleged Hazelwood ran the ship into a reef while drunk and Exxon knew he had a drinking problem, but left him in command of tankers.
The case is Baker v. Exxon Mobil Corp., 04-35182.
---
Editors: David Kravets has been covering state and federal courts for more than a decade.
Showing posts with label oil producers. Show all posts
Showing posts with label oil producers. Show all posts
Friday, December 22, 2006
Bush give Big Oil free ride costing taxpayers tens of billions
December 22, 2006
Incentives on Oil Barely Help U.S., Study Suggests
By EDMUND L. ANDREWS
WASHINGTON, Dec. 21 — The United States offers some of the most lucrative incentives in the world to companies that drill for oil in publicly owned coastal waters, but a newly released study suggests that the government is getting very little for its money.
The study, which the Interior Department refused to release for more than a year, estimates that current inducements could allow drilling companies in the Gulf of Mexico to escape tens of billions of dollars in royalties that they would otherwise pay the government for oil and gas produced in areas that belong to American taxpayers.
--MORE--
Incentives on Oil Barely Help U.S., Study Suggests
By EDMUND L. ANDREWS
WASHINGTON, Dec. 21 — The United States offers some of the most lucrative incentives in the world to companies that drill for oil in publicly owned coastal waters, but a newly released study suggests that the government is getting very little for its money.
The study, which the Interior Department refused to release for more than a year, estimates that current inducements could allow drilling companies in the Gulf of Mexico to escape tens of billions of dollars in royalties that they would otherwise pay the government for oil and gas produced in areas that belong to American taxpayers.
--MORE--
Tuesday, December 19, 2006
Record Current Account Deficit = Countries Selling Dollars: Bonddad
Dec 19, 2006
By Bonddad
bonddad@prodigy.net
The U.S. current-account deficit widened to a record $225.6 billion last quarter as the trade gap grew and the country paid more interest to overseas investors.
The shortfall in the current account, the broadest measure of trade because it includes transfer payments and investment income, followed a revised $217.1 billion second-quarter gap, the Commerce Department said today in Washington.
Stronger economies abroad and a weakening dollar have trimmed the trade deficit in recent months, raising the prospect the current-account gap won't deteriorate much more. A smaller deficit reduces the sum the U.S. needs to attract from overseas, diminishing the dollar's vulnerability to an extended decline.
The BEA reported that:
Goods exports increased to $262.1 billion from $252.8 billion. The increase resulted from increases in all major commodity categories.
Goods imports increased to $480.7 billion from $463.4 billion. The increase resulted from increases in petroleum and products and in most major categories of nonpetroleum products.
In other words, the US can’t export its way out of this problem. In addition, so long as the US is oil dependent the current account will be difficult to cure.
Sometime over the last year the general refrain from the Right Wing Noise, economics division was the current account didn’t matter. Their central argument had two prongs, neither of which had any weight. The first was the US was essentially too big to fail. The second was the current account had been around so long with nothing bad happening that it was something we shouldn’t worry about. But the US dollar has taken a hit recently, and is currently trading at yearly lows and is approaching multi-year lows.
US interest rates – which were noticeably higher than other countries for the last several years – protected the dollar’s value for the last year and a half. However, European interest rates are increasing. In addition, the US economy is slowing which makes the dollar less attractive.
Compounding this development is accelerating European growth which makes the euro more attractive. As a result of all these events – the narrowing interest rate differential, the mammoth US current account and accelerating growth elsewhere – various countries are moving away from the dollar. Iran is the latest country to announce a move to euros:
Iran is to shift its foreign currency reserves from dollars to euros and use the euro for oil deals in response to US-led pressure on its economy.
In a widely expected move, Tehran said it would use the euro for all future commercial transactions overseas.
Analysts said Tehran had been steadily shifting its foreign-held assets out of dollars since 2003 and that Monday's announcement was unlikely to affect the value of the dollar, which has weakened significantly in recent months.
And Iran is not alone.
Venezuelan leader Hugo Chavez is directing a growing share of the country's oil profits into euros as the dollar and crude prices fall.
The dollar, down 9.5 percent against the euro this year, may face more pressure in 2007 because Venezuela and oil producers from the United Arab Emirates to Indonesia plan to funnel more money into the single European currency.
Banco Central de Venezuela has slashed the percentage of its $35.9 billion worth of reserves invested in dollars and gold to 80 percent from 95 percent a year ago, said Maza Zavala. The country, the world's fifth-largest oil supplier, has boosted its euro holdings to 15 percent, from less than 5 percent in the same period.
And they are not the only one:
Bank Indonesia is boosting euro holdings, said Senior Deputy Governor Miranda S Goeltom in a Dec. 13 interview in Jakarta. Indonesia has $39.9 billion in reserves. Sultan Bin Nasser al- Suwaidi, the governor of the Central Bank of the UAE, last month said he was considering when to shift as much as 8 percent of the nation's $24.9 billion in reserves into euros.
The central banks are changing policy ``because the oil price has come down a long way and the U.S. dollar has been declining,'' said Michael Derks, chief markets strategist at Arch Financial Products LLP, a London-based hedge fund. ``The euro stands to benefit.''
They are certainly not alone
Oil producing countries have reduced their exposure to the dollar to the lowest level in two years and shifted oil income into euros, yen and sterling, according to new data from the Bank for International Settlements.
The revelation in the latest BIS quarterly review, published on Monday, confirms market speculation about a move out of dollars and could put new pressure on the ailing US currency.
The dollar is not in a good place. The US economy is slowing and there is a massive trade deficit further weakening its value. Global interest rates are closing in on US rates, taking away the carry trade. And the US’ popularity in some regions is at an all-time low.
For Commentary on the Markets and Current Economic Numbers, go to the Bonddad Blog
By Bonddad
bonddad@prodigy.net
The U.S. current-account deficit widened to a record $225.6 billion last quarter as the trade gap grew and the country paid more interest to overseas investors.
The shortfall in the current account, the broadest measure of trade because it includes transfer payments and investment income, followed a revised $217.1 billion second-quarter gap, the Commerce Department said today in Washington.
Stronger economies abroad and a weakening dollar have trimmed the trade deficit in recent months, raising the prospect the current-account gap won't deteriorate much more. A smaller deficit reduces the sum the U.S. needs to attract from overseas, diminishing the dollar's vulnerability to an extended decline.
The BEA reported that:
Goods exports increased to $262.1 billion from $252.8 billion. The increase resulted from increases in all major commodity categories.
Goods imports increased to $480.7 billion from $463.4 billion. The increase resulted from increases in petroleum and products and in most major categories of nonpetroleum products.
In other words, the US can’t export its way out of this problem. In addition, so long as the US is oil dependent the current account will be difficult to cure.
Sometime over the last year the general refrain from the Right Wing Noise, economics division was the current account didn’t matter. Their central argument had two prongs, neither of which had any weight. The first was the US was essentially too big to fail. The second was the current account had been around so long with nothing bad happening that it was something we shouldn’t worry about. But the US dollar has taken a hit recently, and is currently trading at yearly lows and is approaching multi-year lows.
US interest rates – which were noticeably higher than other countries for the last several years – protected the dollar’s value for the last year and a half. However, European interest rates are increasing. In addition, the US economy is slowing which makes the dollar less attractive.
Compounding this development is accelerating European growth which makes the euro more attractive. As a result of all these events – the narrowing interest rate differential, the mammoth US current account and accelerating growth elsewhere – various countries are moving away from the dollar. Iran is the latest country to announce a move to euros:
Iran is to shift its foreign currency reserves from dollars to euros and use the euro for oil deals in response to US-led pressure on its economy.
In a widely expected move, Tehran said it would use the euro for all future commercial transactions overseas.
Analysts said Tehran had been steadily shifting its foreign-held assets out of dollars since 2003 and that Monday's announcement was unlikely to affect the value of the dollar, which has weakened significantly in recent months.
And Iran is not alone.
Venezuelan leader Hugo Chavez is directing a growing share of the country's oil profits into euros as the dollar and crude prices fall.
The dollar, down 9.5 percent against the euro this year, may face more pressure in 2007 because Venezuela and oil producers from the United Arab Emirates to Indonesia plan to funnel more money into the single European currency.
Banco Central de Venezuela has slashed the percentage of its $35.9 billion worth of reserves invested in dollars and gold to 80 percent from 95 percent a year ago, said Maza Zavala. The country, the world's fifth-largest oil supplier, has boosted its euro holdings to 15 percent, from less than 5 percent in the same period.
And they are not the only one:
Bank Indonesia is boosting euro holdings, said Senior Deputy Governor Miranda S Goeltom in a Dec. 13 interview in Jakarta. Indonesia has $39.9 billion in reserves. Sultan Bin Nasser al- Suwaidi, the governor of the Central Bank of the UAE, last month said he was considering when to shift as much as 8 percent of the nation's $24.9 billion in reserves into euros.
The central banks are changing policy ``because the oil price has come down a long way and the U.S. dollar has been declining,'' said Michael Derks, chief markets strategist at Arch Financial Products LLP, a London-based hedge fund. ``The euro stands to benefit.''
They are certainly not alone
Oil producing countries have reduced their exposure to the dollar to the lowest level in two years and shifted oil income into euros, yen and sterling, according to new data from the Bank for International Settlements.
The revelation in the latest BIS quarterly review, published on Monday, confirms market speculation about a move out of dollars and could put new pressure on the ailing US currency.
The dollar is not in a good place. The US economy is slowing and there is a massive trade deficit further weakening its value. Global interest rates are closing in on US rates, taking away the carry trade. And the US’ popularity in some regions is at an all-time low.
For Commentary on the Markets and Current Economic Numbers, go to the Bonddad Blog
Monday, December 18, 2006
Venezuela, Oil Producers Buy Euro as Dollar, Oil Fall
(Update1)
By Agnes Lovasz and Daniel Kruger
Dec. 18 (Bloomberg) -- Venezuelan leader Hugo Chavez is directing a growing share of the country's oil profits into euros as the dollar and crude prices fall.
The dollar, down 9.5 percent against the euro this year, may face more pressure in 2007 because Venezuela and oil producers from the United Arab Emirates to Indonesia plan to funnel more money into the single European currency.
``The U.S. dollar has suffered a long process of deterioration,'' Domingo Maza Zavala, one of seven board members at the central bank of Venezuela, said in a Dec. 14 interview. ``The diversification strategy started this year.''
Banco Central de Venezuela has slashed the percentage of its $35.9 billion worth of reserves invested in dollars and gold to 80 percent from 95 percent a year ago, said Maza Zavala. The country, the world's fifth-largest oil supplier, has boosted its euro holdings to 15 percent, from less than 5 percent in the same period.
The dollar has slumped against the European currency in 2006 as growth in the euro region outpaced the U.S. for the first time in five years. The dollar today fell against the euro to $1.3094 as of 6:55 a.m. in New York. The U.S. currency is little changed versus the yen this year, and currently trading at 117.81 yen.
Indonesia Buys Euros
Bank Indonesia is boosting euro holdings, said Senior Deputy Governor Miranda S Goeltom in a Dec. 13 interview in Jakarta. Indonesia has $39.9 billion in reserves. Sultan Bin Nasser al- Suwaidi, the governor of the Central Bank of the UAE, last month said he was considering when to shift as much as 8 percent of the nation's $24.9 billion in reserves into euros.
The central banks are changing policy ``because the oil price has come down a long way and the U.S. dollar has been declining,'' said Michael Derks, chief markets strategist at Arch Financial Products LLP, a London-based hedge fund. ``The euro stands to benefit.''
The Organization of Petroleum Exporting Countries, which produces 40 percent of the world's crude oil, said at a Dec. 14 meeting in Abuja, Nigeria, that it would cut output by 500,000 barrels a day to boost prices. Crude oil for January delivery fell 36 cents, or 0.6 percent, to $63.07 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Prices have fallen from a high of $78.40 in mid-July.
Crude is priced in dollars and the U.S. is the biggest consumer, importing around $400 million worth of the fuel a day in 2005, according to data from BP Plc, Europe's second-biggest oil company.
Political Opposition
The share of foreign-exchange deposits held in dollars by OPEC members and Russia, the largest non-OPEC oil exporter, fell to a two-year low of 65 percent during the second quarter, from 67 percent during the previous three months, Bank for International Settlements figures released last week show.
Venezuela may also be motivated by animosity toward the U.S., said Rick Arney, chief currency strategist in San Francisco at Barclays Global Investors, which manages $1.7 trillion in assets.
``There is a political overlay to all of this,'' said Arney. ``Buying the dollar is not politically popular for some of these folks.''
Chavez, re-elected as President for six years on Dec. 3, told the UN General Assembly on Sept. 20 that the U.S. is ``the greatest threat'' to the planet, and has repeatedly described U.S. President George W. Bush as ``the devil.'' He also says Bush's administration is trying to have him killed.
Greenspan Comments
Chavez called on OPEC to sell oil denominated in euros rather than dollars at a meeting of the group in Caracas on June 1, supporting a proposal made by Iran.
Some analysts said the shift by oil-producing nations into euros is unlikely to weaken the dollar. OPEC nations reduced their dollar deposits by $5.3 billion in the second quarter, compared with holdings of $632 billion overall, according to data compiled by the BIS.
``It seems to be inconsequential in the large scheme of things,'' said Marc Chandler, global head of foreign-exchange strategy at Brown Brothers Harriman & Co. in New York. ``If anything, we should be surprised how small the outflow is.''
The euro climbed as much as 0.5 percent on Dec. 11, the most in a more than a week, when former Federal Reserve Chairman Alan Greenspan said there are signs OPEC nations are switching their reserves out of dollars.
`At the Start'
``A rising euro is a source of capital gain for central banks and a source for offsetting the capital loss created by the dollar'' decline, said Bankim Chadha, Deutsche Bank AG's head of macro foreign-exchange in New York and a former International Monetary Fund official. This gives ``an incentive to buy euros.''
OPEC members and Russia increased the percentage of their foreign-exchange deposits held in euros to 22 percent in the second quarter from 20 percent, the BIS said. By contrast, the global average is about a third, according to the Basel, Switzerland-based bank.
Oil states will probably buy the European currency at a faster rate to bring their reserves closer in line with other nations, according to David Durrant at Julius Baer Investment Management in New York.
``They've done very little diversification in the past,'' said Durrant, an investment strategist at Julius Baer, which oversees about $40 billion. ``We're at the start.''
To contact the reporters on this story: Agnes Lovasz in London at alovasz@bloomberg.net ; Daniel Kruger in New York at dkruger1@bloomberg.net .
Last Updated: December 18, 2006 06:59 EST
Subscribe to:
Posts (Atom)