In his weekly address on May 14, President Obama laid out his strategy to continue to expand responsible and safe domestic oil production, leveraging existing authorities as part of his long-term plan to reduce the U.S.’s reliance on foreign oil. He said he is directing the Department of the Interior to conduct annual lease sales in Alaska’s National Petroleum Reserve while respecting sensitive areas; to speed up the evaluation of oil and gas resources in the mid and south Atlantic; and to create new incentives for industry to develop their unused leases both on and offshore.
Also, to give companies more time to meet higher safety standards for exploration and drilling, the administration is extending drilling leases in areas of the Gulf of Mexico that were impacted by the temporary moratorium, as well as certain leases off the coast of Alaska. And, the President is establishing a new interagency working group to ensure that Arctic development projects meet health, safety, and environmental standards.
In the past few months, rising gas prices have put an added strain on American families. While there are no quick fixes to the problem, the President said that these are steps, along with eliminating taxpayer subsidies for oil companies and rooting out fraud and manipulation in the markets, that are worth taking. (May 14, 2011 White House press release)
Until just a few years ago, the petroleum industry was making plans to develop dozens of new North American terminals for importing liquefied natural gas. New facilities and the expansion of existing ones, many believed, would be necessary as the nation struggled to meet its energy needs and turned increasingly to imported liquid natural gas. But the development of shale gas plays across the country, including the Haynesville formation in northwest Louisiana, seem to have changed all that by making natural gas more readily available from domestic sources.
Shale gas made up 14 percent of the country’s total natural gas supply in 2009, and production of the fuel almost doubled between 2008 and 2009, according to the Department of Energy. Industry experts say that the new horizontal drilling and fracking methods have reduced the need for the U.S. to import large quantities of liquid natural gas. As a result, the natural gas industry has started to switch gears. Rather than developing infrastructure to handle a spike in natural gas imports, the industry is readying facilities that can also be used to export excess fuel to international markets. And some of those proposed import terminals are being reformatted so that they can also handle exports.
Earlier this month, the Department of Energy gave Cheniere Energy tentative approval to export liquefied natural gas, known as LNG, from its Sabine Pass LNG Terminal in Cameron Parish, Louisiana, a project that is expected to create thousands of construction and production jobs. And in Lake Charles, Houston-based Southern Union Co. and British gas producer BG Group are seeking federal approval to export more than 2 billion cubic feet per day of natural gas over a 25-year period from an existing LNG import terminal.
So far, investors have responded: After the Energy Department approved Cheniere’s plan on May 20, shares of the Houston-based company rose 31 percent. While Energy Department officials say the plan is subject to final environmental and regulatory approval, some industry experts suggest that it is a formality.
Freeport LNG in Texas has also applied to export LNG. Terminals along the Gulf of Mexico rather than those along the East Coast, like in Massachusetts and Maryland, pose a more likely option for becoming export facilities, industry experts say. But determining how many of the operators of the existing 14 LNG terminals in North America turn to exporting will depend on both the price of oil and natural gas.
The emergence of shale plays as a viable, low-cost supply of natural gas has cut into the need for new LNG terminals, despite proposals for new facilities, operators of the terminal in Lake Charles contended in a filing with the Federal Energy Regulatory Commission last month. And because the U.S. has not relied as heavily on LNG imports, many of the facilities have operated under capacity.
Still, the move toward exporting LNG has drawn concern from some industrial operators who rely on natural gas, and for whom the vast supplies and low prices have been beneficial. And some critics have expressed concerns that the export terminals, which cool and compress the natural gas into a liquid before it is shipped overseas, could be potential terrorist targets, especially near densely populated areas.
On the other end, natural gas producers, supporting large investments in mineral rights and existing facilities, are working to open up new markets for the LNG they are producing. Larger forces could also help drive new demand for natural gas. The Obama administration has outlined plans for an energy policy that includes putting 1 million electric cars on the road by 2015, and boosting investment in natural gas vehicles. (Summarized from a May 29 New Orleans Times-Picayune article)
CATARINA, Texas - Until last year, the 17-mile stretch of road between this forsaken South Texas village and the county seat of Carrizo Springs was a patchwork of derelict gasoline stations and rusting warehouses. Now the region is in the hottest new oil play in the country, with giant oil terminals and sprawling RV parks replacing fields of mesquite. More than a dozen companies plan to drill up to 3,000 wells around here in the next 12 months.
The Texas field, known as the Eagle Ford, is just one of about 20 new onshore oil fields that advocates say could collectively increase the nation’s oil output by 25 percent within a decade -- without the dangers of drilling in the deep waters of the Gulf of Mexico or the delicate coastal areas off Alaska.
There is only one catch: the oil from the Eagle Ford and similar fields of tightly packed rock can be extracted only by using hydraulic fracturing, a method that uses a high-pressure mix of water, sand, and hazardous chemicals to blast through the rocks to release the oil inside. The technique, also called fracking, has been widely used in the last decade to unlock vast new fields of natural gas, but drillers only recently figured out how to release large quantities of oil, which flows less easily through rock than gas. As evidence mounts that fracking poses risks to water supplies, the federal government and regulators in various states are considering tighter regulations on it.
The oil industry says any environmental concerns are far outweighed by the economic benefits of pumping previously inaccessible oil from fields that could collectively hold two or three times as much oil as Prudhoe Bay, the Alaskan field that was the last great onshore discovery. The companies estimate that the boom will create more than two million new jobs, directly or indirectly, and bring tens of billions of dollars to the states where the fields are located, which include traditional oil sites like Texas and Oklahoma, industrial stalwarts like Ohio and Michigan and even farm states like Kansas.
Based on the industry’s plans, shale and other “tight rock” fields that now produce about half a million barrels of oil a day will produce up to three million barrels daily by 2020, according to IHS CERA, an energy research firm. .”This is like adding another Venezuela or Kuwait by 2020, except these tight oil fields are in the United States,” said Daniel Yergin, the chairman of IHS CERA.
Oil companies are investing an estimated $25 billion this year to drill 5,000 new oil wells in tight rock fields, according to Raoul LeBlanc, a senior director at PFC Energy, a consulting firm. In the most developed shale field, the Bakken field in North Dakota, production has leaped to 400,000 barrels a day today from a trickle four years ago. Experts say it could produce as much as a million barrels a day by the end of the decade. The Eagle Ford, where the first well was drilled only three years ago, is already producing more than 100,000 barrels a day and could reach 420,000 by 2015, almost as much as Ecuador, according to Bentek Energy, a consultancy.
The shale oil boom comes as production from Prudhoe Bay is declining and drilling in the Gulf of Mexico is being more closely scrutinized after last year’s Deepwater Horizon disaster. What makes the new fields more remarkable is that they were thought to be virtually valueless only five years ago. EOG began quietly buying the rights to thousands of acres in the Bakken and Eagle Ford after an EOG engineer concluded that the techniques used to extract natural gas from shale -- fracking, combined with drilling horizontally through layers of rocks -- could be used for oil. Chesapeake and a few other independents quickly followed. Now the biggest multinational oil companies, as well as Chinese and Norwegian firms, are investing billions of dollars in the fields.
The new drilling makes economic sense as long as oil prices remain above $60 a barrel, according to oil companies. At current oil prices of about $100 a barrel, shale wells can typically turn a profit within eight months -- three times faster than many traditional wells. But water remains a key issue. In addition to possible contamination of surface and underground water from fracking fluids, the sheer volume of water required poses challenges, especially in South Texas. But unlike Pennsylvania and New York, where fracking for natural gas has produced organized opposition, the oil industry has been mostly welcomed in western and southern states. (Summarized from a May 27, 2011 New York Times article)
Royal O’Brien, the CEO of BitRaider MMO LLC, announced on May 25 that BitRaider will relocate from Jacksonville, Florida, to the Louisiana Technology Park in Baton Rouge. BitRaider will create 22 direct jobs at the tech park, with average annual wages of $51,000, plus benefits. Louisiana Economic Development (LED) estimates BitRaider will generate another 35 indirect jobs in the regional economy, for a total of 57 new jobs. Also, the company will invest approximately $450,000 to equip its space in the technology park.
To support its work, BitRaider is expected to make use of Louisiana’s digital media tax credit program. Prior to 2009, BitRaider would not have been eligible for the digital media tax credits, but changes in state law that year clarified that software companies, as well as video game development firms, may qualify for the incentive. BitRaider also will work with LED’s Louisiana FastStartâ„¢ program to obtain hiring and training assistance, so that it may begin operating in the technology park this summer. Company officials plan to apply for Louisiana’s Research and Development Tax Credit as well.
BitRaider’s patented technology allows customers to begin playing online video games within minutes with multiple players while unneeded parts of the game download in the background. The expedited download can save game players hours and helps game developers attract and retain more users. The company describes its technology as Netflix-style streaming for video games. (Summarized from a May 25, 2011 Louisiana Economic Development Update)
On May 31 Gov. Bobby Jindal and CARBO Ceramics Inc. CEO Gary Kolstad announced CARBO will invest $17 million in an expansion of its Airport Industrial Park facility in New Iberia, creating 40 new jobs and retaining 75 existing jobs. The new jobs at CARBO’s facility will average about $50,000 a year, plus benefits, and the company plans to complete hiring and a renovation of its facilities in the fourth quarter of this year. CARBO is adding a second production line to an Iberia Parish facility that has been in operation since 1978. CARBO manufactures proppant used by oil production companies to boost the output of oil and gas wells. (Summarized from a May 31, 2011 Louisiana Economic Development Update)
Ormet Corp. will make a $21 million capital investment and create more than 240 new direct jobs with the reopening of its Ascension Parish alumina manufacturing plant that had been idle since December 2006. Louisiana Economic Development Secretary Stephen Moret and Ormet President and CEO Michael F. Tanchuk announced the reopening on May 16 at Ormet’s plant site on the Mississippi River.
The new jobs at the Ormet plant will average about $57,000 in annual wages, plus benefits -- more than 40 percent higher than the average wage in Ascension Parish. Ormet plans to begin producing alumina in the fourth quarter of this year, with full employment expected to be reached within a year.
Based on its direct and indirect job impact, Ormet’s facility will become one of the top 10 economic driver firms in Ascension Parish, as well as one of the top 150 economic driver firms statewide out of more than 100,000 existing employers in Louisiana. (Summarized from a May 16, 2011 Louisiana Economic Development Update)
The Federal Reserve Board said on May 16 that it had approved the $1.5 billion stock-for-stock deal for Hancock to acquire New Orleans-based Whitney. Gulfport, Mississippi-based Hancock says that after a required waiting period, the acquisition becomes official on June 5.
The combination will create the 32nd largest bank holding company in the United State with $20 billion in assets, $16 billion in deposits, $12 billion in loans and 300 branches in Texas, Louisiana, Mississippi, Alabama, and Florida. The company will continue to use the Whitney Bank logo in Louisiana and Texas.
Under an agreement with the U.S. Justice Department, the combined company will sell Whitney’s entire network of seven branches in the Mississippi market of Biloxi-Gulfport, along with $155.4 million in deposits and one office in Bogalusa, Louisiana, along with $46.7 million in deposits.
The divestitures will include commercial loans associated with the branches. The combined bank will be headquartered in Gulfport, although Hancock has said that it will maintain a small regional management office in New Orleans. The bank will operate under the brand name of Hancock in Mississippi, Alabama and Florida, while current Whitney Bank locations in Louisiana and Texas will keep that name.
Hancock announced the deal in December. Hancock intends to buy back Whitney preferred shares, which were issued to the U.S. Treasury in exchange for $300 million as part of the government’s troubled asset relief program. Whitney’s common stockholders are slated to receive 0.418 of a share of Hancock stock for each share of Whitney stock with cash being paid for fractional shares.
Whitney has struggled for several years with bad loans in Florida, but returned to profitability in the first quarter. (Summarized from an AP article that appeared in the May 16, 2011 New Orleans Times-Picayune)
A report card on Louisiana’s roads, bridges, levees, and ports will be issued in September. The Louisiana Section of the American Society of Civil Engineers says it will grade the state’s infrastructure in order to provide an objective analysis and determine where to best commit resources.
Kam Movassaghi, president of Fenstermaker, an engineering consulting firm and a former Secretary of the Department of Transportation and Development, is heading up the project team. Nine categories of infrastructure will be graded, Movassaghi says. In studying the scores, elected officials will be able to make better decisions about infrastructure. (Summarized from a May 17, 2011 Baton Rouge Daily Report article)
Officials with the Louisiana Board of Elementary and Secondary Education (BESE) officially announced on May 10 that the International High School of New Orleans has been officially designated an International Baccalaureate Organization “IB World School” authorized to offer the IB Diploma Programme beginning in the fall of 2011.
With this special certification, IHSNO will be the first school in New Orleans to ever earn such an honor and will be one of only 2% of the high schools in the United States certified to offer this internationally-acclaimed program.
BESE officials presented the special IB Diploma certificate of commendation to IHSNO’s 180 students, their Head of School, Anthony Amato, and the school’s Board of Directors at their downtown facility located at 727 Carondelet Street in the Central Business District.
IHSNO, a Type-2 Charter School open to all Louisiana residents, received the IB distinction in only its second year of operation. Founded in 2009 with only a freshman class, IHSNO added a sophomore level this past school year and plans to expand to its junior and senior grade levels over the next two years.
The school’s mission is to foster a diverse community of learners through rigorous academic programs that promote an understanding of business, multi-cultural awareness and foreign language fluency, while preparing its students to succeed in a global economy. (Summarized from a May 10, 2011 IHSNO press release)
The centerpiece of the American trade agenda--a trio of international trade pacts worth $13 billion in new U.S. exports--is in peril as Democrats and Republicans battle over a program that provides aid to U.S. workers. The dispute over the future of the 50-year-old Trade Adjustment Assistance program, which provides benefits to American workers displaced by foreign competition, is putting pending free-trade pacts with South Korea, Colombia, and Panama in jeopardy by pulling them into the contentious debate over federal spending.
The Obama administration and Democrats in Congress want the TAA program renewed. Some Republicans question its value and say it should be scaled back to narrow the deficit. The delay caused by the congressional sparring means it is now virtually impossible to pass the South Korea agreement before a trade pact between Korea and the European Union takes effect July 1. That will put a wide range of U.S. industries at a competitive disadvantage.
Just a few weeks ago, the administration saw the TAA battle as surmountable. Now, unless lawmakers reach consensus soon, the trade pacts won’t pass before the August recess, congressional aides say. After that, chances of passage grow slimmer as the 2012 election nears and lawmakers avoid controversial votes.
On May 26, scores of business leaders visited all 100 Senators to lobby for the agreements, and they plan to call on each House member in coming days. Republicans say the administration should move forward on the trade deals and set the TAA dispute aside for later. The standoff comes as other nations race to forge trade pacts with nations that are the U.S.’s chief commercial rivals. In addition to the EU’s impending pact with Korea, a Colombia-Canada pact will enter force before the U.S.’s agreement with Bogota. In Senate testimony last week, Deputy U.S. Trade Representative Demetrios Marantis told the Finance Committee that delays in passing the agreements meant U.S. exporters would lose market share to rival nations.
The three pending trade pacts are the backbone of President Barack Obama’s plan to help businesses double U.S. exports by the end of 2015. Demand from markets abroad has helped support the U.S. economy--and employment--as consumers remain cautious. Exports contributed 1.16 percentage points to growth in the first quarter, when the economy expanded at a 1.8% annual rate.
The Korea deal, worth $11 billion in new U.S. exports, would immediately eliminate Korean tariffs on nearly two-thirds of U.S. farm products, from corn to wheat. U.S. beef exports to Korea would more than double to $1.8 billion from $600 million. It would eliminate a 15% Korean tariff on U.S. wine and afford U.S. financial services firms the same legal status as Korean firms.
The TAA program has been backed by both parties since the Kennedy administration, justified as a necessary price to induce lawmakers from industrial regions to support trade-opening legislation. It provides training, extended unemployment benefits, and health-care subsidies for workers idled when trade pacts shift jobs overseas. But this year, TAA came up for renewal in the teeth of a polarized budget fight. It expired in February after a proposal to renew it failed in the House.
Two weeks ago, White House trade officials took a tough line, saying the president will not submit the finalized trade agreements to a vote until Republicans strike a deal on renewing TAA. Republicans say the TAA is a sop to organized labor, and its merits don’t justify its inclusion in an already-bloated budget. GOP lawmakers say the program’s budget was swollen by the stimulus and point to past Government Accountability Office studies that question its implementation. The program, they say, should be scaled back, although as an entitlement, by law it can’t be eliminated altogether.
Democrats say the program has grown increasingly important as more companies move jobs overseas, and point to Labor Department figures showing that the program’s size hasn’t changed substantially since before the 2009 stimulus.
In 2002, the program was expanded to include workers whose jobs were lost due to outsourcing in addition to those affected by increased imports. In that year, TAA went to 50,000 people at a cost of $500 million. In 2008, the year before the stimulus, the program cost $916 million. Last year, TAA cost $975 million and 234,000 workers participated.
The Korea, Colombia and Panama agreements have been stalled for four years. The repeated delays underscore the difficulty experienced by every administration in overcoming the public skepticism and political roadblocks that have made the U.S. a global laggard on trade. Of the 202 regional trade agreements ever registered with the World Trade Organization, the U.S. accounts for only 11. Meanwhile, rival nations are moving faster to forge global partnerships that open fast-growing markets for their exporters, and offer subsidies and rules that give their national champions an edge. (Summarized from a May 28, 2011 Wall Street Journal article.)
The World Trade Organization’s 153 members agreed on June 1 in Geneva to a less-ambitious Doha Round of global trade talks, stripping away enough contentious issues that it now appears feasible to finish a deal by the end of the year.
The endorsement of what WTO Director-General Pascal Lamy calls an “early harvest” means the group now risks a significant failure if its members can’t agree to even a Doha-lite deal. It also suggests that the era of big, multilateral trade deals is over.
The final result of a decade of talks, say trade officials and analysts, is likely to be a package of measures designed to help developing nations--including common customs standards, and the elimination of tariffs and quotas on exports from the poorest countries. Gone from the negotiations are several difficult--though potentially lucrative for big business--issues, like reducing tariffs on industrial goods, restricting farm subsidies, opening service trade, and cementing intellectual-property rules.
The biggest opponent of the new agreement is the U.S., say trade officials. It would be expected to grant concessions in key areas such as cotton subsidies. Officials from China, India, and Brazil say they support the proposal. The Doha Round, named after the city in Qatar where negotiations were started in November 2001, began as an idealistic campaign to rebuild global trade rules that help poor countries and temper poverty-fueled radicalism, after the Sept. 11 attacks.
But the high-mindedness quickly crashed against the political realities that Western countries won’t give up farm subsidies and tariffs unless they get big concessions in return, such as access to the booming markets of China, India, and Brazil. Those emerging economies haven’t given in, and the result has been a stalemate. Tuesday’s deal is a recognition that certain realities aren’t going to change, say trade officials and analysts.
Trade ministers from the 153 members are scheduled to meet again in December, at the organization’s Geneva headquarters. There is widespread agreement that something, no matter how small, must be agreed on. Mr. Lamy on June 1 outlined the new, more restrained approach in a speech to ambassadors. His remarks suggest the era of big, multilateral trade deals is over, say WTO officials. In the future, trade deals will either not involve every WTO member, a so-called plurilateral deal, or will be limited in scope.
Mr. Lamy and other senior WTO officials have come to see achieving a victory, however small, as essential to maintaining its role as the principal arbiter of trade disputes. It is currently handling a slew of key cases involving China’s trade relationship with the rest of the world. And it is in the final phases of deciding on two cases involving government subsidies for Boeing Corp. and Airbus, a unit of European Aeronautic Defence and Space Co. NV. A few more years of failure could undermine its credibility in ruling on these cases, say WTO officials.
While it is now realistic to conclude Doha by the end of this year, there are still sticking points, even in a less ambitious agenda. Developing countries, for example, hope the U.S. will agree to trim its huge subsidies to its cotton farmers. That is a hard sell. “If people wish to discuss cotton, everyone’s cotton programs must be on the table,” says Michael Punke, U.S. ambassador to the WTO.
The U.S. also is insisting on new rules to govern fishing subsidies, Mr. Punke said. Those are of particular interest to the U.S. because, unlike other nations, including China and the EU, it has no real fishing-subsidy program. However, by scaling down their ambitions, WTO members risk a total collapse in credibility if they again fail to reach a consensus in December. That, says Angelos Pangratis, the EU ambassador, “would be a shock of historic proportions for the entire WTO system.” (Summarized from a June 1, 2011 Wall Street Journal article)
Leaders of the Group of 8 wealthiest industrialized nations, meeting in Deauville, France, pledged on May 27 to send billions of dollars in aid to Egypt and Tunisia, hoping to reduce the threat that economic stagnation could undermine the transition to democracy.
Representatives of the Group of 8 expressed concern that the democracy movement in the Arab world could be “hijacked” by Islamic radicals if the West did not help stabilize the economies of the two countries that touched off the Arab Spring, according to two European diplomats who were present during the discussions. Comparing the uprisings that are sweeping the region to the fall of the Berlin Wall, which eventually paved the way for a historic shift to democracy in Central and Eastern Europe, the group said in a communiquÃ© that its aim was “to ensure that instability does not undermine the process of political reform.”
How much aid the Western powers would ultimately provide, and how effective any aid would be during volatile political transitions in the two countries, remained uncertain. The group’s official communiquÃ© promised $20 billion, which would be a major infusion of funds. President Nicolas Sarkozy of France, the meeting’s host, said the total could be double that. But he and other officials did not specify how much each country and international development agency would provide, and the Group of 8 countries have in the past made commitments that they did not ultimately fulfill.
Officials said the aid would come from the member states of the Group of 8, which includes the United States, Japan, Canada, Britain, France, Germany, Italy and Russia, and from international organizations, including the World Bank, the International Monetary Fund and the European Investment Bank. Qatar is also urging its Persian Gulf partners to consider creating a Middle East development bank to help Arab states making a transition to democracy
Turning to Libya, the Group of 8 leaders reiterated calls for its leader, Col. Muammar el-Qaddafi, to step aside, saying he and his government “have failed to fulfill their responsibility to protect the Libyan population and have lost all legitimacy. He has no future in a free, democratic Libya. He must go.”
The leaders also backed Mr. Obama’s call for an Israeli-Palestinian peace deal, but conspicuously left out a mention of his call for negotiations to be based on the 1967 borders. (Summarized from a May 28 New York Times article)
The U.S. trade deficit widened by more than expected in March, as soaring oil prices caused imports to outstrip a record level of exports. The trade deficit widened by 6% in March, but the trade gap with China narrowed. Also, China’s CPI growth dipped in April. The U.S. deficit in international trade of goods and services jumped 6.0% to $48.18 billion from a downwardly revised $45.44 billion the month before, the Commerce Department said.
The February trade gap was originally reported as $45.76 billion. U.S. exports grew 4.6% to a new high of $172.67 billion in March from $165.00 billion the previous month. Imports increased 4.9% to $220.85 billion from $210.44 billion in February. The March deficit exceeded the $47.5 billion shortfall economists surveyed by Dow Jones Newswires had expected. (Summarized from a May 11, 2011 Wall Street Journal News Alert)
The Obama administration said on May 27 that China was not manipulating the value of its currency, choosing once again to avoid any escalation in the long-running trade dispute between the two countries.
The Treasury Department said the renminbi was “substantially undervalued” relative to the dollar. It said that the Chinese government worked to hold down the value of its currency by purchasing large amounts of foreign currencies. But the Treasury said that did not rise to the level of manipulation, which would have put the United States on a road to economic retaliation.
The judgment was expected. Successive administrations have made the same finding every six months since 1994. Moreover, China has allowed its currency to rise about 9 percent against the dollar over the last year, including the effects of inflation. The Treasury was careful to describe that progress as “insufficient,” and to say that “more rapid progress is needed.” The depressed value of the renminbi makes Chinese goods cheaper here and American goods more expensive there.
But Eswar S. Prasad, a professor of trade policy at Cornell University, said the issue had been reduced “from a flashpoint to an irritant” in the relationship between the countries. “Tensions on this issue continue to simmer but the administration clearly wants to call a truce and instead focus on more substantive elements of the bilateral economic relationship,” like increased access for American companies, Professor Prasad said.
The Treasury must tell Congress twice a year whether countries that trade with the United States are suppressing the value of their currencies to gain a competitive advantage. No nation has been cited since China was named in 1994. Members of Congress from both parties have pushed the administration to take a harder line, arguing that China’s obvious manipulation has deleterious consequences for the American economy. China spent roughly $197 billion on foreign currencies in the first quarter of 2011 to hold down the value of its currency.
Releasing the report on the cusp of a holiday weekend, however, kept immediate criticism to a minimum because most members of Congress already had left town. (Summarized from a May 28, 2011 New York Times article.)
U.S. tour operators are excited over rules recently spelled out by the Obama administration that promise access to an all-but forbidden market under educational and people-to-people exchanges. New rules issued by the Obama administration will allow Americans wide access to communist-led Cuba, already a mecca for tourists from other nations.
“This is travel to Cuba for literally any American,” said Tom Popper, director of Insight Cuba, which took thousands of Americans to Cuba before such programs were put into a deep freeze seven years ago. But it won’t all be a day at the beach or a night at the bar. U.S. visitors may find themselves tramping through sweltering farms or attending history lectures to justify the trips, which are meant, under U.S. policy, to bring regular Cubans and Americans together. So-called people-to-people contacts were approved in 1999 under the Clinton administration, but disappeared in 2004 as the Bush administration clamped down what many saw as thinly veiled attempts to evade a ban on tourism that is part of the 49-year-old U.S. embargo.
Some familiar voices on Capitol Hill are already sounding the alarm about the new policy. “President Obama and the administration continuously say they don’t want more tourism and that’s not what they’re trying to do. But that’s exactly what’s happening,” said Miami Rep. Mario Diaz-Balart, who was born in Ft. Lauderdale to a prominent Cuban-exile family. He argued that more travel does nothing to promote democracy on the island. “The only thing it does is provide hard currency for a totalitarian regime,” he said.
Insight Cuba is one of at least a dozen travel groups that have applied for a license to operate on the island since details of the change were issued in April. If permission comes from Washington, it could begin trips in as little as six weeks, Popper said. Based on previous numbers, he believes he could take 5,000 to 7,000 Americans each year. In the past, people-to-people travel has included jazz tours, where participants meet with musicians during the day and take in jam sessions at night. Art connoisseurs could visit studios, galleries and museums. Architecture aficionados could explore Havana’s stately, but crumbling cityscape.
Many approved tours will likely be run by museums, university alumni associations and other institutions. They will target wealthy, educated Americans who can afford to spend thousands of dollars on a 10-day tour. Tens of thousands went each year under people-to-people licenses from 2000 to 2003. Anyone is eligible if they go with an authorized group. Cuban officials say privately they expect as many as 500,000 visitors from the U.S. annually, though most are expected to be Cuban-Americans visiting relatives under rules relaxed in 2009. That makes travelers from the United States the second biggest group visiting Cuba after Canadians, with Italians and Germans next on the list. Academic and religious travel from the U.S. is also increasing.
The guidelines published by the U.S. Treasury Department say people-to-people tours must guarantee a “full-time schedule of educational activities that will result in meaningful interaction” with Cubans. But a previous requirement to file itineraries ahead of time is gone, possibly making it difficult to police whether tours will follow the spirit of the law. When the Bush administration shut down people-to-people visits in 2004, it cited allegations the rules were being abused. U.S. officials vow to weed out frivolous trips.(Summarized from an AP article that appeared in the May 21, 2011 Miami Herald)
Christine Lagarde, the French Finance Minister, has launched her bid to become the next Managing Director of the International Monetary Fund. Ms. Lagarde, who has widespread support in Europe amid praise for her handling of the eurozone crisis, said she considered her nationality neither “a handicap or an advantage” in confirming her candidacy on May 25. The former U.S.-based corporate lawyer, 55, is the front-runner to succeed Dominique Strauss-Kahn, who resigned after a charge of sexual assault.
But growing consensus in the industrialized world over Ms. Lagarde has led to disagreement with emerging market countries, which argue the leadership of the Fund should no longer be reserved for a European. Her main rival is Agustin Carstens, Governor of the Mexican Central Bank, who has stated that he intended to carry “the flag of the emerging markets.” (Summarized from a May 26, 2011 Financial Times article)
Volkswagen AG will decide in the next 12 months whether it will build Audi luxury cars in the U.S. in addition to the VWs it has begun churning out at a new factory in Chattanooga, Tennessee, the company’s chief executive said on May 24. BMW AG andDaimler AG’s Mercedes-Benz division have U.S. assembly plants but each sells more than twice as many cars in the U.S. as does Audi. Volkswagen aims to nearly triple its U.S. sales to one million vehicles a year by 2018. The VW brand would account for sales of about 800,000 vehicles, and Audi for about 200,000. Last year VW sold 256,830 cars and light trucks in the U.S. and Audo 101,629 vehicles. (Summarized from a May 25, 2011 Wall Street Journal article)
Absinthe, the drink that inspired artists and poets from Vincent van Gogh to Arthur Rimbaud, looks set to return to its spiritual home after French lawmakers reversed the country’s century-old ban against the drink known as the “green fairy.” It was villified - and romanticized - for its potency and supposed halucinogenic qualities.
Assuming the repeal of the ban, first enacted in 1915, is promulgated in May by Nicolas Sarkozy, France’s teetotal president, producers of the spirit expect a boom in sales. George Rowley, managing director of British manufacturer La Fee, reckons the currently tiny market could reach $500 million to $1 billion within five years. Today’s market is a paltry $40 million a year, Mr. Rowley reckons. but it is growing rapidly as countries around the globe lift bans that were imposed partly as a result of temperance movements and partly following lobbyng by rival alcoholic drink makers.
The French move to lift the ban followed a 2009 bid by Switzerland to earmark absinthe as a regional product under the European geographical protection scheme, which covers products such as Parma ham and Roquefort cheese. Absinthe’s historic home - argued the French - is Pontarlier, a town within a few kilometers of the Swiss border.
Opposition to the Swiss move spurred the legal partial rehabilitation of the drink. In 2000. La Fee became the first brand to distill in France since the drink’s banishment, working together with the curator at France’s Musee d L’Absinthe. The company availed itself of the waiver that allows production for export purposes. Its biggest market is the U.S., which Pernod reckons accounts for half of all sales globally. (Summarized from an article in the April 23 issue of theFinancial Times.)
The U.S.’s ten largest corporations in 2010 in terms of revenues (in billions of $) were: (1) Wal-Mart Stores - $421.8; (2) Exxon-Mobil -$354.6); (3) Chevron - $196.3; (4) ConocoPhillips - $184.9; (5) Fannie Mae - $153.8; (6) General Electric - $151.6; (7) Berkshire Hathaway - $136.1; (8) General Motors -$135.6; (9) Bank of America - $134.2; (10) Ford - $128.9 (Fortune 500, May 23, 2011, Fortune)
Louisiana’s three largest corporations in 2010 in terms of revenues were: (1) Entergy (ranked 213) - $11.5 billion; (2) CentruyLink (ranked 334) - $7.04 billion; (3) Shaw Group (ranked 336) - $7.00 billion. (Fortune 500, May 23, 2011, Fortune)
Chinese investors are snapping up gold bars and coins, buying more than ever before in the first quarter of 2011 and overtaking Indian buyers as the world’s biggest purchasers of the metal. China’s investment demand for gold more than doubled to 90.9 metric tons in the first three months of the year, outpacing India’s modest rise to 85.6 tons, the World Gold Council said in its quarterly report on May 19.
China now accounts for 25 percent of gold investment demand, compared with India’s 23 percent. Historically, India has been the largest investment market for gold. In 2007, just before investing in gold began to take off globally, India’s physical gold demand accounted for 61 percent of the world’s total. China’s was 9 percent. In terms of total consumer demand, however, which also included jewelry, India is still a bigger consumer of gold than China, taking in 291.8 tons in the first quarter, compared with China’s 233.8 tons.
Global gold investment demand rose by 52 percent to 366.4 tons in the first quarter, helping offset a 56-ton outflow from exchange-traded funds, which are popular tools in the West. As the world’s largest gold producer, China chruned out 350.9 tons in 2010,but it wasn’t enough to sate demand - including bullion, jewelry, and technology uses - of more than 700 tons, according to the gold council’s report.
As demand continues to outpace supply, analysts expect China to import more bullion. Note: the gold council’s report covers only private-sector demand, but one wild card for the world’s gold market is how much gold Chjina has been adding to its foreign reseves. Governments tend to annnounce their purchases after they buy. (Summarized from a May 20, 2011 Wall Street Journal article)