Crude Oil Falls From One-Year to High as Dollar Pares Decline

From Bloomberg

By Rachel Graham and Christian Schmollinger

Oct. 20 (Bloomberg) — Crude oil fell from a one-year high as the dollar pared losses against the euro and OPEC said it wouldn’t be comfortable with oil at $100.

Oil traded above $80 as the dollar index, which measures the U.S. currency against six major currencies, fell to its lowest since August 2008, boosting the appeal of commodities as a currency hedge. OPEC Secretary-General Abdalla El-Badri said the market is well-supplied with oil.

“We’re seeing weakness in the dollar,” Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich, said by phone from Vienna. “I would be skeptical of a $100 price based on the fundamental picture.”

Crude oil for November delivery fell as much as 55 cents, or 0.7 percent, to $79.06 a barrel in electronic trading on the New York Mercantile Exchange. It traded at $79.17 a barrel at 10:05 a.m. London time.

Earlier, prices rose as much as 44 cents, or 0.6 percent, to $80.05 a barrel in electronic trading on the New York Mercantile Exchange, the first time the front-month contract has traded above $80 since Oct. 14, 2008.

The November contract expires today. The more actively traded December future was at $79.63 a barrel, down 33 cents.

Prices have gained 78 percent this year, accelerating its climb as a recovery in stock markets emboldened investors and the sliding dollar prompted buying of commodities.

The U.S. currency traded as low as $1.4994 per euro, the weakest since August 2008. It then recovered to $1.4959.

‘No Shortage’

El-Badri said he doesn’t expect prices to reach three figures in the near future as there is “no shortage of oil supply.” The rally to more than $80 a barrel was driven by higher equities, the sliding dollar and speculation, he told reporters in London today.

The 125 million barrels of crude oil and oil products including diesel currently in floating storage is a concern for OPEC, he said.

“When we see that floating storage eliminated it means demand is coming,” El-Badri said. “We are seeing an $80 oil price that is a little bit high.”

U.S. gasoline and distillate fuel inventories probably declined for a second week, according to the median of seven estimates from analysts surveyed by Bloomberg News before an Energy Department report tomorrow.

Gasoline stockpiles are expected to have fallen 1.5 million barrels in the week ended Oct. 16. Oil advanced last week after the department posted an unexpected decline in supplies as refineries idled units. The 5.23 million-barrel drawdown was the steepest since Hurricanes Gustav and Ike shut refineries representing about a fifth of U.S. capacity in September 2008.

Heating Oil

Stockpiles of distillate fuels, a category that includes heating oil and diesel, declined 1.5 million barrels from 170.7 million, the survey showed. Crude oilinventories probably increased 1.5 million barrels last week from 337.8 million barrels.

The Energy Department is scheduled to release its weekly report tomorrow at 10:30 a.m. in Washington. The industry-funded American Petroleum Institute will put out its data today.

Brent crude oil for December settlement rose as much as 41 cents, or 0.5 percent, to $78.18 a barrel on the London-based ICE Futures Europe exchange. It was at $77.43 a barrel at 10:06 a.m. London time.

To contact the reporters on this story: Rachel Graham in Londonrgraham13@bloomberg.net; Christian Schmollinger in Singapore atchristian.s@bloomberg.net.

Last Updated: October 20, 2009 05:07 EDT

United States for sale for 400 billion barrels

http://articles.moneycentral.msn.com/Investing/Extra/HowMuchOilItdTakeToBuyTheUS.aspx

By Scott Burns

Most of us view the world through dollar glasses. It’s perfectly reasonable. Dollars, after all, are the currency we use in daily life. And those lenses, until recently, were distinctly rosy.

When we asked, “How much is that in dollars?,” we usually liked the answer.

But it may be time to ask another question: “How much is that in barrels of oil?”

Trust me, others are doing exactly that.

That’s when the world starts to look very different. It also looks more than a little scary to the U.S. Today, the net worth of the entire country is equivalent to a mere 400 billion barrels of oil. That’s a smidgeon less than the proven reserves of two Middle Eastern countries: Saudi Arabia (264 billion barrels) and Iran (139 billion barrels).

At more than 40 times its 1970 price, oil has outstripped the value created by a full working generation of Americans in a period of dramatic technological change and innovation. During the same time, the value of American business shares, as measured by the S&P 500 Index ($INX), has risen only about 15 times above its 1970 level.

I find that hard to believe. After all, in 1970 the Internet was only an arcane toy for academics. Computer memory was desperately expensive. Intel had just been formed and was introducing the first dynamic random access memory chip. Bill Gates had yet to enter (or drop out of) Harvard and was five years from founding Microsoft. Steve Jobs was years away from creating the Apple II and was decades from launching the iPhone. AT&T was still a single national company, owning all of the regional Bell companies.

No one was yet thinking the U.S. post office was a quaint institution, soon to be treasured for its many buildings that could be converted to trendy condos. Phone calls were expensive. Sears, Roebuck was an important retail stock, not a real-estate play by a hedge fund manager. All surgery was invasive. And it was still believed that stomach ulcers were caused by stress. Google founders Larry Page and Sergey Brin had not yet been conceived, let alone applied to Stanford, where they would create Google.

All of that dynamism and creativity pale against the price of oil. Looking as far back as 1970, America has never been worth less in barrels of oil.

I learned this by measuring the net worth of all U.S. households and nonprofit organizations in barrels of oil. Every three months the Federal Reserve estimates the value of our collective tangible assets, financial assets and liabilities to arrive at our net worth. It’s the whole enchilada — all our cars, our houses, our durable “stuff,” bank deposits, stocks, bonds and mutual funds. Everything. Then it subtracts all our mortgages, consumer credit and other debt to arrive at our net worth.

At the end of March, for instance, our collective net worth as a nation was $56 trillion, the second straight quarter it had dropped. Divide $56 trillion by the recent $140-a-barrel price of oil and you get 400 billion barrels of oil as the value of America, a fraction of our national value in 1998, 1995 or even 1990.

Either oil is too expensive or America is too cheap.
The value of the U.S., in barrels:

Year	Household net worth*	Price of oil	Barrels to buy America
1970	$3.4 trillion	$3.18	1.1 trillion
1975	$5.1 trillion	$7.67	670.3 billion
1980	$9.5 trillion	$21.59	438.6 billion
1985	$14.2 trillion	$24.09	589.7 billion
1990	$20.3 trillion	$20.03	1.1 trillion
1995	$27.7 trillion	$14.62	1.9 trillion
1998	$37.4 trillion	$11.18	3.3 trillion
2004	$48.1 trillion	$42.00	1.1 trillion
2007	$57.7 trillion	$120.00	481 billion
2008	$56 trillion**	$140.00	400 billion

*Includes nonprofits. **Through March. Sources: Federal Reserve, Bloomberg.

Questions about personal finance and investments may be e-mailed to scott@scottburns.com. Questions of general interest may be answered in future columns. More columns by Scott Burns can be found here and here.

Northwest Plans Job Cuts, Fees

http://online.wsj.com/article/SB121562661826339787.html?mod=googlenews_wsj

By DONNA KARDOS
July 9, 2008 2:32 p.m.

Facing fuel costs that have more than doubled in the past year, Northwest Airlines Corp. announced plans to cut its work force by 8.3%, charge fees for the first checked bag and frequent-flier award tickets, and raise fees for ticket changes.

The moves — which follows plans announced by Northwest last month to cut capacity late this year by 8.5% to 9.5% — mark the latest step by an airline to cut costs and pass some on to customers as fuel costs continue to rise.

The precipitous and seemingly unwavering climb in the costs of jet fuel has prompted carriers to pull flights off schedules and to scale back hiring and expansion plans while coming up with new ways to raise revenue.

Meanwhile, consumers can plan on shelling out considerably more money to fly, and they’ll have fewer choices when doing so. At the same time, they will be asked to pony up for services that once were part of the cost of a ticket.

“In order to manage through this unprecedented fuel challenge, we have to take action to both control costs and increase our revenue,” Chief Executive Doug Steenland said Wednesday.

Northwest said the capacity reductions announced in June would results in the elimination of 2,500 frontline and management jobs, with all employee groups being affected. Mr. Steenland called the reductions “the necessary actions we must take to right-size our airline and eliminate unprofitable flying.”

He added that the fee additions and revisions are expected to generate $250 million to $300 million a year.

AMR Corp.’s American Airlines, UAL Corp.’s United Airlines and US Airways Group Inc. have already begun charging $15 for each customer’s first checked bag. Northwest said it will begin charging the same fee, effective with tickets sold on or after July 10, for travel starting Aug. 28, throughout the U.S. as well as for travel between the U.S. and Canada.

Northwest will also charge $25 for a second checked bag and $100 for three or more checked bags. Frequent flier elites and full-fare coach passengers will be exempt.

The company is also matching competitors such as merger partner Delta Air Lines Inc. with a fee for award tickets. For award tickets issued in North America on or after Sept. 15, Northwest will charge $25 for domestic tickets, $50 for trans-Atlantic tickets and $100 for trans-Pacific tickets.

Mr. Steenland, as Delta had, called the move temporary. “As fuel comes down, we will revisit this decision,” he said.

The move to raise fees for ticket changes follows similar moves by American, United, Continental Airlines Inc. and US Airways. Effective Wednesday, nonrefundable ticket changes will have a fee of $150, up 50%. International ticket change fees will increase another $50 to $150 per ticket.

Shares of Northwest, which like other airlines surged Tuesday amid a drop in crude-oil futures, were recently down 11% to $6.65.

Write to Donna Kardos at donna.kardos@dowjones.com

Oil Falls More Than $2 on Reports of European Economic Weakness

http://www.bloomberg.com/apps/news?pid=20601087&sid=axEL9iKKEFHs&refer=home

By Margot Habiby

July 7 (Bloomberg) — Crude oil fell more than $2 a barrel amid signs economic growth is slowing across Europe because of record commodity prices, which may curtail energy demand.

Oil dropped for the first session in four as German production, adjusted for seasonal swings, fell 2.4 percent from April, the biggest decline since February 1999, and the index of U.K. manufacturing production unexpectedly decreased to the lowest since September, slipping 0.5 percent from a month ago.

“There has been a lot of focus on how weak the U.S. economy is without necessarily recognizing that the European economy may be weakening, the Japanese economy may be weakening,” said Tim Evans an energy analyst for Citi Futures Perspective in New York. “It’s not only about the U.S.”

Crude oil for August delivery fell $2.60, or 1.8 percent, to $142.69 a barrel at 1:48 p.m. on the New York Mercantile Exchange. Oil reached a record $145.85 on July 3. Prices have more than doubled in the past year. U.S. markets were closed during the U.S. Independence Day holiday on July 4.

Earlier, oil declined as much as 4 percent as the dollar rose to the highest against the euro in a week amid speculation that leaders from the Group of Eight industrialized nations may signal support for the dollar and address high energy prices.

President George W. Bush said yesterday that “the U.S. believes in a strong-dollar policy.”

The euro fell to $1.5611 against the dollar, the lowest since June 25, before trading at $1.5743 as of 1:40 p.m. in New York.

“Whenever the dollar strengthens, that makes commodities more expensive for everyone else in the world,” said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut. “It makes them less willing to buy oil.”

G-8 Summit

Leaders from Canada, France, Germany, Italy, Japan, Russia, the U.K. and the U.S. will also likely consider the effect of high energy prices on the global economy at their three-day summit in Japan.

Italian Prime Minister Silvio Berlusconi said today that deposits required to trade oil futures should be raised to discourage speculation, amid fears by “some” G-8 leaders that oil prices will reach $200 a barrel.

Also pressuring prices were comments by Iranian Foreign Minister Manouchehr Mottaki on CNN yesterday that talks about its nuclear program are “in a new environment” and “new approaches” with the U.S. are possible. Speculation of an attack on Iran that could disrupt exports from OPEC’s second-largest producer helped push oil to a record last week.

Iranian Talks

Iran’s nuclear program is an “unalienable right,” President Mahmoud Ahmadinejad said today, encouraging all countries to use atomic power to meet their energy needs. He spoke with Radio Televisyen Malaysia, the state-run broadcaster and Bernama, the official news agency in Kuala Lumpur. He is attending a summit of the Eight Islamic Developing Countries.

Heating oil for August delivery fell as much as 4.1 percent today, and gasoline futures were down as much as 3.8 percent.

The fewest Americans in three years may have traveled over the July 4th weekend as record gasoline prices and a slowing economy forced consumers to curtail spending, according to AAA, the largest U.S. motoring group. The number of people taking trips of at least 50 miles (80 kilometers) from home over the holiday weekend will fall 1.3 percent to 40.5 million, AAA said.

Regular gasoline at the pump, averaged nationwide, rose 0.1 cent to a record $4.108 a gallon, AAA said today on its Web site.

“Obviously, there’s some selling pressure here, some profit taking going on,” said Addison Armstrong, director of market research at TFS Energy LLC in Stamford, Connecticut. “The gasoline and heating oil are pretty weak.”

Brent crude oil for August settlement fell 64 cents, or 0.4 percent, to $143.78 a barrel on London’s ICE Futures Europe exchange. Futures climbed to a record $146.69 on July 3.

To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.

Last Updated: July 7, 2008 13:59 EDT

GM reportedly considering job cuts, brand sales

http://www.marketwatch.com/news/story/gm-reportedly-considering-job-cuts/story.aspx?guid=%7B9210C993-56C0-4F58-A88B-15F8561F0DB4%7D&dist=msr_5

SAN FRANCISCO (MarketWatch) – General Motors Corp. shares jumped as much as 7% Monday on word that the struggling automaker is about to rack up more white-collar job cuts and is mulling whether it’s time to trim its brand portfolio. But GM’s stock, a component of the Dow Jones Industrial Average, reversed course in midday trades to follow the broader market lower, down less than 1%. The shares are off by 72% in the past year, compared to an 18% decline in the blue-chip benchmark.

Facing steep vehicle sales drops amid soaring gas prices and plunging consumer confidence, the Detroit giant is likely to present job cuts and other cash-raising steps to its board of directors in early August, according to the Wall Street Journal.

These potential measures are part of a broader re-evaluation aimed at returning the company to profitability in 2010, the paper reported, citing internal projections.

GM spokeswoman Renee Rashid-Merem would not comment on speculative points in the report but said the company believes it has sufficient liquidity and financial flexibility to meet its 2008 funding requirements.

Still, “next steps” taken by the company could include “further reducing structural costs, selling non-core assets, and retiming or eliminating other capital spending,” she said. “In addition, we will consider opportunistically executing financing transactions in the global capital markets, although we have nothing to announce today.”

GM recently put its Hummer division up for sale and could soon put another of its eight brands on the chopping block, saving billions in development costs for vehicles that have trouble moving off the lots, like those from Buick, Saturn and Saab.

In fact, the sale or shut down of any one of its brands, excluding core nameplates Chevrolet and Cadillac, is on the table, The Journal reported.

Gimme Credit auto industry analyst Shelly Lombard said she believes that GM will try to raise between $5 billion and $10 billion within the next six to 12 months, warning that it won’t be easy in the current credit environment.

“Considering that everything that can go wrong usually does …, we believe GM needs to raise $10 billion, even if just to settle the market’s nerves,” she said in a note to clients.

Any such moves would come in the wake of a historically dismal run for the automaker, which has brought the share price down to levels not seen since the 1950s. Brokerage firms like Merrill Lynch have told clients to unload their position and have even raised the red flag of a potential bankruptcy, further pressuring the broader auto sector. See full story.

“It looks like we are seeing that ‘run on the bank’ with respect to the automakers,” Wall Street Strategies analyst David Silver said, adding that GM is still his industry favorite. “I think the sell-off is completely overdone, but wouldn’t try to catch this falling knife. I think that GM has enough liquidity and cash to make it through this situation…”

Even if the company has plenty of cash or even raises more, it will still have to find a way to bring buyers back to its showrooms. GM reported an 18% drop in June U.S. vehicle sales, as end-of-the-month promotions weren’t enough to stem the decline.

U.S. Stocks Retreat, Led by Banks; Fannie, Freddie Shares Drop

http://www.bloomberg.com/apps/news?pid=20601087&sid=aKghDn0KVzM8&refer=home

By Eric Martin

July 7 (Bloomberg) — U.S. stocks fell, sending the Standard & Poor’s 500 Index into a bear market, as concern that banks will be saddled with more losses from mortgage debt erased the biggest gain in three weeks.

Fannie Mae and Freddie Mac, the two largest U.S. providers of financing for home loans, tumbled on speculation they will be forced to raise more capital. JPMorgan Chase & Co. and Citigroup Inc. also retreated, sending the S&P 500 Financials Index to its lowest level since October 2002. Exxon Mobil Corp. and Schlumberger Ltd. dropped as crude slid.

The S&P 500 lost 17.15 points, or 1.4 percent, to 1,245.75 at 2:01 p.m. in New York, extending its plunge from an October record to more than 20 percent. The Dow Jones Industrial Average sank 118.63, or 1.1 percent, to 11,169.91, erasing a rally of almost 111 points. The Nasdaq Composite Index fell 24.53, or 1.1 percent, to 2,220.85. Four stocks dropped for each that rose on the New York Stock Exchange.

“The realization of the depth of the credit crunch and depth of the financial crisis is really starting to stick,” said Walter Prendergast, a New York-based money manager at Paradigm Capital Management Inc., which oversees $2 billion. “It’s not time to believe that the end is near.”

Stocks rose earlier as the retreat in oil prices boosted the outlook for corporate profits and the S&P 500 traded at the cheapest relative to earnings since April, its best month in five years.

Fannie, Freddie

Fannie Mae tumbled $2.89, or 15 percent, to $15.89. Freddie Mac retreated $3.04, or 21 percent, to $11.46.

Lehman Brothers Holdings Inc. analysts said in a report today that an accounting change may force Fannie Mae to add $46 billion of capital and Freddie Mac to add $29 billion. Speculation that the companies may need to make further writedowns also weighed on the stock, said John Tierney, a credit strategist at Deutsche Bank AG in New York.

JPMorgan, the third-largest U.S. bank by assets, tumbled $1.31, or 3.7 percent, to $34. Citigroup, the biggest, lost 70 cents, or 4.2 percent, to $16.12.

Companies that invest in mortgage bonds dropped. Crystal River Capital Inc., a New York-based investment trust that owns securities backed by residential and commercial loans, plunged 32 percent to $2.29, the biggest drop since its 2006 initial public offering. New York-based Annaly Capital Management Inc. slid 9.7 percent to $14.09, an 11-month low. Capstead Mortgage Corp. lost 11 percent to $9.62.

The S&P 500 Financials Index fell 4.1 percent as 88 of 89 of its companies declined.

$401.8 Billion

The credit-market contraction has costs banks and brokerages worldwide at least $401.8 billion of writedowns since the beginning of last year, according to data compiled by Bloomberg.

Profits at financial companies fell 60 percent on average in the second quarter, according to analyst estimates compiled by Bloomberg.

Alcoa Inc. is scheduled to report second-quarter results tomorrow after the close of U.S. trading, beginning an earnings season that will probably mark the longest streak of consecutive profit declines for S&P 500 companies since 2002. The world’s third-largest aluminum producer may say profit dropped 19 percent to 66 cents a share, according to consensus estimates compiled by Bloomberg. Alcoa added 28 cents to $33.06.

Earnings Watch

Earnings for all S&P 500 companies probably shrank for a fourth straight quarter, falling 11.2 percent, according to the average estimate of analysts surveyed by Bloomberg. General Electric Co., which in April posted its first quarterly earnings decline in five years, is expected to announce results on July 11. GE may say profit decreased 2.7 percent to less than 54 cents a share, according to analysts’ estimates.

Energy companies were the second-biggest drag on the market after financials. Exxon, the biggest U.S. oil producer, retreated $1.23 to $87.04. Schlumberger, the largest oilfield-services company, sand $2.42 to $99.46.

Yahoo Inc., operator of the most-visited U.S. Web site, jumped $1.83, or 8.6 percent, to $23.18. Microsoft Corp. said it may try to buy the search business or the whole company if investor Carl Icahn succeeds in replacing Yahoo’s board. Microsoft has been in talks over the past week with Icahn, who controls about 69 million Yahoo shares, or about 5 percent.

Stocks climbed in Europe and Asia following a rout that left global equities at the cheapest valuations in at least 13 years.

To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.

Last Updated: July 7, 2008 14:02 EDT

G8 focuses on food, fuel and finance

http://www.gulfnews.com/world/Japan/10226820.html

AP
Published: July 07, 2008, 09:13

Rusutsu: The world’s top industrialized nations faced demands at their annual G8 summit on Monday to reinvigorate the stumbling world economy, push ahead
languishing climate change talks, and make good on pledges to battle poverty and hunger.

Leaders from the Group of Eight – the United States, Japan, Germany, Britain, France, Canada, Italy and Russia – began gathering in the northern Japanese resort village of Toyako on Sunday for three days of meetings among themselves and with heads of African nations and rapidly developing countries such as China.

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The summit also coincides with demanding foreign policy issues such as the effort to strip North Korea of its nuclear weapons, mounting international pressure on Iran to stop its uranium enrichment program, and the threat of UN Security Council sanctions on Zimbabwe over its recent one-sided presidential election runoff.

The meeting’s Japanese hosts poured security agents and riot police – about 20,000 of them – into the isolated venue and surrounding towns, sealing access to the summit hotel and cloistering the 5,000 journalists covering it at Rusutsu, a resort 20 miles away.

Protesters were limited to rural villages or the distant city of Sapporo.

Despite the demanding agenda, concerns were high that the political uncertainties in some member countries – particularly the United States, where President George W. Bush is 200 days away from the end of his term – could prevent decisive action. The leaders of France, Japan and Britain also face domestic problems.

Bush urged his fellow leaders Sunday to push forward stalled talks on world trade in the so-called Doha Round and to pour more aid into Africa, after a bilateral meeting with Japanese Prime Minister Yasuo Fukuda.

Climate change Is a top agenda item for the summit. UN-led talks aimed at forging a new global warming accord by the end of 2009 have stalled because of deep disagreements over what targets to set for greenhouse gas reductions, and how much developing countries such as China and India should be required to participate.

With global oil prices surging, the G8 leaders are expected to urge major oil producers to increase supplies while also calling for steps to improve energy efficiency and develop alternative sources of energy. Oil spiked to a record US$145.85 a barrel last Thursday.

It was unclear how effective a call by the G8 to boost oil production would be when the group does not include Saudi Arabia, the world’s largest exporter of crude, or any OPEC members.

In a measure of the expectations on the group, Pope Benedict XVI on Sunday urged the G8 to help the world’s poor.

“Many voices have been raised asking G8 leaders to realize the commitments made at previous G8 appointments and to courageously adopt all necessary measures to conquer the plagues of extreme poverty, hunger, disease, illiteracy,” Benedict said in a speech at Castel Gandolfo near Rome.

Inflation leaves Delhi’s beggars no choice

http://www.gulfnews.com/world/India/10226789.html

IANS
Published: July 07, 2008, 00:02

New Delhi: Beggars are beginning to feel the pinch in the capital and they reckon skyrocketing inflation is to blame.

Mendicants making do near the city’s traffic intersections are suddenly finding motorists reluctant to part with the small change.

“Six months ago, I used to make Rs70-Rs80 (Dh6-Dh6.8) every day. Now things have changed. If I get Rs50, I am happy,” said Santosh, whose operates near Connaught Place.

“Everything is costly. A thin flat bread costs Rs2. Nobody wants to cough up money for us,” he says.

He is not sure of his age, but nods when told that he could be 18 to 20. Though not handicapped, his fragile body makes him fit for begging on the city’s streets.

Shivram, 20, who seeks alms at the Karkardooma traffic intersection in east Delhi, concurs that beggary no longer guarantees sustainable livelihood.

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“I just make some money to meet both ends meet. That’s all,” he says.

Ratan Lal drives a three-wheeler to earn his livelihood. After paying the vehicle owner Rs250 each day, he is left with Rs200 to Rs250 on an average.

Rising costs

“A year back – when a kilogram of flour used to cost Rs7-8 as against Rs16-18, earning Rs250 was considered decent. Now, with prices of food stuff having risen almost 100 per cent, earnings are still static,” says Lal, a resident of Kalyanpuri in east Delhi.

Even with comparatively better incomes than last year, he said, people like him have been winded by inflation-driven expenses.

Dharma Rao, a middle-rung government employee, has drastically cut his expenses on clothing, outings and accessories to balance his house budget.

“My income is fixed. I have rationalised expenses to generate extra Rs1,500 to Rs2,000 per month to meet essential requirements. Inflation has played havoc with my budget,” he said.

Rao does not buy the government’s argument that the current bout of inflation is driven by high prices of crude oil and therefore not controllable.

Mismanagement

“It is more a mismanagement of the economy than anything else. Retailers are fleecing the customers. Goods are being sold at maximum retail prices. The government must look into this aspect,” he said.

The finance ministry said in a statement on Friday that high inflation, which touched 11.63 per cent for the week ended June 21, was being driven by high crude oil prices.

Secret World Bank Report Blames Biofuels for Food Price Spike

http://blog.wired.com/wiredscience/2008/07/world-bank-blam.html

By Brandon Keim July 07, 2008 | 11:15:59 AM

Biofuel demand is the villain behind a catastrophic spike in global food prices, says a leaked World Bank report that was hidden for fear of embarrassing President Bush.

The report, obtained last week by the Guardian, tracked staple foods on a month-by-month basis since 2002. Their prices rose by 140 percent, of which 75 percent is directly attributed to demand for biofuels and speculation on crops and cropland.

The situation reached crisis in April, when global food riots broke out following a sudden jump in the cost of rice. Argument raged over the reasons, with biofuel defenders pointing instead at drought in Australia and increased energy and fertilizer costs were the real culprit — but the World Bank’s stark findings are the most conclusive to date.

A British government report scheduled for release today is expected to deliver similar conclusions.

Whether these reports signal a shift away from the dangerous biofuel darlings of corn, palm oil and soy — the centerpieces of industry and government biofuel initiatives — and towards more sustainable sources, such as algae and seaweed and agricultural waste, remains to be seen.

In coming days, I’ll ask the campaigns of Barack Obama and John McCain whether the new reports affect their biofuel platforms.

Lufthansa cuts regional flights as pilots strike

http://www.gulfnews.com/world/Germany/10226833.html

Agencies
Published: July 07, 2008, 13:39

Frankfurt: Hundreds of flights were cancelled by Lufthansa at its CityLine and Eurowings regional carriers on Monday, as pilots walked out in a 24-hour strike over pay.

Lufthansa said nearly 202 services were cancelled up until 1100 GMT. These cancellations could continue later during the day, a spokesman for the carrier said.

Passengers at airports across Germany, including Lufthansa’s main hubs Frankfurt and Munich, were affected by the strike which began at 2200 GMT on Sunday.