Competitors to Keystone Pipeline moving forward and other top news stories of the day
Competitors to Keystone Pipeline moving forward
Two energy firms are building pipelines that will allow them to move 850,000 barrels of crude oil from Canada to the Gulf of Mexico by mid-2014, according to the Wall Street Journal. Enterprise Products Partners LP and Enbridge, Inc. own the Seaway Pipeline which is in the process of reversing its flow. They will build a new 30 inch pipeline in the same right of way as the Seaway Pipeline. They will not face as many hurdles as the Keystone Pipeline, however, because their cross border portions are already built so no State Department approval is required. They will need approval from the US Federal Energy Regulatory Commission and the Army Corps of Engineers. Pipelines carrying oil tar sands products must be built differently because they are more likely to spring leaks but these firms have already complied with these needs in existing pipelines. The Energy Information Administration indicates that North American oil production will increase by 20 percent by 2020.
Bernanke's comments lead to positive day for markets
Comments made yesterday by Federal Reserve Chairman Ben Bernanke in a speech moved the markets to an increase of 160 points to close at 13,241, according to CNBC. The comments suggested that interest rates will remain steady until 2014. Asian markets are up on Tuesday while European markets are negative.
Earthquake hits Japan
A 6.4 earthquake has hit Japan, but there are no warnings regarding a tsunami, according to the Associated Press.
OECD demands stronger European firewall
Angel Gurria, the head of the Office for Economic Cooperation and Development, has demanded that the EU build an economic firewall of more than 1 trillion euros, or $1.3, to protect the European economic system. This is in contrast to the 500 billion euro firewall being recommended by the IMF and the head of the EU, according to the Associated Press. There will be a meeting in Copenhagen of Friday of European leaders to discuss the amount of the European firewall. Countries such as Germany believe that if the firewall is too large some countries will fail to implement the required austerity measures.
Banks demand that the Fed discloses the math behind stress tests
Large banks in the US are demanding that the Fed disclose the math calculations behind the recently released stress tests, according to the Wall Street Journal. For many banks, even those that passed the stress tests, their capitol ratio calculations were much different than those released by the fed. This makes it difficult for banks to make decisions regarding dividends or stock buybacks. The Fed, however, believes that disclosure of the calculations will allow banks to manipulate future numbers. Those banks that failed the stress tests, such as Citi, MetLife, Ally and SunTrust are particularly angry that the mathematics are not clearly disclosed.
Iran increasing wheat imports
Iran is ramping up its imports of wheat, fearing more sanctions from the US and its allies over Iran's development of nuclear capabilities. The Wall Street Journal reports that Iran has imported greater amounts of wheat from the US, Australia, Brazil and Kazakhstan and is currently negotiating with India. Iran has 78 million citizens and it fears that rising food prices might increase unrest as has happened in other Middle Eastern countries. The cost of flatbread in Iran has risen 30 percent in recent months. Treaties generally allow food imports to continue between countries despite other sanctions. The US Department of Agriculture indicates that Iran has purchased 2 million metric tons of wheat in the past year from the US, much higher amounts than normal. Iran fears that increasing sanctions and the falling value of its currency will make imports more difficult in the future. With the denial of banking privileges worldwide, Iran will soon be forced to pay for imports via middle men.
Airlines raise fares.....again
Citing rising fuel costs, Southwest Airlines was the first to raise fares yesterday with an increase of $4-10 per roundtrip ticket, according to USA Today. The other airlines, including United, American, Delta, and US Airways followed within hours. This followed a $2 fare increase by JetBlue over the weekend. This is the fifth time this year that airfares have increased. Last year the airlines increased fares 22 times. Experts say that not only are fuel prices involved, but airlines are seeing greater demand for seats with an improving economy.