Oil price steadies despite Saudi Arabia protest fears

Oil prices had risen 2% in early trading, due to the shutdown of Libyan production as well as fears that unrest might spread to Saudi Arabia itself.

But prices fell back again after Saudi state oil company Aramco announced that all demands for extra oil had been met.

Sentiment was also boosted by news that the eastern Libyan port of Tobruk had reopened and a Chinese tanker was being loaded.

By 1800 GMT, Brent crude was slightly higher for the day at $112.28, while US light, sweet crude was down 0.5% at $97.83.

Brent had earlier reached $114.50 - still well below its Thursday peak of $119.80 - while US light, sweet crude hit $99.50.
Control of oil fields

Also on Monday, the European Union's Energy Commissioner Guenther Oettinger said that most of Libya's oil fields were no longer under the control of Libyan leader Colonel Muammar Gaddafi.

"There is reason to believe most of the oil and gas fields are no longer under Gaddafi's control," Mr Oettinger told a news conference.

"Instead we have provisional [regional] leaders who have taken control," he said, adding there was therefore no point in blockading Libyan energy shipments.]

"We would be punishing the wrong people," he said.

Mr Oettinger was speaking after EU ministers approved a package of sanctions against Colonel Gaddafi in response to his attempts to suppress anti-government unrest. The sanctions included an arms embargo, asset freezes and travel bans.
Stock market fall

Meanwhile, the world's biggest shipbroker Clarkson said that oil cargoes were still leaving Libya, with a majority of its loadings going normally.

Nevertheless, Shukri Ghanem, head of the state-run National Oil Company and Libya's de facto oil minister, said that the country's oil production had been cut by about 50%, although some estimates say oil output has fallen by up to 75% due to the revolt.

Whatever the shortfall, the Saudis have promised to make up for it.

However, on Sunday, the Saudi stock market fell 5% after 119 academics, activists and businessmen wrote an open letter to the king demanding reform.

The Tadawul all-share index has fallen a cumulative 10% in the last two weeks to its lowest level in six months, prompting some Saudi investors to call on the government to intervene to steady the market, or even to close it.

The index had recovered early losses and remained largely unchanged for the day on Monday.

The news comes as the Egyptian stock exchange is set to reopen on Tuesday after a month-long closure due to the popular uprising there, although protesters continued to gather outside the stock exchange building intent on forcing another delay.
'Spike and crash scenario'

Libyan supply could be knocked out for months, according to a report by US investment bank Merrill Lynch.

The Wall Street firm said that as much as 1.2 million barrels-per-day of production may have been shut down already, and that production facilities in the west of the country were prone to attack by government or opposition forces, which would lead to a prolonged output loss.

There remained a substantial risk that oil prices could move sharply higher, undermining the global economic recovery, the research piece warned, and the market only had limited ability to withstand further unrest in the Middle East.

"The combination of a substantial run-up in demand coupled with a very severe supply shock makes a spike and crash scenario increasingly likely for global oil prices and the world economy," it said.

The investment bank said that a 10% rise in oil prices - if sustained - would lead to a 0.5% reduction in global oil demand.
Saudi 'day of rage'

The letter to the Saudi king complained about the prevalence of corruption and nepotism and a widening gap between state and society.

Meanwhile a Facebook site calling for a "day of rage" in Saudi Arabia on 11 March has seen its number of subscribers increase from 400 to 12,000 in recent days.

Analysts fear the kingdom may face the same volatile generational schism that has affected Egypt and elsewhere.

Two-thirds of the Saudi population is aged under 30.

Youth unemployment is about three times the national average and there is an 18-year waiting list for government-provided housing.

The threat of protests has already wrung concessions from the 87-year-old King Abdullah, who only recently returned from three months of medical treatment in the US.

He has offered permanent work contracts to an estimated 50,000 state workers, and spent $36bn (£22.3bn; 26.1bn euros) of the country's $440bn in currency reserves on social initiatives, including a 15% pay rise for public sector employees.

Not only is it the world's biggest producer, with the world's largest reserves by far, but the country is also a key "swing producer" within the Organisation of Petroleum Exporting Countries (Opec), retaining most of the world's spare production capacity.

The kingdom accounts for the bulk of Opec's additional 4.7 million barrels-per-day available, compared with Libya's exports estimated at 1.5 million.

Meanwhile violence flared on Sunday for the first time in non-Opec Oman - which produces about 865,000 barrels-per-day - as police cracked down on pro-democracy demonstrations there.

Shutdown: Washington gets ready

Washington has started getting ready for a possible government shutdown.

Behind the scenes, federal agencies are working on their plans for shutting down operations and deciding how many workers they need to perform essential operations.

Washington has started getting ready for a possible government shutdown.

Behind the scenes, federal agencies are working on their plans for shutting down operations and deciding how many workers they need to perform essential operations.

Dudley: Don't blame Fed for recent price hikes

The Federal Reserve is not to blame for the rise in global commodity prices and it should continue its controversial purchases of Treasuries, according to New York Fed President William Dudley.

Speaking at New York University on Monday morning, Dudley challenged the assumptions that the recent rise in oil, food and other commodity prices is the fault of the Fed -- which has been pouring money into the economy with its recent purchases -- or that there is a risk of a U.S. inflation outbreak.

He argued the U.S. economy is still too weak to have higher prices take hold, although he did acknowledge that the "economic outlook has improved considerably" since the Fed started a program in November to buy $600 billion long-term Treasuries.

That policy, known as quantitative easing, or QE2 for short, has been under frequent attack since it was announced. Critics -- including some within the Fed -- worry that pumping so much cash into the economy will spark inflation.

"The natural debate now is whether to complete the program, or to taper off to a somewhat lower level of asset purchases," St. Louis Fed President James Bullard said in a speech Thursday.

But on Monday Dudley argued against any early end to QE2. "Faster progress...would be very welcome and need not require an early change in the stance of monetary policy," he said.

In answer to a questioner who suggested that inflation is now the major U.S. export, Dudley said he strongly disagreed. Instead he pointed to political disruptions in the Middle East, bad food harvests and the rapid growth of major developing economies, such as China and India, as reasons for the rising commodity prices.

In fact, Dudley argued it is very unlikely that rising commodity prices will bleed into core inflation readings, which exclude such volatile segments as food and energy.

He said even if the U.S. economy started adding 300,000 jobs a month, far above recent gains, there would still be significant slack in the labor markets at the end of 2012. "The economy can be allowed to grow rapidly for quite some time before there is a real risk that shrinking slack will result in a rise in underlying inflation," he said.

He sees the only significant risk of inflation coming from an increase in inflation expectations by businesses and investors. But he said he's confident that the Fed has the tools it needs to reign in inflation quickly if necessary.

"If inflation expectations were to become unanchored because Federal Reserve policymakers failed to communicate clearly, this would be a self-inflicted wound," he said.

Still, NYU economics professor Thomas Cooley said Dudley's speech won't do much to convince the so-called "inflation hawks" among Fed policymakers.

Military health costs up 300%

The cost of military health care, up 300% in the past decade, is eating a giant hole in the Pentagon's budget, according to a report released Monday by a group of defense experts.

The Defense Department expects to spend $52.5 billion on health care in 2012, a 300% increase since 2001, the report says. By 2015, health care will account for 10% of the Pentagon budget.
The eye-popping numbers have set alarm bells ringing inside the Pentagon.

The report, from the left-leaning Center for American Progress, lays out a way to cut $15 billion a year from the Pentagon's bloated health care budget.

The target: An insurance program called Tricare that accounts for much of the cost increase.

Currently, fees for some of the 9.6 million service members who participate in the program haven't risen since 1995. And enrollees pay rates far below what they would find in the private sector.
Defense spending: Slaying the sacred cow

Fees for one popular Tricare program -- called Tricare Prime -- stand at $38 a month, or $460 a year for an entire family. Individual retirees pay $230 a year.

The report advocates for a gradual increase in enrollment fees and deductibles for working-age retirees who can afford to pay.

It would also raise costs on retirees who use a program called Tricare for Life, which is a supplemental policy for veterans enrolled in Medicare.

Those enrollees would pay a $120 annual enrollment fee, and the program would no longer cover the first $500 in expenses, and would increase cost-sharing with Medicare.

The plan would also limit coverage for high-income working-age retirees, many of whom are able to secure insurance through their currently employer, but instead choose Tricare for its rock-bottom price, and it would peg premium levels to those of Medicare Part B.

The changes advocated in the report would not change health care services provided to active duty troops.
0:00 /01:13Buying Boeing

"While the Defense Department must continue to provide top quality care to our men and women in uniform -- and their dependents, and our military retirees -- the Pentagon's health care system simply cannot afford to continue on its current trajectory without undermining military readiness and increasing our already debilitating deficit," the report says.

The report's authors include Lawrence Korb, who served as assistant secretary of defense between 1981 and 1985, are not the only ones looking for ways to control costs. The Pentagon's 2012 budget request lays out its own proposal for cost control that includes a modest increase in enrollment fees.

The Pentagon has sought to modify Tricare in recent years, but has run up against strong opposition from members of Congress.

"In recent years the department has attempted modest increases in premiums and co-pays to help bring costs under control, but has been met with a furious response from the Congress and veterans groups," Defense Secretary Robert Gates has said. "The proposals routinely die an ignominious death on Capitol Hill."

NFL ticket prices on the rise

The average ticket price for professional football games increased 4.5 percent this year to $76.47, even as some teams struggled to fill every seat.

The increase comes largely at the expense of the fans of the New York Jets and New York Giants, who face ticket price increases of 38.1% and 26.0% respectively. Both teams play in a $1.6 billion new stadium in New Jersey.

But prices pushed higher despite 15 NFL teams either keeping rates steady or lowering prices, according to a survey conducted by Team Marketing Report, a group that tracks ticket prices.

In fact, only nine of the NFL's 32 teams have prices above the league average, with New England Patriots fans forced to fork over the most cash for a ticket: $117.84.

David Carter, executive director of USC's Sports Business Institute, said the tough economy is certainly playing a role in pricing decisions made by management, and that some teams soften the blow of a price increase by including price breaks on concessions or parking.

But fans that buy tickets as part of season ticket packages should consider themselves lucky. The increase in the average face value of tickets is dwarfed by resold tickets in the secondary market.

The average price of a resold ticket to an NFL game is up nearly $100 from last year, according to data from FanSnap, a website that acts as a search engine for tickets that are resold online.

Success on the field seems to be pushing those prices higher. Tickets for reigning Super Bowl champion New Orleans Saints games increased 264%, to an average of price of $404.

But the rising prices may become a problem for teams. That's because it could lead to unsold seats and more television blackouts, which tend to further alienate fans. If tickets don't sell out within 72 hours of game time, the games are not shown on television in the team's home market.

One team already hit by a blackout, the Tampa Bay Buccaneers, is offering discounts in order to increase attendance.

According to team spokesman Jonathan Grella, the sales problem is grounded in economic conditions.

"This area is struggling and it's unfortunate," Grella said. "We're hoping that when economic conditions improve, our fans will return to the stadium."

Bank of America, Wells Fargo, JPMorgan Lead Rebound in Hiring

Wells Fargo & Co. and JPMorgan Chase & Co. are among financial firms that added employees last year as the industry adjusted to an expanding economy and demands imposed by new U.S. regulations.

Bank of America, the biggest U.S. lender, counted 288,000 employees in its annual report for 2010 to securities regulators, an increase of 4,000, or 1.4 percent. Wells Fargo, the biggest U.S. mortgage lender, increased headcount by 4,900, or 1.8 percent, to 272,200, according to its annual report. Bank of America’s workforce increased 17 percent in 2009, the year when Merrill Lynch & Co. was added, while San Francisco-based Wells Fargo dropped almost 5 percent that year.

Banks reported a 77 percent increase in earnings in 2010, according to data compiled by Bloomberg. Improved asset quality and a decrease in loan-loss provisions contributed to the earnings growth, according to a report last week from the Federal Deposit Insurance Corp. Bank of America, based in Charlotte, North Carolina, put aside $28.4 billion for bad loans in 2010, down 41 percent.

“There was good talent out there at the right price,” said Eric Moskowitz, head of market intelligence in the global financial-markets practice of Los Angeles-based executive search firm Korn/Ferry International. “A lot of banks cut pretty deep in 2008 and 2009, and they needed to staff-up.”

AmEx Headcount

JPMorgan, the second-largest bank, may file its annual form 10-K later today. Data accompanying the New York-based company’s fourth-quarter earnings report in January showed 239,831 employees, an increase of almost 8 percent from a year earlier.

American Express, the biggest credit-card issuer by purchases, increased its workforce by 2,700, or 4.6 percent, to 61,000 in 2010, according to a filing today by the New York- based firm. In 2009, the staff shrank 12 percent. Citigroup Inc., the third-largest bank by assets, cut jobs by 5,300, or 2 percent, to 260,000 in 2010. New York-based Citigroup has been shrinking as it recovers from the financial crisis.

Banks are adding employees to help ensure they’re in compliance with new laws such as the Dodd-Frank overhaul of the financial industry that passed last July, Moskowitz said. The act creates a consumer bureau at the Federal Reserve, a council of regulators to monitor firms for systemic risk to the economy and a mechanism for liquidating large financial firms whose collapse could threaten economic stability.

“It’s a very nuanced regulatory environment, not just for the U.S., but globally, so you need people on the ground in different regions because the regulations are so in flux and varied,” Moskowitz said.

Bank of America, ranked second in home loans and first in mortgage servicing, hired and trained about 12,000 people to modify loans over the past two years to help homeowners struggling to keep up with payments. About 58,200 were employed in the home loans and insurance unit, according to the filing.

Obama Tells Governors Public Workers Must Not be ‘Vilified’

President Barack Obama said public employees shouldn’t be “vilified” or lose collective bargaining rights as states seek to balance their budgets.

The president, speaking to a bipartisan group of the nation’s governors at the White House, said that while everyone will need “to give up something” to bring state and federal spending into line, government workers shouldn’t have to bear the entire burden.

The president didn’t specifically mention the battle in Wisconsin between the state’s Republican governor, Scott Walker, and unionized state workers that has sparked protests in Madison.

Walker wants to let public workers bargain only over wages. He also proposes to double their health-care premiums and would require them to start paying part of their pension costs. The minority Democrats in the state Senate have fled Wisconsin to block passage of the legislation.

The fight is likely to spread to other states, including Ohio, which will be a key battleground in the 2012 presidential election. Unions are a prime Democratic Party constituency and the workers in Wisconsin have gotten help from Obama’s political organization and aligned political advocacy groups such as MoveOn.org.

Obama earlier this month called Walker’s proposal an “assault on unions.” Walker stayed in Wisconsin and didn’t attend the three-day conference of governors in Washington.

‘Shared Sacrifice’

In a meeting with governors at the White House today, Obama said “everybody should be prepared to give up something” to solve state budget problems. He said “most public servants agree with that,” Democrats and Republicans.

He called on states to invoke a practice of “shared sacrifice” where “everyone should be at the table.”

“If all the pain is borne by only one group, whether it’s workers or seniors or the poor, while the wealthiest among us get to keep or get more tax breaks, we’re not doing the right thing,” he said. “I don’t think it does anybody any good when public employees are denigrated or vilified or their rights are infringed upon.”

He said doing so will make it more difficult to attract the best teachers for public schools or recruit firefighters and police officers.

Obama also used his address to the governors to defend his budget priorities. He said the federal government, like the states, must get spending under control. Still, he said, that shouldn’t be done by cutting spending for education, building infrastructure and encouraging innovation.

The U.S. can’t “sacrifice our future” by trimming in those areas because it will make the country less competitive in the global economy, Obama said.