Archive for July, 2010

New Poll: Americans Support Energy Production, Oppose Unfair Taxes by a 3-1 Margin (PR Newswire)

Friday, July 30th, 2010 | Finance News

WASHINGTON, July 30 –

WASHINGTON, July 30 /PRNewswire-USNewswire/ -- A new survey released today by the American Energy Alliance (AEA) found that 77 percent of registered voters oppose efforts in Congress to tax American companies twice on income earned abroad. The poll also found that 3 out of 4 Americans agree that our energy companies should be allowed to continue offshore exploration for energy and, separately, that we should increase U.S. oil production. 

"These results may not be what the leaders on Capitol Hill want to hear, but it is no surprise that even with the tragic events unfolding in the Gulf, Americans recognize the realities of our nation's economy, the abundance of energy still available here in the U.S., and the overall exemplary safety record of our nation's drillers," AEA president Thomas Pyle said.

"AEA recently commissioned a study that showed 12,000 jobs would be lost and $2.8 billion in economic activity with it, because of the Administration's six-month moratorium in the Gulf. This unpopular and unnecessary ban is costing more jobs every day and will cost every American in terms of higher energy prices and increased reliance on energy from unstable foreign regimes.  Again, we urge the Administration to listen to the American people and reopen the Gulf to responsible energy development."

The survey, conducted by Jan R van Lohuizen from Voter/Consumer Outreach, comes at a time when the President and Congress are attempting to pay for environmental and other pet projects on the backs of American oil and gas companies.  Two specific changes to the tax code included in the President's 2011 budget and under discussion on Capitol Hill would have the impact of increasing the cost of energy in the U.S. and could lead to even more job losses in the energy sector.  The U.S. currently taxes the global income of its international companies, but provides a credit against domestic tax liability on that income in hopes of keeping American companies from being "double-taxed" on their overseas earnings. Targeting our own energy producers with this double-tax will weaken American energy companies' ability to compete with foreign energy companies.

Additionally, policymakers are looking to repeal Section 199 tax provisions which gives all businesses that manufacture goods within the U.S. an incentive to grow their U.S. operations and hire more U.S. workers.  Some in Washington are attempting to repeal these provisions just on the oil industry, essentially discriminating against energy jobs.  Today, the energy industry employs some 9 million workers.  However, many of these jobs could be in jeopardy if the Administration and Congress continue the drilling moratorium and impose new and onerous taxes on these companies. 

The survey also found that Americans overwhelmingly oppose new regulations on the energy industry and, instead, support efforts to better enforce existing laws (16%-75%).

The poll was commissioned by Save U.S. Energy Jobs, a project of the American Energy Alliance – a free market energy advocacy organization. To learn more and get exclusive information on upcoming projects, follow Save U.S. Energy Jobs on Twitter and Facebook.

Founded in May, 2008, The American Energy Alliance ("AEA") is a not-for-profit organization that engages in grassroots public policy advocacy and debate concerning energy and environmental policies.  AEA is the advocacy arm of the Institute for Energy Research (IER), a not-for-profit organization – founded in 1989 – that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets.

SOURCE The American Energy Alliance

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China overtakes Japan as No.2 economy: FX chief (Reuters)

Friday, July 30th, 2010 | Finance News

BEIJING (Reuters) – China has overtaken Japan to become the world's second-largest economy, the fruit of three decades of rapid growth that has lifted hundreds of millions of people out of poverty.

Depending on how fast its exchange rate rises, China is on course to overtake the United States and vault into the No.1 spot sometime around 2025, according to projections by the World Bank, Goldman Sachs and others.

China came close to surpassing Japan in 2009 and the disclosure by a senior official that it had now done so comes as no surprise. Indeed, Yi Gang, China's chief currency regulator, mentioned the milestone in passing in remarks published on Friday.

"China, in fact, is now already the world's second-largest economy," he said in an interview with China Reform magazine posted on the website (www.safe.gov.cn) of his agency, the State Administration of Foreign Exchange.

Cruising past Japan might give China bragging rights, but its per-capita income of about $3,800 a year is a fraction of Japan's or America's.

"China is still a developing country, and we should be wise enough to know ourselves," Yi said, when asked whether the time was ripe for the yuan to become an international currency.

CAN IT BE SUSTAINED?

China's economy expanded 11.1 percent in the first half of 2010, from a year earlier, and is likely to log growth of more than 9 percent for the whole year, according to Yi.

China has averaged more than 9.5 percent growth annually since it embarked on market reforms in 1978. But that pace was bound to slow over time as a matter of arithmetic, Yi said.

If China could chalk up growth this decade of 7-8 percent annually, that would still be a strong performance. The issue was whether the pace could be sustained, Yi said, not least because of the environmental constraints China faces.

In an assessment disputed by Beijing, the International Energy Agency said last week that China had surpassed the United States as the world's largest energy user.

If China can keep up a clip of 5-6 percent a year in the 2020s, it will have maintained rapid growth for 50 years, which Yi said would be unprecedented in human history.

The uninterrupted economic ascent, which saw China overtake Britain and France in 2005 and then Germany in 2007, is gradually translating into clout on the world stage.

China is a leading member of the Group of 20 rich and emerging nations, which since the 2008 financial crisis has become the world's premier economic policy-setting forum.

In one important respect, however, China is still a shrinking violet: anxious to shield itself from the rough-and-tumble of global markets, it does not permit its currency to be freely exchanged except for purposes of trade and foreign direct investment.

And Yi said Beijing had no timetable to make the yuan fully convertible.

"China is very big and its development is unbalanced, which makes this problem much more complicated. It's difficult to reach a consensus on it," he said.

In the same vein, China was in no rush to turn the yuan into a global currency.

"We must be modest and we still have to keep a low profile. If other people choose the yuan as a reserve currency, we won't stop that as it is the demand of the market. However, we will not push hard to promote it," he added.

NO BIG RISE IN YUAN

China has been encouraging the use of the yuan beyond its borders, allowing more trade to be settled in renminbi and taking a series of measures to establish Hong Kong as an offshore center where the currency can circulate freely.

But Yi said: "Don't think that since people are talking about it, the yuan is close to becoming a reserve currency. Actually, it's still far from that."

He said expectations of a stronger yuan, also known as the renminbi, had diminished. There was no basis for a sharp rise in the exchange rate, partly because the price level in China had risen steadily over the past decade.

"This suggests that the value of the renminbi has moved much closer to equilibrium compared with 10 years ago," he said.

Yi's comments are unlikely to go down well in Washington, where lawmakers have scheduled a hearing for September 16 to consider whether U.S. government action is needed to address China's exchange rate policy.

China scrapped the yuan's 23-month-old peg to the dollar on June 19 and resumed a managed float. The yuan has since risen only 0.8 percent against the dollar, and economists calculate that it has fallen in value against a basket of currencies.

China would stick to the principle of holding its $2.45 trillion of official reserves in a mix of currencies and assets.

The stockpile -- the world's largest - was so big that it was impossible to adjust its currency composition in a short space of time: "We won't be particularly bearish on the dollar at a given time or particularly bearish on the euro at another time."

(Additional reporting by Zhou Xin; Editing by Ken Wills)

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Fortune Brands 2Q profit more than doubles (AP)

Friday, July 30th, 2010 | Finance News

DEERFIELD, Ill. – Fortune Brands Inc., whose products range from tequila to golf clubs, said Friday that its second-quarter profit more than doubled as revenue increased and costs fell.

The results beat Wall Street estimates and the company boosted its full-year forecast.

"We're on track for strong full-year results," Chairman and CEO Bruce Carbonari said in a statement.

He said each of its three brand groups — spirits, golf and security products — reported sales that grew faster than their markets in the second quarter.

Fortune's brands include Maker's Mark bourbon, Courvoisier cognac, Sauza tequila, Moen faucets, MasterLock security system and Titleist golf products.

Its shares rose 19 cents to $43.57 in morning trading.

For the three-month period that ended on June 30, Fortune reported net income of $224.7 million, or $1.48 per share, up from $98.8 million, or 66 cents per share, a year ago.

Excluding one-time items, Fortune Brands earned 98 cents per share. Analysts surveyed by Thomson Reuters expected adjusted earnings of 76 cents per share.

Revenue grew 9 percent to $1.9 billion from $1.74 billion last year. Analysts expected lower revenue of $1.80 billion.

The company, based in the Chicago suburb of Deerfield, Ill., said it expects to earn between $2.60 and $2.90 per share, excluding any charges. It had previously forecast earnings of between $2.50 and $2.80 per share.

Analysts expect a full-year profit of $2.84 a share. Last year, Fortune Brands earned $2.43 per share.

Fortune Brands shares closed Thursday at $43.38

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