Oil Hits New High – Morning Business Memo

Feb 24, 2012 8:31am

There’s no end in sight for expensive oil and gasoline. Crude prices hit $108 a barrel on global markets, a nine-month high. Prices are now getting close to levels reached in 2008. Tensions in the Middle East are one reason for the rise. But some oil analysts say speculators are also playing a major role at a time of falling U.S. demand for gas.

Bart Chilton, a commissioner on the Commodities Futures Trading Commission, says big banks are gambling on oil: “That’s not good for consumers, it’s not good for markets and it’s not good for our economy.” Chilton is an outspoken supporter of position limits in commodities markets. Expensive oil could be a threat to U.S. economic growth.

The earnings season might have been solid for most big companies, but results from retailers have been mixed at best. Gap, the retail company that owns Banana Republic, Gap and Old Navy stores, announced profits fell 40 percent because of discounting higher costs and sluggish sales. While Saks, Nordstrom and most high-end retailers announced strong sales, many retailers are struggling, especially department stores and discounters. Wal-Mart announced a drop in profits this week. Sears Holdings plans to sell or close more than 1,200 stores to raise cash. Sears and Kmart stores have suffered through years of falling sales and market share.

The U.S. Postal Service is pushing ahead with planned cuts at more than 260 mail processing centers. The moves are expected to lead to a loss of about 35,000 jobs and slow the delivery of first-class mail. The Postal Service is deeply in the red. It warned last week of as much as $18.2 billion a year in losses by 2015 unless Congress grants it new leeway to eliminate Saturday delivery and raise the price of a postage stamp by as much as 5 cents.

Banks are putting more marketing muscle behind credit cards. Partially because of recent legislation, credit cards are much more profitable for banks than debit cards. Some firms are now offering new customers sign-up bonuses. “They can be as much as $500 in cash or really a lot of frequent flier miles,” Erica Sandberg of Credit Card Guide told ABC News Radio. “You can get 30,000 frequent flier miles translatable maybe to a round trip fare in the United States.”

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