Morning Business Memo:
The giant storm now moving over the Gulf of Mexico could have a direct impact on consumers wallets – pushing up the price of gas. Energy companies are scrambling ahead of Isaac – evacuating workers from oil and natural gas platforms, and cutting oil production in the Gulf of Mexico. As the storm tracks west it becomes a bigger threat to the energy industry. The Gulf accounts for more than 20 percent of US oil production and over 40 percent of refining. If many plants are closed that could push up gas prices – at least for a few weeks. Global oil prices are already on the rise. West Texas crude rose to more than $97. The price was in the low 80′s as recently as June.
Mergers often lead to higher prices for consumers, and that could be the case for rental cars. Hertz is buying its rival Dollar Thrifty for $2.3 billion. Dollar Thrifty’s stock jumped more than 5 percent in premarket trading this morning. Hertz said it will pay $87.50 for each Dollar Thrifty share, an 8 percent premium to the company’s Friday closing price. Hertz has been pursuing Dollar Thrifty for two years. The boards of both companies have unanimously approved the deal. But it still needs antitrust clearance from the Federal Trade Commission.
While consumers worry about the weak economy and jobs market the state of most corporate balance sheets is strong. The stock market is coming off its first losing week since July. The averages have made solid gains so far this year, boosting the value of most 401(k)s and other retirement funds.
Shares of Samsung Electronics plunged 7 percent on Asian markets overnight after Friday’s stunning jury verdict in San Jose, Calif. The $1 billion jury award in the patent infringement case brought by Apple accounts for only 1.5 percent of Samsung’s annual revenue. But the embarrassment of the verdict could be a far larger blow than the financial cost. The question is also whether Samsung and other Apple competitors will have to redesign their smart phones to avoid infringing Apple’s patents. The result of this case could also lead to less competition, potentially pushing up prices for consumers.
Richard Davies Business Correspondent ABC NEWS Radio twitter.com/daviesabc