Business and Finance

Deep in Republican oil country, President Barack Obama is fending off criticism of his energy policies, pointing to plans to fast-track an oil pipeline that emerged after he delayed the larger Keystone XL project earlier this year.

Obama was directing federal agencies Thursday to expedite a 485-mile line from Oklahoma to refineries on Texas’ Gulf Coast that would remove a critical bottleneck in the country’s oil transportation system. The directive would also apply to other pipelines that alleviate choke points.

“We’re drilling all over the place,” Obama said in Maljamar, N.M., on Wednesday, standing alongside oil rigs on federal land. The president was announcing his plans for the expedited pipeline, a southern portion of the original Keystone XL, in Cushing, Okla., where construction is expected to begin this spring.

In oil fields and amid acres of solar panels, Obama is trying to rebut charges that he has stifled domestic energy production and been too eager to spend government money on renewable energy projects as gas prices have climbed to $3.86 a gallon. His emphasis on oil drilling is aimed at countering criticism of his rejection of the 1,700-mile Keystone XL pipeline, which would carry tar sands oil from western Canada to refineries along the Texas Gulf Coast.

For Obama’s advisers, rising gas prices pose a threat to his re-election bid because they could undermine the benefits of a payroll tax cut that he made the centerpiece of his jobs agenda last fall _ Congress approved the tax cut extension in February _ and throttle the economic recovery.

Republicans view rising gas prices as emblematic of Obama’s energy record and hope to tag him with the blame even though no president has much control over prices at the pump. Gas prices have risen more than 50 cents a gallon since January in response to a standoff over Iran’s nuclear program that has threatened to disrupt Middle East oil supplies.

GOP presidential hopeful Rick Santorum, campaigning at a Harvey, La., company that services oil rigs, said Obama’s administration should open more federal lands for leases to boost U.S. oil production and revenue for the federal government.

“Here’s an opportunity for us in this country to do something about it: increasing jobs, lowering energy prices, decreasing the deficit, all of the things you would think the president of the United States would be for,” Santorum said.

Mitt Romney, Santorum’s chief rival for the Republican nomination, has labeled Obama’s top energy advisers as the “gas hike trio,” urging the president to fire three Cabinet secretaries because of the high prices.

The status of the Keystone XL pipeline has been a focal point in the heated political fight over energy development.

Calgary-based TransCanada said it hopes to complete the $2.3 billion Oklahoma-to-Texas section next year after receiving the last approvals it needs to start construction. Many of the permits and environmental reviews already have been completed as part of the larger Keystone project, company officials said.

Republicans questioned whether the executive actions by Obama would speed up the pipeline’s construction and said it reiterated the need for the larger Keystone XL pipeline.

“The American people can’t afford more half-measures on energy from the president. No matter what he says, the reality is he killed the Keystone pipeline and the energy production and 20,000 jobs that went with it,” said Kirsten Kukowski, a Republican National Committee spokeswoman.

Obama’s energy tour was also aimed at defending his administration’s support of renewable energy projects, an agenda tarnished by his administration’s decision to pump millions into California solar company Solyndra before it collapsed.

In an interview with American Public Media’s “Marketplace” on Wednesday, Obama noted that the funding came from a loan guarantee program approved by Congress to help renewable energy companies, some of which would not succeed.

“Do I wish that Solyndra had gone bankrupt? Absolutely not. And obviously it’s heartbreaking what happened to the workers who were there,” Obama said. “When you look at the overall portfolio, is it right for us to make sure that we’re not just cashing in our chips and letting the Chinese or the Germans develop the technologies that we know are going to be critical in the future? I’m proud to say that we’re going to continue to support it.”

Electoral politics remain close to the surface. Nevada and New Mexico remain top targets on Obama’s 2012 election map, and while Republican stronghold Oklahoma will get scant attention from his political team, taking his message to the site of a future oil pipeline allows him to strike back at his chief critics on energy.

Obama was ending the day with a stop in battleground Ohio, talking about automobile research and development at Ohio State University in Columbus. The president has cited his decision to raise fuel efficiency standards to 55 miles per gallon for new vehicles by 2025 as an important step in conserving oil and saving consumers at the gas pump.

Obama has repeatedly invoked his decision to rescue General Motors and Chrysler from collapse with billions in federal aid, a move that saved hundreds of thousands of auto assembly and supplier jobs in Ohio, Michigan and elsewhere. Romney opposed the bailout, and Obama’s team intends to make it a stark contrast between the two candidates if the former Massachusetts governor wins the GOP nomination.

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The Federal Reserve paid $75.4 billion to the U.S. Treasury as an expanded bond portfolio generated $83.6 billion in interest income from its open-market operations last year.

The Fed

The price of oil is lower Wednesday, after the government reported that supplies rose last week, as analysts expected.

Gasoline pump prices continued to climb, rising to a national average of $3.811 per gallon.

Benchmark crude fell by 61 cents to $106.10 per barrel in New York. Brent crude, used to price oil imported by U.S. refineries, fell 6 cents to $126.16 per barrel in London.

The Energy Department said that supplies increased by 1.8 million barrels last week payday advance lenders. Gasoline supplies fell by 1.4 million barrels as refineries sold off remaining stockpiles of winter gasoline blends. Supply levels were near analysts’ estimates.

The government also says energy demand remains weak. Demand dropped 5.4 percent for oil and 7.2 percent for gasoline compared with the same week last year.

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First-time claims for unemployment benefits ticked higher last week, slightly dimming prospects for Friday’s employment report.

The Labor Department reported Thursday that 362,000 people filed for initial unemployment benefits in the week ended March 3, up from the previous week’s revised 354,000 claims.

Economists surveyed by Briefing.com had predicted 355,000 new claims would be filed.

About 3.4 million people filed for their second week of unemployment benefits or more in the week ended Feb. 25, the most recent data available.

Jobless claims are considered a key indicator of the job market’s strength. The number can be volatile from week to week, so economists often look to the four-week moving average as a broader gauge.

Lately, that figure has been on a gradual decline. But last week it rose slightly to 355,000, up from the previous week’s average of 354,750.

The worse-than-expected report on initial claims comes one day before the government’s monthly employment report is scheduled to be released.

A CNNMoney survey of 19 economists predicts that the economy added 210,000 jobs in February, down from January, when 243,000 jobs were added to payrolls.

Most of the gain will likely come from the private sector, where the prediction is for an addition of 225,000 jobs.

The unemployment rate is expected to remain unchanged at 8.3%  

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Federal Reserve Chairman Ben S. Bernanke spent six years pushing for an inflation goal. Now that he has it, some investors are betting he

Netflix’s key contract with Starz expired on Tuesday, causing a massive hit to its instant streaming catalog of movies and TV shows.

Pay-cable network Starz struck a four-year licensing deal with Netflix back in 2008. Netflix had been trying for months to negotiate a new contract, but talks fell apart back in September.

The Starz contract officially expired on February 28, so titles such as "Toy Story 3," "Scarface" and "Young Frankenstein" are no longer available on streaming from Netflix.

A significant amount of Starz’ content catalog is Disney (, Fortune 500) films, though it includes licensed titles from several other studios. Netflix spokesman Steve Swasey would not confirm how many titles were pulled.

Swasey implied that Netflix will be able to get some of those titles back by striking deals with other cable networks, saying that "only about 15 Disney titles are really non-replaceable."

"There’s always an ebb and flow of title availability, and there always will be," Swasey said. "There’s never a shortage of stuff. You’ll see more titles soon."

As of January, Starz content accounted for 2% of viewing time, Swasey said.

Still, the loss highlights two major problems for Netflix (): a streaming catalog that some customers complain is lackluster, and the increasing costs of content.

Before the talks fell apart last year, Netflix called the Starz contract "one of our most important deals" — because it was one of the few that gave Netflix streaming access to relatively recent movies.

Because Starz has licensing deals with several major movie studios, Netflix was able to piggyback on the arrangements and boost its catalog of recent releases.

Starz said it ended the contract talks because of "our strategy to protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content."

Meaning: Starz wants more money. Netflix was able to score cheap contracts years ago, when streaming video hadn’t fully broken into the mainstream. Now that streaming video is so popular, providers are upping the price tag for their content.

Those increasing costs have set off a vicious cycle. In order to offset content charges, Netflix began charging separate prices for its DVDs-by-mail and streaming video plans in September 2011.

That raised the cheapest-possible bill for customers who want both services from $10 to $16 a month. Outraged customers left thousands of comments on Netflix’s blog, and in the third quarter of 2011, the company’s U.S. subscriber base fell for the first time in years.

Millions of customers stayed on, but some have complained of a too-small streaming catalog. Outright loss of content, like the Starz expiration, leaves angry customers asking why they’re paying more for less.

Netflix has been striking other deals to beef up its catalog. Last week, the company announced a multi-year agreement to get Academy Award-winning titles "The Artist" and "Undefeated," as well as other movies from The Weinstein Company.

Netflix is making an even bigger bet on TV, including studio-like moves. Last year Netflix licensed its first original series, "House of Cards," which stars Kevin Spacey and is due out in late 2012. In November, Netflix announced it would release a new season of the cancelled "Arrested Development" in 2013.

Meanwhile, studios now have a bargaining chip in the form of Netflix’s competitors. Beyond direct rivals like Hulu and kiosk service Redbox (owned by Coinstar ()), big tech players like Amazon (, Fortune 500) and Google (, Fortune 500) are jumping into the streaming game.  

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The number of Americans filing first-time claims for jobless benefits last week held at a four- year low and consumers became more confident, indicating an improving labor market may boost household spending.

Applications (INJCJC) for unemployment insurance benefits were unchanged in the week ended Feb. 18 at 351,000, the fewest since March 2008, Labor Department figures showed today. The Bloomberg Consumer Comfort Index rose to minus 38.4 in the week to Feb. 19, the strongest reading since April 2008.

Markets were optimistic Monday that Greece will finally secure a massive but long-delayed international bailout, allowing the debt-crippled country to avoid defaulting on its debts next month.

A surprise easing in monetary policy in China over the weekend also added to the buoyant mood in markets _ many stock indexes are trading at multi-month highs, while the euro has recovered its poise.

The main focus of attention _ on a day when Wall Street will be shut for a public holiday _ will be Brussels, where the finance ministers from the 17 eurozone countries are gathering to discuss the elusive Greek bailout deal.

After some eurozone countries suggested last week that they might prefer Greece to default, the latest comments indicate the ministers will approve th euro130 billion ($171 billion) bailout. Greece has struggled to convince its partners in the eurozone, particularly Germany, that it will enact the austerity and reform measures in return for the cash.

France’s finance minister Francois Baroin told Europe 1 radio Monday that while details will have to be worked out, “the political commitments have been made.” Both parties in the Greek coalition government have agreed to push forward the measures in the event they are in government after expected elections in April.

“Officials have confirmed that momentum is building for approval of the deal and that while there are some gaps to be filled, the gaps are not so large that they risk derailing the whole process,” said Sue Trinh, an analyst at RBC Capital Markets.

Alongside the bailout, Greece is expected to conclude debt-reduction discussions with its private creditors. That should slice off around euro100 billion from Greece’s debt mountain. Even after that, Greece will have the highest debt burden of all the euro countries.

One of the last-minute hurdles to overcome is how to get Greece’s debt burden down to around 120 percent of GDP by 2020. One way that target could be met is if European central banks forgo profits due on their holdings of Greek debt.

Even though there are issues that need to be ironed out, investors are confident of a successful conclusion.

In Europe, the FTSE 100 index of leading British shares was up 0.8 percent at 5,952 while Germany’s DAX rose 1.4 percent to 6,944. The CAC-40 in France was 0.8 percent higher at 3,468.

The euro was 0.1 percent higher at $1.3223.

Sentiment has also been boosted by the surprise decision over the weekend by China’s central bank to lower the ratio of funds that banks must hold as reserves to 20.5 percent from 21 percent, effective Friday. That will free up tens of billions of dollars for loans at a time when the growth rate is expected to drop from last quarter’s 8.9 percent to closer to 8 percent. The cut is the second in two months.

Earlier in Asia, Japan’s Nikkei 225 index added 1.1 percent to close at 9,485.09, its highest closing level of the year. South Korea’s Kospi rose slightly to 2,024.90. Mainland China’s benchmark Shanghai Composite Index climbed 0.3 percent to 2,363.60 after gaining more than 1 percent earlier in the day, while the Shenzhen Composite Index gained 0.3 percent to 923.32.

Hong Kong’s Hang Seng dipped 0.3 percent to 21,424.79.

In the oil markets, Iran was battling with Greece to be the main focus of attention. Oil prices have jumped to a nine-month high near $105 a barrel Monday after Iran said it halted crude exports to Britain and France in an escalation of a dispute over the Middle Eastern country’s nuclear program.

Benchmark crude was up $1.50 to $104.74 per barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Earlier in the day, it rose to $105.21, the highest since May.

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Pamela Sampson in Bangkok contributed to this report.

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U.S. stock futures are slightly higher on hopes that Greece would soon get its crucial second bailout and following another batch of upbeat U.S. economic news.

Investors are growing more optimistic that European finance ministers will sign off on the Greek bailout and a bond swap agreement with Greece’s private creditors on Monday.

Dow Jones industrial futures are up 33 points to 12,903. The broader S&P 500 futures are up 2 points at 1,357. Nasdaq 100 futures are up 2 points at 2,595 instant credit reports.

Sentiment in the markets has been further buoyed by more positive U.S. economic data, particularly in the jobs market. Figures released Thursday showed jobless claims fell last week by 13,000 to 348,000, the lowest level since February 2008.

Most European and Asian markets rose Friday.

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Congress is getting ready for another round of sparring over whether to extend the 2 percentage point payroll tax cut past its Feb. 29 expiration. Consider it a warm-up for the main event later this year, likely after the November election.

The Bush tax cuts are set to expire at the end of 2012. If Congress does nothing, most people who work and lots of people who don’t will see higher taxes starting Jan. 1.

The fight to come has sky-high stakes - a possible tax increase of over $200 billion a year imposed on an economy that may still be struggling for traction. Come November, voters will have their chance to swing the outcome.

The wealthy have the most at risk. For instance, the estate tax will be much higher for people who die after New Years Eve.

Now, estates up to $5 million are exempt from the estate tax, also known as the death tax. That exemption drops to $1 million next year. The top tax rate on estates would jump to 55 percent from 35 percent.

“This is insanity. There are 70 tax code items that expired last Dec. 31 and 38 more that expire at the end of this year. The future of all these items is up to the lame duck Congress and it’s anybody’s guess what will happen,” said Dan Connors, an enrolled agent at the Buenger Doyle Tax Service in Granite City.

President George W. Bush and Congress gave the vast majority of wage-earners a break when they trimmed tax rates across the board in 2001 and 2003.

Everybody who actually pays income taxes benefited when the bottom tax bracket was cut to 10 percent from 15 percent. But higher brackets were cut as well. As a result, the higher a person’s income, and the more they gain from investments, the more dollars they saved on taxes. The top bracket, for couples earning more than $388,000, fell to 35 percent from 39.6 percent.

Taxes on dividends and capital gains were cut too, to a maximum of 15 percent. If the cuts expire, the rate on capital gains will go to 20 percent, while dividends will be taxed as ordinary income.

A couple with a child earning $60,000 from wages saves about $1,000 under the Bush tax cuts, according to a calculator supplied by the Tax Foundation. A couple earning $300,000, with $20,000 of that in investment income, saves $6,800. A couple earning $1 million, with $200,000 from investments, saves about $71,000.

But the poor will also lose if all the tax cuts expire. The earned income tax credit for the working poor will become less generous. The $1,000 child tax credit would be cut in half, and people who owe no taxes would no longer get a refund check because of it.

If the deadline draws close with no action, expect some churning in the financial markets. Dividend stocks have been the most popular investments on Wall Street for most of the past year as investors yearn for yield. Higher dividend taxes would subtract some appeal.

People with big capital gains on stocks would be tempted to sell them late this year to avoid the tax hike.

For now, tax advisers are telling their clients to sit tight and watch closely.

“Both parties know that the worst possible outcome would be for the Bush tax cuts to completely go away,” said Bob Jones, CEO of Central Trust in Clayton.

Taxes will be a campaign issue, but the betting is that serious bargaining will wait until after the election.

The major Republican presidential candidates would generally extend the Bush cuts, and then some. Mitt Romney would kill the estate tax and eliminate taxes on investment income for most investors.

Newt Gingrich would give taxpayers a choice of paying under the current system or at a new 15 percent tax rate. Rick Santorum would lower income tax rates further and triple the exemption for children.

President Barack Obama would preserve the Bush tax cuts only for families earning less than $250,000, while adding new taxes on people earning $1 million or more.

The debate will feel like “groundhog day all over again,” says Mark Luscombe, principal analyst at CCH, a tax analysis and software company. The Bush cuts were originally to expire in January of last year, when the recession was biting deeper, but Congress and Obama agreed to extend the cuts for two years.

If re-elected, Obama won’t agree to another punt, Luscombe predicts. After all, he doesn’t have to run again. If there is no agreement, all the Bush tax cuts would disappear on Jan. 1.

“This could be the last year of relatively low tax rates,” says Luscombe.

Todd Sivia, an estate planning attorney in Edwardsville, thinks heirs to large estates are at risk, given the government’s projected $1.1 trillion deficit this year.

“History shows that, when we’re deep in debt, we always re-establish the estate tax and it comes back with a vengeance,” Sivia says.

Lawyers have long experience in avoiding or delaying the estate tax. Tactics include gifts and establishing trusts to move assets between generations.

Sivia notes that higher estate taxes could turn grandparents more generous, as they try to pass on more of their wealth through gifts while living.

The prospect of higher income tax rates could motivate people who have been thinking of converting a regular IRA into a Roth IRA. Such conversions mean paying taxes on the IRA now, in trade for tax-free growth in a Roth. They can be a good move for people with many years to retirement.

Upper income people are due for a tax hike anyway, regardless of whether the Bush cuts are extended. The health care reform law of 2010 established a “Medicare surtax” that takes effect next year, notes Bert Schweizer, principal at Buckingham Asset Management in Clayton.

The complex tax applies to singles earning over $200,000 and $250,000 for married couples.

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