In this stunning announcement, Royal Dutch/Shell today downgraded 250 million barrels in reserves to less certain reserve categories and decided not to book 220 million barrels that it had earlier classified as reserves. Although small in comparison to Royal Dutch/Shell’s earlier writedown, the timing of this latest reserve writedown is certain to increase scrutiny of the company’s management practices.
As noted here and here, Royal Dutch/Shell is already the subject of Justice Department and SEC investigations regarding its earlier reserve writedown.

This NY Times article and this WSJ ($) article report on the postponement of confirmation and consummation of United Airlines‘ reorganization plan in its long pending chapter 11 case. UAL has been operating under chapter 11 since December, 2002, and it’s exit financing and debtor-in-possession financing commitments expire on June 30. Although UAL is probably too big for its institutional creditors simply to give up on it, this is clearly a business that is in trouble, and no sure bet to make it even after emerging from chapter 11.
A related NY Times story reports on the daunting problems confronting UAL competitor, American Airlines.

The BusinessPundit points us to this Forbes article that lists Northwestern University economics history professor Joel Mokyr‘s (editor in chief of the “Oxford Encyclopedia of Economic History“) ten most influential businessmen of all-time. Neither Ken Lay nor Jeff Skilling made the list. ;^)

Given recent disclosures at Royal Dutch/Shell previously discussed here, this announcement that the Justice Department has opened an inquiry into the oil company’s recent restatement of reserves is no surprise.

Holman W. Jenkins Jr. is a member of the editorial board of The Wall Street Journal and is the author of the weekly Business World column. He is one of America’s most insightful thinkers and commentators on the political implications of the most pressing business issues of the day. In today’s column ($), Mr. Jenkins examines the relunctance of both political parties and their candidates to address meaningful reform in America’s broken health care finance system. The entire article is a must read, and here a few nuggets:

[P]roductivity miracles don’t descend from heaven but arise when companies choose to invest in new tools to make existing workers more productive rather than hire additional workers. Why? Listen to what business owners say every time somebody puts a notepad in front of their faces: Computers and machine tools don’t create open-ended health-care liabilities. Human workers do.
General Motors, a company that has shrunk by 180,000 employees over ten years, reported last week that its long-term health liabilities now top an incredible $60 billion. GM spends $5 billion annually to treat 1.2 million workers, retirees and their dependents. That amounts to more than $14,000 per current employee, gobbling up what a worker would otherwise take home as cash pay.
. . . Indeed, we’ve pretty much come to the point where we’re trying to do the economically impossible and give a subsidy to everybody. The average family of four now pays about $1,600 a year in taxes to cover the cost of a health-insurance subsidy to itself. No real gain to anybody occurs: We just push checks around to conceal from people the true cost of their health care.
How bad this has become is lost on most Americans. When you add the tax subsidy to Medicare, Medicaid and other federal programs, government now touches 60% of the dollars in heath care. The tax benefit alone comes to $120 billion a year. It’s also grossly regressive: A family earning $100,000 a year gets $2,357 to help pay for medical insurance; a family earning $15,000 gets only $71.
The only reform that stands a chance is one that dismantles the nutty system of tax subsidies that fuels health-care inflation by commanding an unnatural urge to channel every ache, pain and prescription through a third-party payment bureaucracy.

As noted in earlier posts here and here, things have not been going well recently for El Paso Corp. Now, the company is making the rounds with its banks. Not a good sign.

This previous post addressed Mayor White‘s premature announcement of ChevronTexaco‘s purchase of the former Enron Building in downtown Houston. Harris County Commissioners announced today that they are not inclined to grant the ad valorem tax abatement that ChevronTexaco was relying on in agreeing to the deal to the buy the building. Commissioner Steve Radack, hopefully in a fit of delusion, suggested that the County might step up and buy the building if ChevronTexaco backs out of the deal.

This NY Times article describes the interesting life inside Saudi Aramco, Saudi Arabia’s largest oil company, which retains its decided Western influence even after Saudi citizens have taken over its top management positions. As the Times article notes:

Try not to make too much of the women driving sport utility vehicles, the baseball diamonds, the thousands of Americans and Britons or the cul-de-sacs with names like Prairie View at the well-guarded headquarters of Saudi Aramco, the world’s largest oil company.
. . . While Aramco’s importance to the Saudi economy and the global energy industry is hard to underestimate, the company, like other Western-influenced areas of society, has been caught in the cross hairs of Islamic conservative objections to its American-style management approach.
For instance, while women nearly everywhere in Saudi Arabia are required by religious law to dress conservatively in black shawls and prohibited from driving, Aramco’s female employees are allowed to wear Western clothing and drive on company property. Old-fashioned American business practices also persist at Aramco, down to the gold watch after 30 years of service.
And in a striking difference from many oil companies that were seized by governments in the developing world in the last century, Aramco never required its American employees to leave. Though its top executives are now Saudis, the official language remains English, making it easier for the 2,000 Americans who work for the company in Saudi Arabia, most of them living in this dusty city across the border from Bahrain.
The company still provides plentiful perks to attract American employees, who call themselves Aramcons. The benefits for Americans and other expatriates from rich countries include subsidized ranch-style suburban houses at Aramco’s compound here, free health and dental care at the company’s own hospitals, nearly 40 vacation days a year and free private education for children until high school, when the company will pay 80 percent of boarding-school costs in the United States.
Aramco, which produces about eight million barrels a day, generated an estimated $85 billion in oil revenue last year . . . The company’s financial clout extends to other areas, like its fleet of jet aircraft used to travel inside and outside Saudi Arabia. All its pilots are trained in the United States or Britain.
“It feels almost normal here until you get outside the company and its compounds,” said Richard Pattee, a native of Tacoma, Wash., who moved to Dhahran in October to pilot the company’s new Boeing 737.

As noted in this earlier post, Houston-based Plains Resources is the subject of an ongoing offer to purchase the company. As reported in this Houston Business Journal article, Plains received another unsolicited offer, which it has rejected for the time being. However, this is getting interesting. Stay tuned.

This Sports Law Blog post discusses this interesting law review article that addresses the legal and economic implications of high school basketball players eschewing college basketball and going straight into professional basketball. As the Sports Law Blogger notes:

The most compelling statistic of the article, though, is that only 29 players have entered the NBA draft as high schoolers in the past 25 years. This tends to dispel the myth that the NBA is being overrun by players who have never experienced college. Of those 29, many have become “stars” or “superstars,” while less than half are deemed “busts” or have been relegated to “minor league” basketball. Is the problem as bad as critics make it out to be?

Interesting post and article. Too much time is spent attempting to prevent high school athletes from turning professional prematurely. In America, we retain the right to make bad decisions.