Overall, the Houston Chronicle’s coverage of the Enron case has at least been exhaustive, if not particulalry balanced. But in the interests of exhaustive coverage, was it really necessary for the hometown newspaper to have society columnist Shelby Hodge attempt to crash the funeral of Ken Lay in Aspen on Sunday?
It’s beginning to look as if Barbaro may not make it (related, subsequent stories on Barbaro’s increasing health problems are here, here, here and here).
The condition of the Kentucky Derby champion who broke down at the beginning of the Preakness took a turn for the worse late Saturday when veterinarians had to remove the plate and some of the screws from his injured right hind leg to stave off infection. Although Barbaro’s leg appears to be healing reasonably well, the horse is having a hard time shaking off an elevated temperature, which is an indication that attempts to control infection are failing.
In Cameron Crowe’s Almost Famous, Phillip Seymour Hoffman does a fine job of playing disenchanted rock music critic Lester Bangs, who views the purity of Rock n’ Roll as being corrupted by commercial interests. Of course, Rock n’ Roll has never been all that pure in the first place, but that’s another story.
At any rate, even as business-oriented a fellow as me never thought that I would see the day that the Beatles would be providing the background music for a Vegas casino stage show or the day that the Grateful Dead would be cozying up to lawyers and business-types while entering into management deals involving the group’s intellectual property.
Does this mean it’s only a matter of time before Bob Dylan plays Branson, Missouri?
Update: As my brother Joe points out, this may not be Branson for Dylan, but it’s close.
This Liam Pleven-Ian McDonald-Karen Richardson WSJ ($) article reports on an interesting market condition in the disaster insurance business that has been reverberating in business circles around Houston since the storms of last summer — despite robust demand for disaster insurance and huge amounts of capital pouring into providing such insurance, there is nowhere near a sufficient supply of such products to meet the demand for disaster insurance.
As a result of seven costly hurricanes in two years, insurers are pulling back from the amount of risk that they will take in hurricane-prone areas such as the Gulf Coast. The shortage of supply is showing up primarily in the reinsurance market, where primary insurers buy coverage to hedge the risk of loss on the policies that they issue. Reinsurers covered over half of the estimated $40 billion in insured losses that occurred last year as a result of Hurricance Katrina. Consequently, the cost of property-catastrophe reinsurance has risen over 25% this year and, in hurricane-prone areas, the rates are increasing almost four times that amount. And all of this occurring despite the financial market’s creation of new forms of investment vehicles to induce investment of capital at reduced-risk levels.
As noted in this earlier post on federally-subsidized flood insurance in hurricane-prone areas, this tight market condition for disaster insurance is actually having a beneficial impact. Businesses in hurricane-prone areas are considering alternatives to paying huge premiums for disaster insurance, such as self-insurance and re-evaluating investment decisions. This is precisely how markets efficiently allocate risk and resources, and reflects why that efficient allocation is undermined by the federal subsidy on flood insurance.
This Bhushan Bahree-Russell Gold/WSJ ($) article reports on Chevron Corp’s pilot project in Saudi Arabia in which it is using its steam injection technique to to loosen up sludge-like heavy-oil reserves in Wafra, the huge field in the so-called neutral zone between Saudi Arabia and Kuwait.
Heavy oil is costlier to produce than light oils, typically contains more contaminants such as metals and sulfur, and is priced lower than light oil to boot. But because of the decreasing supply of easily-produceable light oil, a growing number of refineries around the world are acquiring the special equipment necessary to turn heavy oil into petroleum-based products such as gasoline, jet fuel and heating oil. Inasmuch as most heavy-oil fields in Saudi Arabia are not included in the country’s current estimate of 260 billion barrels of recoverable reserves, a successful steam injection initiative in such heavy-oil fields would potentially add billions of barrels to Saudi reserves
Meanwhile, Clear Thinkers favorite James Hamilton explores the effect that a recent reduction in Saudi oil production may be having on speculation over oil prices. Interestingly, the drop in Saudi production has occurred at the same time as the Saudis are aggressively increasing their drilling efforts.