Bausch & Lomb---June (slow)
>> bausch & lomb’s executive speaking out today as stores across america clear their shelves of the company’s contact lens cleaner, ink linked to a rare infection that can cause blindness if untreated. june grasso has the latest developments.
>> bausch & lomb shares are down another 7% today after a 15% plunge yesterday when the company suspended shipments of renu with moistureloc, the fastest growing product for cleaning contact lenses. today, the chief executive officer said in a conference call that tests show the product is effective in killing the fungus that causes the infection and the company has examine hundreds of possibilities to find a link between the product and illness.
>> batch tanks to production lines to source of chemicals, source of packaging, trucking companies to shipping routes, you name it. through all of that analysis, we haven’t found a correlation with anything.
>> u.s. regulators are investigating the product after 109 reports of cornea infections in the past 10 months. renu with moistureloc accounted for 45 million dollars of bausch & lomb’s sales last year and was the flagship product of the company’s most profitable unit. zarrella acknowledged there may be ripple effects, hurting sales of other bausch & lomb products. but he argued the number of infections is small.
>> the c.d.c., at our request, had initiated a surveillance program that has so far resulted in the accumulation of 109 cases of suspected fusarium keratitis infections in the united states. that’s out of more than 30 million contact lens wearers.
>> piper jaffray analyst steven hamill said in an interview that the company has only days to come up with evidence their product is not to blame or take more aggressive action to avoid permanent damage to the renu brand. retailers pulling the product including c.v.s., walgreens and rite aid. back to you. bloomberg’s june grasso. senator hillary rodham clinton is calling for a new strategy to drive down energy costs, saying the u.s. needs to end reliance on foreign oil. she proposed u.s. oil companies be required to contribute part of their extraordinary profits to a fund dedicated to developing energy-efficient technologies.
>> we spend $20 billion a month just paying off the interest on our national debt. we certainly ought to be able to invest $20 billion a year in trying to get us independent from foreign oil.
>> clinton called for economic policies that will place greater emphasis on the needs of the middle class, not just a sustained rate of growth, an indirect criticism of president bush. she called for a bipartisan agreement on curbing growing u.s. deficits. clinton is considered the front-runner for the democratic presidential election in with 2008. she said this year she’s just focused on a re-election bid in the united states where polls show her with big leads over potential challenges. the federal communications commission changed the bidding rules ahead of a highly-anticipated wireless airwaves auction in june. they instilled blind bidding rules, trying to prevent wireless companies from working together to buy licenses at a discount to punish rival bidders.
>> in this particular case and with an auction of this particular size, i think we have to do all that we can to prevent even the possibility of any anti-competitive behavior and establish clear, fair and equitable rules as soon as possible, which is, i think, what we’re doing today.
>> there will be over 1,100 licenses on the auction block in june, expected to be hotly contested since they’ll give wireless carriers the ability to offer faster is the internet service. coming up, the latest on the situation with iran. bloomberg state department correspondent jetine zacharias will join us with more on the administration’s diplomatic moves.
点击播报
Listen Market briefing -- Peter (slow)
Interview: American Petroleum Institute---Felmy, John---Economist
Interview: Fimat USA---Fitzpatrick, Michael---Vice President, Energy Risk Mgt
i’m peter cook reporting from washington. michael mckee is off today. welcome to “money & politics.” we focus first today on energy. back on august 30 of last year in the aftermath of hurricane katrina, the price of oil reached a record $70.85 a barrel. today, without a hurricane in sight, oil is in the $70 range, but it’s gasoline emerging as the bigger story. the energy department saying today that crude oil supplies surged last week more than analysts had forecast, climbing more than three million barrels, to the highest level in more than eight years but gasoline stockpiles dropped more than forecast, down 7.9% over the last six weeks. distillates, including heating oil, also fell more than expected. how did the markets fare on this news, the inventory news? crude for may delivery ended the day down 36 cents at $68.62 and gasoline up more than three cents, closing at $2.09 a gallon, the highest price in more than six months. traders say refiners, ungoing switch from the additive mtbe to ethanol as required by last year’s energy bill, one factor affecting supply and prices. checking other energy movers, heating oil up higher on the day. natural gas futures, checking that, as well. natural gas down on the day just slightly. another factor affecting energy prices today, uncertainty over the situation in iran and the nuclear standoff showing no signs of ending with iranian officials saying they’ll start industrial scale enrichment of uranium by adding thousands of cent funerals to its nuclear facility. the u.s. assistant secretary of state for nonproliferation telling reporters at that level of production, it would take just 16 days for iran to produce enough uranium for a nuclear weapon. u.s. secretary of state condoleezza rice calling for tough diplomatic action against the islamic republic.
>> i do think that the security council will need to take into consideration this move by iran and that it will be time when it reconvenes on this case for strong steps to make certain that we maintain the credibility of the international community on this issue.
>> meanwhile, iran’s announcement yesterday of its first successful uranium enrichment program drew condemn condemnations from china and russia, who have been hesitant in the past about sanctioning iran over its nuclear program. iran, inventories, the switch to ethanol, what’s really driving complexes in the energy complex and can these levels be sustained? joining me to talk about the situation is john felmy, chief economist at the american petroleum institute. we hope to be joined by mike fitzpatrick, vice president of risk management at fimat u.s.a. thank you for your time today. i want to ask you about the inventory levels. are you surprised on the crude side at how much oil is in inventory right now?
>> i wasn’t surprised by the crude number or the distillate numbers. these are typically the average builds or draw you see for this week of the year in terms of the end of the heating season and building crude oil inventories for the coming driving season. in a sense, the gasoline change wasn’t that unexpected, either, because we’re going through this turnover that you mentioned in terms of switching from mtbe to ethanol. to do that, you have to draw inventories down so that you don’t mix the two different types.
>> mike fitzpatrick with fimat u.s.a., i think you’ve joined us from new york. thank you for your time. i want to get your take on the inventory numbers, particularly the gasoline side. your cashes concerns about the gasoline supply going forward.
>> the gasoline supply situation is causing a great deal of concern right now, mainly because of the window of mild weather we had in january we didn’t take advantage of to replenish stockpiles. that’s one of the reasons crude is backing up, gasoline may have a problem replenishing to the levels as necessary to meet demand during the driving season.
>> how much of the problem is due to the changeover from mtbe, the end of refiners using mtbe as specified in the energy bill, and this change over to ethanol.
>> the change over into ethanol caught the market a bit by surprise. at the moment, there aren’t enough rail tank cars or over-the-road cars to transport the ethanol to the refineries where it needs to be made. this time next year we may be awash in ethanol but i wouldn’t be surprised to see shortages around the country during the summer.
>> a surprise, everyone saw the energy bill that came out last year, how was it the industry was caught by surprise and how surprised are you that this is the situation we face?
>> i’m surprised there wasn’t more preparation but there was lax preparation made for the changeover and that’s why we’re in the situation we are right now. there aren’t enough physical cars to transport the ethanol itself to where it needs to be to be refined into gasoline. at some point it will lead to greater energy independence but at this point there are bottlenecks.
>> the industry has been asked about whether this transition, everyone was equipped to handle this change. from an industry perspective, has it gone according to plan?
>> so far we’ve seen the switchover move fairly smoothly but i agree with the concern of where ethanol will be where it’s needed because of the logistical concerns. i’m also concerned about ramping up the refineries to make the best gasoline blended with ethanol. it’s a huge challenge and we’re working very hard to deal with it.
>> do you have any expectation, any need for the government to step in here and perhaps consider making some changes in the law, accounting for the fact that there may be supply shortfalls? do you think the industry would ask for that?
>> at this point, no. we’re following the inventory data, production data, import data for the new base gasoline and it’s moving smoothly to make the adjustment to meet the needs when we have them on may 1. we’re watching it closely.
>> mike fitzpatrick, let me ask you about the other issue over the energy market right now, iran. your own sense about the risk premium in crude right now and how much of that is attributable to the tensions with iran over the nuclear program?
>> as we approach $70, i don’t think it’s unrealistic to think that as much as $30 or more is part of the risk premium. the iranians announced they had enriched their first batch just recently. talk on the news wires they could be as close as 16 days away from making a weapon, which i doubt that and i doubt it would be an effective weapon at that. but it seems as though their desires are for a lot more than just to generate electricity and that’s what they’ve been saying for public consumption.
>> what do you view, if we remove the risk premium right now, what is the fundamental price right now given the supply situation for crude?
>> from a purely economic standpoint, supply and demand, i suspect between $38 and $42. but we’ve had the wall of worry and the prices have been climbing for three years and the elements that brought us to these levels are still with us and don’t appear to be closer to resolution.
>> $38 to $42, john felmy, is that where we should be disregarding the other outside factors?
>> i have often said if i could forecast oil prices, i wouldn’t be sitting here. we hav strong worldwide demand for petroleum and reduction of real supplies from venezuela, iraq, concerns about iran and other concerns in russia, nigeria, all these places around the world. it’s really hard to say. i think the market will prove out what ultimately the real fundamentals are. we’ll have to see what happens with iran, what they decide to do, what other oil supply countries decide to do and an porn point is, we do have over a billion barrels of emergency stockpiles we could use to mitigate a shortfall.
>> if we reach $70 a barrel, do you think there would be a significant change in u.s. demand going forward?
>> so far, we’ve seen preliminary data for the last month that demand is down so we’re already seeing some decrease and that may continue.
>> mike fitzpatrick, let me wrap up with you, if i could. your view about prices, the likelihood that we get to that $70 mark and go beyond by the end of the year?
>> it’s very possible that any one of these situations john just mentioned ignites or multiples of them ignite, we could be close to $100 in an eye blink.
>> mike fitzpatrick with fimat u.s.a., we very much appreciate your time joining us from new york and here in washington, john felmy, economist with the american petroleum institute, thank you both. while energy prices may be going up, the u.s. trade deficit shrank to $65.7 billion in february led by a decline in chinese imports that may be temporary. the gap narrowed from the record $68.6 billion in january and the deficit with china, the smallest in almost a year. but that may just reflect business shutdowns during the chinese new year holiday. and the treasury department announcing that government spending in march hit an all-time high for a single month. federal spending totalling $250 billion, up 14% from march of 2005, leaving a deficit of $85.5 billion in march. ahead, i’ll discuss the reports and the bush administration’s plans to revamp the bush administration’s plans with allan hubbard. first of all, health officials link bausch & lomb’s contact lens solution to a rare eye fungus. june grasso has details when we return.
