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The Wall Street Journal (2/11, A14, Luhnow, subscription required) reports that Venezuelan President Hugo Chávez on Sunday "threatened to cut off oil sales to the U.S. over an escalating fight between Exxon Mobil Corp. and the nation's state-controlled oil company." However, the Journal, noting that Chávez "has made similar threats over the years," says the nation "is considered unlikely to act in a way that hurts U.S. oil supplies long-term, reflecting the nation's dependence on the big U.S. oil market and its need for petrodollars." In addition, "With his popularity slipping at home from bungled economic policies, Mr. Chávez can ill afford major missteps. In fact, most analysts see his recent comments as evidence that he is seizing on the Exxon move to try to gain needed political capital at home by casting Exxon as an exploiter of the poor."

        The Washington Post (2/11, A2, Mufson) also reports that analysts "believe it is unlikely that Chávez would carry out his threat," noting that Venezuela, "beleaguered by food shortages, depends heavily on oil exports for about 90 percent of its export earnings and about half of government revenue." Currently, "Venezuela sells about 1.3 million barrels a day of oil to the United States, making it the fourth-largest source, at 14 percent, of U.S. petroleum imports."

        Similarly, the New York Times (2/11, A13, Romero) notes that Chávez "has repeatedly threatened to cut off oil supplies to the United States, but has never done so." The U.S. is actually Venezuela's "top trading partner," despite "deterioration in political relations."

        The BBC (2/11) points out, however, that even if Chávez does not halt oil supplies, "the latest outburst does highlight a growing ideological divide that daily shows little sign of easing."

        Meanwhile, the AP (2/11, Sierra) reports, "Venezuelan Oil Minister Rafael Ramirez has argued that court orders won by Exxon Mobil have 'no effect' on the state oil company PDVSA and are merely 'transitory measures' while Venezuela presents its case in courts in New York and London."

        According to BusinessWeek (2/11, Wilson), "PDVSA might have a good chance of getting the orders overturned, says Roger Tissot, an independent oil analyst, but only if it were willing to prove to the courts it could meet any order to pay compensation." Still, "Venezuelan officials may not be willing to open the books."

        On the other hand, "According to Patrick Esteruelas, an analyst at Eurasia Group, if the court orders are upheld, PDVSA's ability to raise finance for ambitious investment plans and growing spending obligations could be limited," the Financial Times (2/10, Mander, McNulty, subscription required) reported. "Exxon's move could also complicate PDVSA's strategy of selling overseas refining assets, after it divested some owned by its subsidiary Citgo in the U.S. last year. PDVSA still has stakes in 14 refineries in the U.S., Europe and the Caribbean worth about $15 billion." Bloomberg (2/11, Bodzin) and the AFP (2/11) also cover the story.

The Wall Street Journal (2/9, Bater, subscription required) reported that the Commerce Department said Friday "[w]holesale inventories increased 1.1 percent at a seasonally adjusted $411.60 billion" in December, "after rising a revised 0.8 percent during November." This is the "the highest rate in more than a year...as sales plunged." The Journal calls it a "worrisome sign that unsold goods were piling up on shelves as the economy braked." Inventories of durable goods "increased 0.9 percent in December, after increasing 0.4 percent in November. Automotive stocks surged 3.5 percent after rising 2.6 percent in November. Inventories of metals increased 1.7 percent," while "[i]nventories of electrical goods rose 1.2 percent."

        Machine tool demand rose eight percent in 2007. Reuters (2/11, Rascoe) reports that "U.S. machine tool demand rose 8 percent in 2007," as "total machine tool demand increased to $4.261 billion from $3.944 billion in 2006." The 2007 growth was attributed to "manufacturers' use of innovative technology to improve productivity." While "December demand for machine tools, which gives a sense of the pace of manufacturing, rose 31.9 percent in the Midwest and was up 16 percent in the South," demand in the West "fell by 11.2 percent" and "was down 7.9 percent in the Central United States. Demand also declined 4.7 percent in the Northeast."

The New York Times (2/10, A16, Fackler) reported that G7 leaders recently "offered a more pessimistic view of the global economy than they did four months ago." The finance ministers and central bank chiefs also "said the fundamental elements of the global economy remained strong and the U.S. was likely to avoid recession." While the statement "pledged joint action to calm shaken financial markets," it was "short on specifics, especially on steps to rekindle growth." G7 "[m]embers urged China to absorb more imports by raising the value of its currency and they also called on oil-producing nations to help cut energy prices by raising output." Some members "warned that higher fuel and food costs could cause global inflation." The AP (2/9, Kageyama) also covered the story.

        Recession fears set in as economic news worsens. On its front page, Newsday (2/10, A1, Marshall) reported, "Locally and nationally, the economic picture has darkened considerably in the last month, with perhaps worse news about employment and home prices still to come. ... Over the last two weeks alone, the news included falling home sales and home prices, economic activity that's barely growing, job losses nationwide and a contracting service sector." Mark Zandi of Moody's Economy.com said the weakness "is centered in housing and mortgage finance but the problems are now bleeding out." These concerns, experts say, "are coming at a time when many businesses and consumers have little to cushion a fall, since the boom of the last several years was fueled mostly by housing, debt and easy credit -- not by increased profits and higher wages."

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The Wall Street Journal (2/11, A3, Boudette, Kosdrosky, subscription required) reports that "Chrysler LLC is laying out a turnaround plan based on a radical idea: offering a smaller number of models will lead to bigger profits." The automaker "plans to drop as many as half of the roughly 30 models it now produces" over the next three years, in "a move likely to cut sales at least for a while. Along the way, it expects a substantial consolidation in its network of 3,600 dealers."

        Jim Press, Chrysler's vice-chairman, "disclosed that the carmaker had cut production by an annualized 300,000 units over the past six weeks, mostly to reduce low-margin sales to car-rental companies and other fleet operators," according to the Financial Times (2/10, Simon, subscription required). "These cutbacks are likely to be permanent."

        The Detroit News (2/9, Terlep) noted that Chrysler is "under pressure after losing an estimated $1.6 billion last year," but will "use virtually all of its $3 billion annual capital allowance from owner Cerberus Capital Management LP to improve existing products and fill holes in the lineup where they exist." Press said, "We have $3 billion to invest. ... We really need to get an effective product portfolio and invest in effective and efficient manufacturing."

        The Detroit Free Press (2/10, Higgins), however, reported that the company "also plans to add some new models in areas that it lacks and is in talks with other automakers about using their platforms -- with a Chrysler-styled body on top -- to be sold under a Chrysler brand, Chrysler President Jim Press said Saturday during a meeting with reporters." Reuters (2/11, Krolicki) also covers the story.

The AP (2/11, Krisher) reports that, according to the chief economist of the National Automobile Dealers Association (NADA), Paul Taylor, "U.S. car and light truck sales will drop to about 15.7 million for the full year. That's down about 2.5 percent from the 16.1 million vehicles sold in 2007, the worst year in a decade, and down 1.3 million vehicles from the 17 million sold as recently as 2005." At NADA's annual convention, Taylor went on to say that "the economy could slip into a recession if the Commerce Department revises fourth-quarter 2007 gross domestic product growth downward from the anemic 0.6 percent it reported last month. Two more revisions of fourth quarter statistics are possible, and if the first quarter of this year is also negative, that would mean a recession."

        In a Bloomberg (2/11, Ramsey) report, Taylor attributes the falling sales to "[e]nergy costs of gasoline, home heating and cooling," which "will continue to drain money from consumer budgets and slow down consumer spending." Bloomberg notes that the "next U.S. retail sales report, set for release this week, may show purchases excluding automobiles climbed 0.2 percent, after a 0.4 percent drop in December, the median of economists polled by Bloomberg."

        Still, "While the consensus view among analysts and high-profile investors points to a further decline in the car industry's single-largest market in 2008," Reuters (2/11, Krolicki) adds, "there is still a debate about how deep the slump will become."

        European auto stocks dip over past three months. The Wall Street Journal (2/11, C2, Rauwald, subscription required) reports that, though they "roar[ed] ahead for most of the past year, European auto stocks hit a sharp decline over the past three months." Much of this is due to "strong euro compared with the dollar, lackluster demand for cars in crucial markets such as the U.S. and Western Europe, and recession fears." Also, "sluggish demand in mature markets such as North America and Europe amid high gasoline prices eat into earnings, as margins and sales volumes in the emerging markets where the automakers are turning for growth are usually lower." Still, there "are some possible bets to the upside. Among the most frequently named top picks in the European auto sector in turbulent times is Daimler," though BMW is "also considered to be a relatively safe wager in jittery markets."

On the front of its Business section, the Washington Post (2/9, D1, Ahrens) reported that Polaroid has announced it "is shutting down factories in the United States and abroad as the company abandons the technology that made the instant photo possible." Polaroid said it "will cease production of its film by next year." The Post attributed the death of the technology to "Flickr webpages full of digital images, flawlessly produced by cameras that do not require film, emulsion or anything bigger than a shirt pocket to carry them around."

        The Wall Street Journal (2/9, Kingsbury, subscription required) explained that Polaroid "has turned its focus to digital, where the film business has migrated over the past decade. The wrenching transformation, for example, has resulted in the loss of 27,000 jobs in a $3.4 billion, four-year restructuring at Eastman Kodak Co." The company "has two film plants in Massachusetts, where the company is based, and facilities in Mexico and the Netherlands. The U.S. plants employ about 150 people."

        The AP (2/9) adds that "Polaroid instant film will be available in stores through next year, the company said -- after which...Japan's Fujifilm will be the only major maker of instant film."

The Wall Street Journal (2/9, A3, Matthews, subscription required) reports that "Nucor Corp. will buy one of the U.S.'s biggest scrap-metal companies for $1.44 billion in a deal that boosts Nucor's already-large profile in the scrap-metals business and helps shield it from volatile scrap prices." Nucor announced it will "buy scrap broker and processor David J. Joseph Co.," which will allow the company to "lock up a supplier and not worry as much about competing with overseas scrap-metal buyers, which are paying premiums for scrap metal. It also would enable the company to make more steel for export and take advantage of the weak dollar."

        Forbes (2/9, Ackerman) notes that "CIBC World Markets analyst Michael Willemse said that the acquisition will allow Nucor to pocket more of its sales." Willemse also "forecasts that earnings will trend higher in 2008 as steel prices increase, the value of the dollar decreases, and Chinese exports dwindle." He said, "Two years ago imports supplied about 35 percent of the U.S. market. ... Now it has gone to almost zero. That's good news for Nucor."

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The Washington Post (2/9, A3, Fahrenthold, Mufson) reported, "A federal appeals court yesterday threw out the Environmental Protection Agency's (EPA) approach to limiting mercury emitted from power-plant smokestacks, saying the agency ignored laws and twisted logic when it imposed new standards that were favorable to plant owners." This "ruling, issued by the U.S. Court of Appeals for the D.C. Circuit, was another judicial rejection of the Bush administration's pollution policies. It comes less than a year after the U.S. Supreme Court rebuked the administration and the EPA for refusing to regulate greenhouse gases." The Post calls the ruling "especially sharp," since it "compared the EPA to the capricious Queen of Hearts in 'Alice's Adventures in Wonderland.' ... The EPA responded to yesterday's ruling by saying that the ruling wiped out a valuable program that would have reduced mercury emissions by 70 percent."

        The Wall Street Journal (2/9, A2, Smith, subscription required) called the appeals court's ruling "sharply worded" and noted that, "[o]n a practical level, Friday's decision could force the utility industry to upgrade more power plants."

        The New York Times (2/9, A13, Barringer) explained that the "panel said the agency had ignored its legal obligation to require the strictest possible controls on the toxic metal or to justify an alternative approach. The ruling against a signature environmental policy of the Bush administration is the latest to reverse agency actions as inconsistent with environmental laws."

The Wall Street Journal (2/11, A6, Drucker, subscription required) reports that tax experts say the "business tax cuts in Congress's economic-stimulus package passed Thursday will cost nearly triple the official government estimate." The business incentives are expected to "cost more than $22 billion over the next 11 years, or roughly $15 billion more than the government's long-term estimate of $7.5 billion." However, while the "cuts create a big initial cost to the government," firms will "then get smaller tax deductions in future years, which means the government eventually recoups much of its lost revenue." The bill's "largest business break," called "accelerated depreciation," will permit "companies to take much larger tax deductions on this year's capital investments, instead of spreading those deductions over several years. Under the proposal, a company would be able to add a larger deduction immediately of at least 50 percent of the cost of the equipment to a portion of the normal deduction." This is meant to provide "an incentive to speed up business-equipment purchases, thus stimulating the economy." But, "Congress passed a nearly identical "bonus depreciation" tax break in 2002 that lasted for almost three years," and studies analyzing the break "found businesses didn't significantly speed up purchases of equipment."

        Bush to sign stimulus bill Wednesday. Reuters (2/10, Pelofsky) reported that President Bush announced "he would sign on Wednesday a $152 billion package aimed at boosting the U.S. economy and ward off a recession." When Bush was "asked whether he would consider further action if the economy continued to sputter" on Fox News Sunday, he replied, "We just have to play it by ear."

The New York Times (2/10, WK11) editorialized that it is "good news" that Wall Street and Main Street caught on to the opposition over coal-fired power plants without technology to capture greenhouse gasses. "The failure -- by both the Bush administration and Congress -- to encourage alternative sources of power is distressing." Congress needs "to extend important tax breaks for alternative energy sources that are set to expire at the end of this year. These incentives have been critically important to the development of wind and solar power; wind power has become increasingly cost-competitive with natural gas, although not yet with coal. Investors are unlikely to pump much new money into clean power unless they are sure the credits will be available next year."

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New Hampshire's Nashua Telegraph (2/9, McKeon) reported that Kollsman, Inc., an "avionics and electro-optic systems manufacturer" in Merrimack, "received $70,000 from the state Job Training Fund." With Kollsman "matching the grant, as many as 15...manufacturing assemblers can now earn an electronic technician certificate and potentially increase their earnings from $15 to $20 an hour." According to the Telegraph, Kollsman "officials opened their doors" last week "to Gov. John Lynch (D), who toured the facility and told workers about the benefits of the Job Training Fund." Lynch pointed out that "he made reestablishing the program," which "went dormant in 2002," a priority a year ago. Plant assemblers "will attend Nashua Community College every other Friday...and take 18 months' worth of courses." Upon successful completion of the program, they will earn a certificate that will enable them to rise "from entry-level assembler to the more advanced technician position." Jack McStravock, Kollsman's vice president of human resources, said that this will allow the company to "gain 10 to 15 new technicians without having to hire from outside."

The Milwaukee Journal Sentinel (2/9) editorialized that the remaining presidential candidates should begin speaking on subjects important to Wisconsin, noting, "We're Midwesterners with some distinctly Midwestern concerns -- problems with which we have some unfortunate, up-close and personal familiarity." Problems like manufacturing have "particular resonance for a state that has long viewed itself as the nation's machine shop." The Journal Sentinel then asked "Sens. Clinton, Obama and McCain, what will you do about the following?" Manufacturing and trading, in which "jobs have been bleeding away for a while," as "Congress, of which you three are members, allowed a research and development tax credit to expire. According to the National Association of Manufacturers, 11,000 companies used that tax credit. And because it lapsed, they are paying $9 billion more in taxes." Wisconsinites "are generally free-traders but want it done in such a way that opens up markets to U.S. products -- manufactured or otherwise, opens up our markets to others and protects environments and workers abroad." On healthcare, the Journal Sentinel noted, "we'd like your thoughts on cost containment, for sure. But we'd still like everyone covered." The newspaper also specifies alternative energy, the Great Lakes, transportation, and education as important issues for the state.

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