Texas Business Report: BP Gets in the Wind Game

BP has invested more than $1 billion in wind energy in Texas, Dell's stocks take a dip, and every minute spent waiting in line at the border costs companies $116 million.
Sat February 25, 2012 2:38 am
Flickr | Charles Cook

The Texas economy is one of the most robust in the world. Wildly profitable companies and ingenious entrepreneurs call this state home, and what happens here influences businesses around the nation. Here’s a slice of the profits, losses, big deals, and backroom decisions happening across Texas this week.  

From Oil Spill to Windmill
It may take years for the Deepwater Horizon scandal to blow over, but in the meantime, BP is investing in wind power . This week the British energy company began commercial operations at the 20,000-acre Sherbino 2 wind farm near Fort Stockton. According to UPI, the farm’s sixty turbines “can generate enough electricity to meet the demands of 45,000 homes.”

The Bottom Line: BP has installed one thousand turbines in seven states over the last five years, and the company says it has invested more than $1 billion in wind power in Texas alone.

A Cold Day at Dell
Dell’s stock took a dip this week after its latest earnings report underwhelmed analysts and investors—it showed that profits declined by eighteen percent and sales fell off by seven percent in the fourth quarter, the Austin American-Statesman reported.

Dell, which is shifting its focus toward “high-value systems and services,” attributed its slow sales in part to the worldwide shortage of hard drives resulting from flooding in Thailand last year.

The Bottom Line:  This news comes a week after CNBC’s Jim Cramer called the company “one of the hottest turnaround stories in tech.” Some analysts believe the prediction could still prove true, arguing that the market is overreacting to the report and that Dell is still poised for long-term growth. 

Study: Frack Flak May be Whack
Hydraulic fracturing, also known as fracking, has been a hotly debated environmental issue in recent years, and a University of Texas study released last week could give the oil and gas industry more ground in the discussion–the report suggests that fracking is no more environmentally harmful than other types of drilling.

The study also indicates that “the hydraulic fracturing of shale formations to develop natural gas has no direct connection to groundwater contamination,” according to the Dallas Business Journal.

The Bottom Line: Meanwhile, the Obama administration is becoming increasingly vigilant in monitoring fracking practices, tightening rules requiring companies to disclose the types of chemicals they use. The Houston Chronicle recently examined how existing state policies compare to a draft of new federal regulations that leaked earlier this month. Drillers contend that the disclosure rules would put their trade secrets at risk. 

Border Line Ridiculous
A group of El Paso business leaders headed to Washington this month to voice concerns about the negative economic impact of long wait times at bridges crossing the border from Ciudad Juárez. They argue that the delays deter companies from locating to the area because the lost time makes it inefficient to move employees and products from one side to the other. 

One executive told the El Paso Times this week that “border wait times at the five busiest southern ports of entry average over one hour,” costing the U.S. economy “nearly 26,000 jobs and $6 billion in output, $1.4 billion in wages and $600 million in tax revenue” annually. That works out to $116 million lost for every minute of delay at the border.

The Bottom Line: In a 2008 study, the U.S. Department of Commerce projected that border wait times could exceed one hundred minutes within the next five years, resulting in as much as $12 billion in lost economic output annually.

Winner of the Week: Central Texas Hotels
Getting Austin’s Formula 1 project on track has been a long, slow process, but hotels in the Austin area wasted no time in driving up prices.

The Austin American-Statesman found that rooms in the city are already going for up to five times the normal nightly rate for the week of the November race—even hotels in Buda and Lockhart are getting in on the action, charging more than $400 a night.

Call it opportunism if you must, but the drastic increases technically don’t qualify as price gouging under state law, which applies “only when a state of emergency or disaster is declared,” according to the Statesman

Loser of the Week: Coastal Rice Farmers
Despite a rainy start to 2012, last year’s drought continues to take its toll on the state’s agriculture industry.

This week the Lower Colorado River Authority approved a plan that could reduce the amount of water usually released to farmers in the coastal region for irrigation. The San Antonio Express-News reported that the LCRA has previously released an unlimited supply of water for farming when the Highland Lakes reservoirs were full, but the lakes are currently at about forty percent capacity.

The gloomy outlook for coastal growers was also the focus of a Washington Post report on Thursday examining the fallout from Iraq’s decision to stop buying American rice in favor of cheaper rice from Asia. The country “had accounted for about 2 percent to 5 percent of U.S. sales each year,” according to the Post.

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