Maine news, sports, weather from Portland Press Herald / Maine Sunday Telegram, Portland, Maine

August 3, 2012

Briefcase

Lack of action on euro debt sends stocks sharply lower

NEW YORK - European leaders on Thursday gamely promised to keep tackling the continent's debt crisis. But the markets wanted much more.

Stocks sank across the United States and Europe, the euro fell against the dollar and investors dumped bonds issued by the governments of Spain and Italy. Investors had been expecting more immediate action from the European Central Bank and were disappointed by the plan's lack of details, especially considering ECB President Mario Draghi's pledge last week to do "whatever it takes" to keep the euro intact.

It was the second day in a row that markets were disappointed by a lack of decisive action from a major central bank. On Wednesday, stocks closed lower after the Federal Reserve made only vague promises about its plans for trying to revive the U.S. economy.

The Dow Jones industrial average fell 92.18 points to 12,878.88. The Dow had been down as much as 192 shortly after noon.

Mortgage rates inch higher after string of record lows

WASHINGTON - The average rate on a 30-year fixed mortgage rose this week after falling to record lows in each of the past four weeks.

Mortgage buyer Freddie Mac said Thursday that the rate on a 30-year loan jumped to 3.55 percent. It was 3.49 percent last week, the lowest rate since long-term mortgages began in the 1950s.

The average rate on a 15-year fixed mortgage, a popular refinancing option, increased to 2.83 percent. Last week's record low was 2.80 percent.

Cheaper mortgage rates have helped drive a modest but uneven housing recovery this year. Sales of new and previously occupied homes fell in June from May but were higher than the same month last year. Home prices have started to rise in a majority of cities.

Builders are also more confident after seeing more demand for homes. In June, they increased their spending for a third straight month.

Energy experts say Kasich overstating Ohio's reserves

COLUMBUS, Ohio - Gov. John Kasich's claim that a single energy company could recover $1 trillion worth of oil and gas from the state's shale is an exorbitant overestimate, according to experts interviewed by The Associated Press.

At current oil prices, that figure represents more than four times U.S. oil production last year. Viewed another way, all of the oil produced in America for the next four years will be worth roughly $800 billion, based on current prices and production rates.

"I think he's way off base," said Arthur Berman, a Texas-based petroleum geologist and independent energy consultant. "My best estimate is he's probably wrong by a couple of zeroes."

U.S. crude oil production in 2011 was 2.078 billion barrels. At roughly $100 a barrel, that's $200 billion worth of oil.

The revenue potential of newly accessible deposits of oil, natural gas and natural gas liquids under the state is important because Kasich is pursuing an increase in a state tax that large-volume oil and gas producers pay on what they extract. Proceeds from the tax would fund modest statewide income tax relief.

-- From news service reports

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