Marketplace: News Archives

Thursday, September 7, 2000
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It's Thursday, the 7th of September. I'm David Brancaccio.

In one of the biggest layoff announcements of the year, the phone company Qwest Communications International said today it's cutting 12,800 jobs over the next 15 months. Qwest of Denver completed its $36 billion purchase of the regional phone company U.S. West at the end of June and Qwest's CEO Joseph Nacchio has made it clear the remnants of U.S. West need some serious shaking up. Courtney Quinn is a telecom analyst at The Yankee Group.

Quinn: "There's just a very different corporate culture at Qwest. They tend to be more entrepreneurial, more of a 'start-up' atmosphere, whereas U.S. West has been around forever, since the break-up of the Bell system, and there's a lot of beauracracy built into that system. Qwest wants to eliminate that and make U.S. West as part of the new Qwest as more entrepreneurial."

State public utility regulators have been grumbling about the quality of service offered by the old U.S. West and one of the challenges for Qwest will be to improve quality even as it sheds more than 18 percent of its workforce. Qwest says mostly managers will lose their jobs, suggesting that unionized, blue-collar jobs will be spared.

President Clinton warned the Saudi Crown Prince today that the price of oil is so high, it could provoke a global recession. In response, the Crown Prince told the President he expected the oil producers cartel OPEC to boost production by three percent. That didn't impress oil traders in New York, where light crude prices were trading at near record levels and home heating oil prices reached levels not seen since the Gulf War. These are especially alarming headlines if you live where it will soon get cold. Today the Governor of Massachusetts warned of a winter heating oil crisis. We asked Marketplace's John Dimsdale to find out what's driving the prices up and ultimately, what it all means for consumers.

Dimsdale: "Heating oil prices in the Northeast, the region of the country with the most heating oil users, are averaging around $1.40 a gallon. That's high for this early in the heating season. But it could go higher according to experts and markets. The Department of Energy is estimating the average home heating oil bill will be 20 percent more this winter."

Horn: "And we're going to have some volatility. I don't think it's avoidable at this point."

Dimsdale: "Dick Horn is president of the Hughes Oil company with 8,000 heating oil customers in Boston. He says some of the high prices now can be blamed on worry about price and availability this winter."

Horn: "There's probably 10 or 12 cents in the wholesale price of heating oil and diesel fuel and jet fuel tied to emotionalism and sort of, you know, a little hysteria."

Dimsdale: "Horn says that hysteria premium could quickly disappear if oil-producing nations decide to increase their supplies at a meeting this weekend. But experts say there's little OPEC countries can do right now. Some oil producers, like Venezuela and Iran, are pumping at capacity already. And any increases announced now won't show up until next year. And then there's the weather. Dave Costello is an economist at the Department of Energy."

Costello: "At some point during the winter, it isn't just that it's cold like winter normally is, but that it's really cold for a little while. And you get some supply disruptions. That could have a big impact and send prices up higher."

Dimsdale: "But take heart, the Farmer's Almanac is predicting a mild winter this year. In Washington, I'm John Dimsdale for Marketplace."

An effort to eliminate the estate tax died an ugly death on Capitol Hill today. House Republicans tried to override President Clinton's veto of a bill to end the tax altogether, a tax that current affects about two percent of all estates. Democrats like David Bonior of Michigan called it an irresponsible tax cut for the rich.

Bonior: "When historians consider the effort to repeal the estate tax, they will say, 'Never have so many spent so much time to give so much money to so very few."

Republicans accused Democrats of playing class warfare, but ultimately fell 14 votes short of the number necessary to override the veto. But, the Clinton veto could help Republicans position the Democrats as pro-tax with the election approaching. The Treasury Department estimated that losing the estate tax would cost the government more than $115 billion over the next ten years.

And that's the top of our news for Thursday. Today the Dow fell 50 points, that's 0.5 percent. The Nasdaq rose 2.1 percent.