A study released Mar. 27 by consultancy Cambridge Energy Research Associates carries a sobering warning for the global economy after the recession ends and growth resumes: Thanks to the plunge in crude prices since mid-2007 and a resulting cutback in oilfield and production investment, shortages in capacity may appear within five years, leading to an oil price shock.

Although oil majors such as Exxon and Shell say they are keeping their investment plans unchanged this year despite falling prices and the slowdown in demand, many Mideast producers have scaled back. As a result, Cambridge Energy warns, nearly 8 million barrels per day of expected output may be “at risk.” At its recent meeting in Vienna, OPEC also warned of a possible price rise when the economy turns around and demand picks up again.

Source: Wall Street Journal, New York Times

Obama: Help for Detroit Comes with Strings

President Barack Obama said Mar. 26 during an online “town hall” meeting that his administration will unveil an aid package for the ailing U.S. auto industry within the next few days, but that it will entail “painful” and “pretty drastic” changes for carmakers. If the companies don’t agree to aggressive restructuring, Obama warned, “I’m not willing to have taxpayer money chase after bad money.”

Source: Washington Post

The Looming Battle over Geithner Reform Plan

Markets reacted positively to the proposals outlined Mar. 26 in Washington by Treasury Secretary Timothy Geithner to drastically reshape regulation of the financial services industry. But behind the scenes, industry groups are already mobilizing to block restrictions they oppose and win new protections they have wanted for years. Expect a months-long political battle pitching interest groups against one another.

Source: New York Times, BusinessWeek

Barclays Soars on ‘Stress Test’ Success

Shares in the big London bank jumped as much as 10% Mar. 27 on news that it has passed a thorough audit of its books conducted by Britain’s Financial Services Authority watchdog. The clean bill of health means that Barclays likely won’t have to seek additional capital from shareholders or outside investors.

Source: Financial Times, Times of London

Facebook is Hunting for More Money

Facing rising costs for the computers and networks needed to support its surging traffic, the social-networking site is working to secure as much as $100 million in debt financing from big banks, sources say.

Source: BusinessWeek

In Hollywood, Rethinking a Venerable Business Model

The mood in Hollywood is decidedly anxious. After decades of success, there’s a sense that it may all be coming to an end—that the threat this time is real and that the old business models can’t survive. Blame the Internet, the rise of legal and illegal downloading, and tight financing.

Source: Washington Post

Las Vegas Developer May File for Bankruptcy

CityCenter, the troubled residential and casino development in Las Vegas backed by MGM Mirage and Dubai World, has hired a law firm to prepare for a potential bankruptcy filing, possibly within days. Backers are likely to miss a $220 million debt payment due Mar. 27 for the sprawling and unfinished $8.6 billion project.

Source: New York Times

Air France-KLM Sags on Loss Warning

Shares in Europe’s largest airline, Air France-KLM, fell as much as 7% early on Mar. 27 after the carrier warned it will lose $272 million for the year ending Mar. 31 amid deteriorating economic conditions and a slump in corporate travel. The carrier also mistakenly hedged fuel prices at above their current price.

Source: MarketWatch

State Aid Urged for Troubled Russian Banks

A senior Russian banking official has warned that hundreds of domestic banks are at risk of going under this year as bad loans rise to as much as 20% of their portfolios. Pyotr Aven, president of Alfa Bank, called on the government to move swiftly to recapitalize the top 30 banks and name the institutions that will receive assistance.

Source: Financial Times

WTO Cautions on Rising Protectionism

Facing pressure to keep jobs at home, leaders around the world have edged closer to protectionism, which could eventually choke global trade and prolong the recession, the head of the World Trade Organization warned on Mar. 26.

Source: Washington Post

Europe on Top Again in Tech-Readiness Index

An annual survey by the World Economic Forum that examines technology infrastructure and usage patterns around the globe finds seven of the top 10-ranked countries in Europe, with the strongest showing from Nordic nations that have invested heavily in developing information-age economies.

Source: BusinessWeek

Conversation of the Day: Securing the Smart Power Grid

Reader Marc Jacquinot writes: “You can easily create secure, hacker-proof communication channels between smart grid components using smart card technology.”

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Hot Topic on the Business Exchange: Facebook

Facebook is looking for $100 million in financing to pay for its huge growth, while it grapples with negative reaction to its new interface. Robert Hof and others are sharing their insights.

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