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Five Things You Need to Know: Halliburton to End Dependence on U.S. Oil; Middle East to End Dependence on Middle East Oil; Consumers to End Dependence on Wages; Skybus to End Dependence on Passengers; What Would Abraham Lincoln Do?


What you need to know (and what it means)!


Minyanville's daily Five Things You Need to Know to stay ahead of the pack on Wall Street:

1. Halliburton to End Dependence on U.S. Oil

Halliburton (HAL), which announced in March it was moving its chief executive to Dubai, yesterday said it would welcome a Middle East investor taking a "major" equity stake in the company, and may even dually list its shares in Dubai.

  • According to the Wall Street Journal, Halliburton Chief Executive David Lesar said, "One of my goals is to find investors interested in taking a long-term position with the company. We would welcome a Middle East investor taking a major equity stake."
  • Lesar also said the company plans to increase its revenue from the Middle East, targeting $80 billion worth of projects over the next five years.
  • Halliburton is the world's second-largest oil-field-service firm behind Schlumberger (SLB).
  • Schlumberger earned 28% of its operating income in the Middle East and Asia last year, according to the Wall Street Journal, while Halliburton earned just 15%.
  • According to the Journal, Mr. Lesar said the company plans to hire thousands of Arabs in the region as part of its new strategy to court favor with Middle Eastern governments.
  • Back in March, leading Congressional Democrats sharply criticized Halliburton for relocating its chief executive to Dubai, suggesting it was possibly an effort to dodge American taxes and investigations.
  • As it turns out, that was flat out wrong.
  • The relocation was simply an effort to try and sell a major stake in the company to rich Middle Eastern investors flush with cash after years of high oil prices.

2. Middle East to End Dependence on Middle East Oil

Barely a year after a high-profile "national security" debate over the sale of U.S. port management businesses in six major U.S. seaports to Dubai Ports World, a company based in the United Arab Emirates, Halliburton (HAL), said it would welcome a Middle East investor taking a "major" equity stake and may dually list its shares in Dubai.

  • No worries.
  • Hypocrisy aside, this is all part of the U.S. plan to end its dependence on foreign oil.
  • Almost a year ago, U.S. President George W. Bush outlined his administration's plan to sharply America's dependence on foreign oil.
  • "Our dependence on oil creates a threat to America's national security because it leaves us more vulnerable to hostile regimes and to terrorists who could attack oil infrastructure," President Bush said.
  • Seizing on this plan, companies such as Schlumberger and Halliburton have really taken the "national security" issue of foreign oil dependence to heart... namely by reducing their exposure to North American work projects while increasing their exposure, relationships and projects in the Middle East.
  • Now this may seem contradictory at first blush, especially to the uninitiated who haven't had the opportunity to run Halliburton and then later become U.S. Vice President.
  • But clearly, the thinking here is simply that Middle East investors, flush with cash after years of high oil prices, will be more likely to work to...uh... keep oil prices... ahem... lower if they own parts of United States-based companies whose profitability.... er... depends on... (cough)... high oil prices which create a need for oilfield services companies... because... you know, if the price of oil were to go down... no, wait.... up?... no, that's right....down.... then, well, that would mean that demand has fallen.... naturally... and... uh... then companies like Halliburton would make less money?
  • So THAT'S RIGHT! This is a long-term plan to sell highly profitable U.S.-based oil services companies to Middle East investors and then bankrupt them when the price of oil goes down because we are no longer dependent on their oil!

3. Consumers to End Dependence on Wages

Speaking of dependence on foreign oil, an article in this morning's USA Today carries the following headline: "Impact of rising gas prices 'fairly limited', economists say." Really? Interesting.

  • "Drivers may be griping about record high gasoline costs, but the recent surge in the price at the pump will have little impact on most consumers and will be hardly noticed in the broad economy, say several economists, including those at Standard & Poor's, LaSalle Bank and the Federal Reserve Bank of Dallas," the newspaper says.
  • Ok, but didn't we read just last week in the very same newspaper that Americans are driving substantially fewer miles for the first time in 26 years because of high gas prices?
  • We did.
  • So what are these economists seeing that last week's news story didn't?
  • Simple, rising incomes will help offset higher gas prices for most Americans, they say.
  • "Wages and salaries for workers in private industry were up 3.6% in March from a year earlier, after a 2.4% gain in March 2006, according to the Labor Department," the newspaper helpfully notes.
  • But what about another measure of earnings, the Labor Department's Real Average Weekly Earnings?
  • Real Average Weekly earnings fell by 0.5 percent from March to April, the Labor Department said.
  • The measure has now fallen in three of the past four months and seven of the last 12.

4. Skybus to End Dependence on Passengers

Discount airline Skybus debuted Tuesday with ticket prices on some routes as low as $10.

  • The carrier, which initially began flying with 14 jets from Columbus, OH to Burbank, CA, promises to sell at least 10 seats per flight for $10, with the rest costing about half of the pre-Skybus market.
  • In addition to Burbank, the carrier services two other cities: Kansas City, Mo., and Portsmouth, N.H., near Boston.
  • Flights reportedly will begin next week to Fort Lauderdale, Greensboro, N.C., Oakland and Bellingham, Wash., the USA Today reported.
  • Skybus' leased Airbus A319 jets can carry 144 passengers, while 65 new models scheduled for delivery next year will have 156 seats.
  • Skybus has raised $160 million in start-up equity from backers including Morgan Stanley, Fidelity, Tiger Management and Nationwide Mutual Insurance.
  • "We're sort of embarrassed our fares are as high as $10," CEO Bill Diffenderffer said in an interview, according to the USA Today.
  • Minyanville predicts that embarrassment won't last long, however.
  • Skybus' ultra-low $10 fares are all part of the airline's efforts to compete with the major air carriers such as Delta, US Airways, United and Northwest, by skipping years and years of moderately unprofitable operations and jumping almost immediately into bankruptcy.

5. What Would Abraham Lincoln Do?

We miss Chris Black's excellent site. Now lost in cyberspace after debuting in 2000 - perhaps a victim of the "cyclical" bull market - it was the first and, until now, the last Web site we know of to feature the hideous jabbering head of Abraham Lincoln.

Because we are living through such a difficult, divided time in America, not unlike the Civil War during which Abraham Lincoln was President (except for all the brother-against-brother killing and slavery and stuff), Minyanville Senior Editor Jon Schwartz (email complaints here) thought it would be an ideal time for me to sit down with President Lincoln for an interview.

Minyanville Presents an Interview With Abraham Lincoln.

1).jpg" width="78" /> Mr. Presid...

Please, call me Rail Splitter, sonny.
I'm not going to call you "Rail Splitter", Mr. President.
Why not?
It's too weird.

Mr. President, I'd like to get your perspective on the increasing division between Haves and Have Nots in our society, the apparent growing class divide and how it may compare to the problems you faced during your own administration.

Mr. President?

Ok, fine. Rail Splitter, I'd like...
There you go! That's the spirit!
Fine. I'd like to get your perspective on the increasing division between Haves and Have Nots in our society, the apparent growing class divide and how it may compare to the problems you faced during your own administration.
Good Lord, son. Because you people got a few folks that can't afford a plasma TV you think you got a damn Civil War on your hands!? I had whole states forming their own country for crying out loud! Whole states! That's a Civil War.
Well, with all due respect Mr. Pre... Rail Splitter... I think the divide between Haves and Have Nots in our society runs a bit deeper than who can own a plasma TV.
Ha! Have you seen those things?! They're crystal clear! Crystal Clear! You watch a football game and it's like totally being there.
Well sure, they're nice, but that's completely beside the point.
Poppycock, m
an! Poppycock! I would've given my right arm for a plasma TV back in my day. Imagine it, the ability to watch theater-quality entertainment in the privacy of your own home! I dare say things might have turned out a bit differently for Ol' Rail Splitter with a plasma TV.

Maybe this wasn't such a good idea.
I'll tell you what's a good idea... home movies on demand. That's a good idea.
Right. I don't think I have anything else then.
Yessir, let's look at the pros and the cons of going to the theater versus home video on demand. Let's see, the theater has... assassins! You go to the theater... and you get assassinated! That's a pretty big con in my book. Yet home movies on demand seem to come without assassins!
Hmmm, which do I choose, assassins or no assassins?
I have to go now.
Want to go see a play later?
Seriously, I have to go.
Don't be so squeamish.

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