Energy Prices Top Business Story of 2005
Dec 21, 2005 (AP Online via COMTEX) -- When drivers line up to pay $3 a gallon for gasoline and offshore oil platforms go missing, it's much more than an energy story. It's the story of the economy.
Energy proved its economic power this year, as soaring prices reshaped the way consumers spend, put the squeeze on airlines and manufacturers, and ratcheted up pressure on already struggling U.S. automakers dependent on sales of SUVs. Then Hurricane Katrina hit.
The consequences and questions prompted by soaring oil and natural gas prices drove many of the year's top business stories, as chosen by the U.S. newspaper and broadcast editors surveyed by The Associated Press.
They named energy as the biggest business story of 2005, with Hurricane Katrina's impact on the economy ranked second.
It marked the second year in a row that energy prices rose to the top of the business headline ranking.
But some other perennial business newsmakers were notably absent from this year's Top 10 list, including the Federal Reserve's continuing campaign of interest rate hikes, competition from China and the fall and rise of Martha Stewart.
Here, according to editors polled by the AP, are the top business stories of 2005.
1. ENERGY PRICES: When oil topped $55 a barrel in 2004, it was big news. But by this fall, those numbers seemed almost quaint. Crude oil prices, already high, soared to $70 a barrel after hurricanes shuttered Gulf refineries and offshore sources of energy. It has eased since, but the still-high prices could crimp consumer spending and contribute to rising inflation into the new year. Energy continues to squeeze a broad range of businesses, and could force others to adjust their offerings.
2. KATRINA'S TOLL: The massive hurricane ravaged Louisiana and Mississippi, inflicting huge losses on insurers and businesses. Katrina, followed less than a month later by sister storm Rita, shut down much of the region's energy infrastructure. But the damage reached far beyond, disrupting shipping traffic, driving up prices for some goods and eliminating more than 600,000 jobs. The economic fallout was largely contained to the region, but on a scale that will take years to resolve.
3. AUTO WOES: The problems facing the domestic auto industry steadily worsened. General Motors Corp. and Ford Motor Co., weighed down with high costs and faced with slowing demand for their vehicles, saw their debt downgraded. Auto parts maker Delphi Corp. filed for bankruptcy protection, and investors speculated whether GM would follow suit. The automakers won concessions from the autoworkers union for cuts in employee retirement and health care costs, but analysts wondered if the deals reached will be enough to allow a turnaround.
4. AIRLINES FALTER: Delta Air Lines Inc. and Northwest Airlines Corp. took refuge in bankruptcy, as the nation's established airlines continued their struggles to remake themselves. Both carriers fought through the year to cut their costs. At Northwest, that included replacing striking mechanics whose wages it had sought to cut.
5. PENSIONS RETIRED: Scores of troubled companies defaulted on their pension promises, turning over to the federal government retirement plans covering 235,000 workers and retirees. The problems that began with big steel companies and airlines earlier in the decade could continue if the auto and parts makers seek bankruptcy protection.
6. HOUSING COOLS: The red-hot housing and real estate market finally shows some signs of cooling after a record run. But not by much. Construction of new homes remains near record levels, and prices for existing homes remain sky-high in many markets. Still, rising interest rates have taken some of the edge off demand.
7. FED CHANGEOVER: After 18 years at the helm of the Federal Reserve, Alan Greenspan is readying to step aside. President Bush has nominated replacement Ben Bernanke, currently chairman of his Council of Economic Advisers, who has pledged not to veer dramatically off the course set by Greenspan.
8. JAIL TIME: Former WorldCom Inc. CEO Bernard Ebbers and onetime Tyco International Ltd. CEO L. Dennis Kozlowski were sentenced to lengthy prison terms, following jury trials on corporate fraud charges.
9. GROWTH CONTINUES: The economy showed surprising resilience, continuing to expand steadily despite soaring energy prices and a series of hurricanes. It grew 4.1 percent in the third quarter, and analysts said they expect that growth has extended - although likely at a slightly slower rate - through the end of the year.
10. RUSH TO COURT: Courts saw a rush of activity, as weary consumers sought bankruptcy protection before October, when a new law took effect tightening filing requirements. The rush pushed the number of bankruptcy petitions over 2 million for the year, well above the previous record of 1.66 million.
The following stories filled out the Top 20 in this year's survey:
11. A group of dissident unions split away from the AFL-CIO, reflecting bitter debate in the labor community over struggles to keep membership from eroding.
12. The Federal Reserve steadily raised bank lending rates, announcing its 13th hike in December.
13. Google Inc.'s profits soared, as shares of the Internet search giant soared above $400.
14. President Bush's efforts to overhaul and privatize Social Security stalled, leaving questions at the heart of the debate unresolved.
15. Wal-Mart Stores Inc. launched a public relations blitz in an attempt to turn back repeated criticism about its treatment of workers.
16. Telephone companies made a big push into broadband competition, taking on cable television companies.
17. Merck & Co. lost its first defense of Vioxx in a state court but won the second, cut 7,000 jobs and announced plans for plant closings. But after a mistrial in federal court, the drug maker continues its battle in to the New Year.
18. Martha Stewart completed a five-month jail sentence, after her conviction for lying to the government about a stock sale, and her return home put her back in the spotlight.
19. Federated Department Stores, parent of Macy's and Bloomingdale's, took over rival May Department Stores, owner of the Lord & Taylor and Marshall Field's chains.
20. Procter & Gamble Inc. bought Gillette Co., marrying some of the biggest names in consumer products.
By ADAM GELLER AP Business Writer
Copyright 2005 Associated Press, All rights reserved
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