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Hurricane’s Damage to Oil Facilities in Gulf Sends Prices Up

By Jad Mouawad
THE NEW YORK TIMES

As the extent of the damage to offshore oil facilities in the Gulf of Mexico slowly became apparent a day after Hurricane Katrina’s passage, oil prices soared above $70 a barrel and gasoline futures jumped by 20 percent Tuesday on concerns it would take months to restore production to pre-storm levels.

For consumers across the nation this means that retail gasoline prices are likely to jump above $3 a gallon — matching inflation-adjusted records reached in the early 1980s — just as millions of drivers hit the roads on the Labor Day weekend.

On the New York Mercantile Exchange, crude oil futures closed at $69.81 a barrel Tuesday, a 3.9 percent jump, after touching a high of $70.85 a barrel earlier in the day, a reflection of how little slack there is on global energy markets to make up for shortages in the gulf.

The hurricane, one of the most severe storms to ever hit the United States, crippled the nation’s foremost oil-producing region at the worst possible time for American and global energy markets. It will probably take days, or even weeks, before the full extent of the damage is fully revealed. Repairs are likely to drag on for months.

“The market can’t afford any disruption whatsoever,” said Ben Dell, an oil analyst at Sanford C. Bernstein in New York. “As it happens, we just had the worst disruption ever.”

Most of the oil and gas production from the Gulf of Mexico remained shut off Tuesday. The region, which usually produces 1.5 million barrels of oil and 10 billion cubic feet of gas each day, accounts for nearly a third of domestic oil production and a fifth of its natural gas output.

Storagetek Shareholders Approve Sun Merger

By Kimberly S. Johnson
THE DENVER POST LOUISVILLE, COLO.

Shareholders of Storage Technology Corp. on Tuesday approved the company’s acquisition by Sun Microsystems Inc.

Few employees at StorageTek corporate headquarters here even knew the $4.1 billion deal had been approved, but they saw the merger with the Santa Clara, Calif., computer giant as a positive move, particularly the new access to Sun’s large customer base.

StorageTek, founded by former IBM workers in 1969, makes tape drives and network management and backup software for businesses and government agencies. The company employs 7,000 people worldwide.

“If the company says it is a good thing, it’s a good thing,” said a 27-year StorageTek engineer, who declined to give his name. “I don’t think you can control what’s happening (the consolidation) in the current business environment.”

Ninety-nine percent of the shareholders who voted cast ballots in favor of the $37 a share cash buyout by Sun. Of the 108.4 million outstanding shares, 71.6 percent of them were voted.

The acquisition is expected to close Wednesday, and it will be the last day of trading for StorageTek, which will be removed from the New York Stock Exchange. The first day of business for the combined companies will be Thursday.

StorageTek has yet to announce any layoffs, but it’s expected that overlapping administrative job functions will be eliminated. One employee in the advanced manufacturing division said Tuesday that workers in finance and human resources were concerned about their jobs.

Zimbabwe Lawmakers Cut Rights

By Michael Wines
THE NEW YORK TIMES

Parliament approved a widely criticized batch of constitutional amendments that solidify state power within the long-ruling ZANU-PF party, disenfranchising any citizen with at least one foreign parent and allowing the government to prohibit travel abroad by anyone deemed “anti-national.” Another amendment bars legal action by the more than 4,000 white commercial farmers whose lands have been seized by the government and redistributed to peasants and ZANU-PF members in the last five years. Opposition legislators called the changes “the rape of democracy,” and the union of white farmers charged that they had effectively legalized ethnic cleansing. The Zimbabwean justice minister, Patrick Chinamasa, said the changes would conclude the “decolonization” of Zimbabwe that began 25 years ago when it won independence from white rule.

U.S. Gives Ukraine $2 Million
To Destroy Weapons

By C.J. Chivers
THE NEW YORK TIMES

Two U.S. senators, Richard G. Lugar, R-Ind., and Barack Obama, D-Ill., urged Ukraine to pass legislation enabling the destruction of its vast stockpile of conventional weapons, which could end up in terrorists’ hands. Ukraine has at least two million tons of conventional ordnance and seven million excess small arms, according to NATO, which has sponsored a program to accelerate their destruction. The United States has pledged $2.1 million for the program’s early phase.

German Mayor Faulted
For Supporting Fetish Fair

By Victor Homola
THE NEW YORK TIMES

Berlin’s openly gay mayor, Klaus Wowereit, has come under criticism for extending the city’s official welcome to a leather and latex fetish street fair that begins on Saturday. “The first weekend in September will be marked by pure joie de vivre,” Wowereit wrote in a message of greeting for the official program of the event, Folsom Europe. “A warm welcome to Berlin!” About 15,000 leather and latex enthusiasts from around Europe are expected at the event, which is being held for the second year in Berlin and was inspired by the long-running Folsom Street Fair in San Francisco. Politicians criticized the letter for not being in line with the dignity of the office of mayor, and the mass-market newspaper Bild accused Wowereit of transforming Berlin into a sex capital.