Crude prices rose on initial reports that a U.S. ship had fired on two Iranian boats; the news raised concerns that a conflict between U.S. and Iranian forces could cut oil supplies from the region. A Navy spokeswoman said the origin of the boats was unclear.

The news was enough to send light, sweet crude for June delivery up to $119.55 before the contract retreated to settle up $2.46 at $118.52 a barrel on the New York Mercantile Exchange.

The incident worried investors because at first it appeared to be the latest in a series of encounters between U.S. forces and Iranian boats in the Gulf. Early this month, the USS Typhoon fired a flare at an Iranian boat that came within about 200 yards of the ship. In January, several Iranian boats made what the Navy described as provocative moves near a U.S. ship in the Strait of Hormuz. And in December the USS Whidbey Island fired warning shots at a small Iranian boat officials said was rapidly approaching the ship.

On Friday, oil prices were already up before the report on news of a pipeline attack in Nigeria and a looming refinery strike in Scotland.

In Nigeria, the Movement for the Emancipation of the Niger Delta, or MEND, said its fighters hit an oil pipeline late Thursday, the fourth conduit the group has attacked in the past week. MEND said the pipeline belongs to a Royal Dutch Shell PLC joint venture. A Shell spokesman confirmed one of its pipelines had been hit, but provided no additional details.

Earlier this week, Shell said an earlier attack cut its Nigerian oil production by about 170,000 barrels a day.

Separately, workers at an ExxonMobil Corp. joint venture in Nigeria cut production by an unspecified amount to demand more pay.

Adding to the supply concerns, BP PLC said it will shut down a 700,000 barrel-a-day pipeline system that carries oil from the North Sea to refineries in the U.K. on Saturday in anticipation of a strike at Scotland’s Grangemouth refinery expected to begin Sunday. The refinery supplies power and steam to the pipeline; if it shuts down, the pipeline can’t operate.

Oil’s rise came as the dollar strengthened. A stronger dollar typically encourages selling by making commodities such as oil less effective hedges against inflation, and by making oil more expensive to overseas investors. Analysts say the dollar’s steady decline over the past year is the chief culprit behind this year’s rapid rise in oil prices.

But, noted Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Ill., “that connection between oil and the dollar can be broken easily by supply issues,” which drove trading on Friday.

At the pump, meanwhile, gas prices rose another 2.1 cents Friday to a record national average of $3.577 a gallon, according to AAA and the Oil Price Information Service. Gas prices have been following oil futures higher, but are also rising due to concerns about whether gasoline supplies are adequate to meet peak summer driving demand.

Analysts expect gas prices to continue rising for at least another month to $3.70 to $4 a gallon. To a large extent, how high gas prices peak depends on what oil does.

Lately, analysts have recently raised their oil price predictions to $125 to $130 a barrel. Earlier this week, the expiring May crude contract rose as high as $119.90 as investors scrambled to square positions.

However, the Federal Reserve is expected to cut interest rates less sharply next week than originally thought. Because rate cuts tend to weaken the dollar, a smaller than expected cut could push the dollar higher, and send oil prices down.

In other Nymex trading Friday, May gasoline futures rose 3.51 cents to settle at $3.0537 a gallon after earlier rising to a new trading record of $3.0815, and May heating oil futures rose 4.45 cents to settle at $3.3028 a gallon. May natural gas futures rose 17.3 cents to settle at $10.963 per 1,000 cubic feet.

In London, Brent crude futures rose $2 to settle at $116.34 a barrel on the ICE Futures exchange.

The 48-hour strike over pension issues, due to begin Sunday at the Grangemouth oil refinery in central Scotland, is expected to disrupt energy supplies and hinder delivery of Britain’s North Sea oil.

There is plenty of gasoline and diesel in Scotland to meet demand, government business secretary John Hutton told the British Broadcasting Corp. “But of course there is going to be a challenge if people change the way that they consume fuel.

Gas stations in and around Edinburgh were limiting gas purchases to $40 per visit Saturday, and lines of cars formed beside some pumps. Some stations had run out of gas and diesel by midmorning.

Some were charging 1.25 pounds — equivalent to $2.47 — Saturday for a liter of unleaded, up from about 1.08 pounds — $2.14 — on Monday.

“This is profiteering by the garages and oil companies,” said Edinburgh motorist Ian Bain, 44.

The government wants to avoid a repeat of scenes in 2000 when motorists lined up at gas stations as truckers angry at heavily taxed fuel brought Britain to a standstill by blockading refineries.

Refinery owner Ineos shut down production at Grangemouth on Friday before the strike. Oil producer BP PLC said it would shut its Forties Pipeline System, which delivers almost a third of Britain’s North Sea oil production and is powered by electricity and steam from Grangemouth, by 6 a.m. Sunday.

The government says the strike could force more than 70 platforms in the North Sea to halt production, at a cost of $99 million a day.

Grangemouth is the major oil supplier to Scotland and parts of northern England, and those areas were expected to feel the greatest impact from the strike by 1,200 workers.

Pat Waters of the Automobile Association said that despite assurances, “people should accept that they will probably be rationed to an amount of petrol to conserve supplies.”

From the AP

From the Editor

The finances of many states have deteriorated so badly that they appear to be in a recession, regardless of whether that’s true for the nation as a whole, a survey of all 50 state fiscal directors concludes.

The situation looks even worse for the fiscal year that begins July 1 in most states.

“Whether or not the national economy is in recession – a subject of ongoing debate – is almost beside the point for some states,” said the report to be released Friday by the National Conference of State Legislatures.

The weakening economy is hitting tax revenue in a number of ways: People’s discretionary income is being gobbled up by higher food and fuel costs, while the tanking housing market means people are spending less on furniture and appliances associated with buying a house.

The situation is grim in Delaware, with a $69 million gap this year, and bleak in California, with a projected $16 billion budget shortfall over the next two years, the report said. Florida does not expect a rapid turnaround in revenue because of the prolonged real estate slump there.

By mid-April, 16 states and Puerto Rico were reporting shortfalls in their current budgets as the revenue those budgets were built on – typically, taxes – fell short of estimates. That’s double the number of states reporting a deficit six months ago.

The NCSL said the news is even worse for the upcoming fiscal year, with 23 states and Puerto Rico already reporting budget shortfalls totaling $26 billion. More than two-thirds of states said they are concerned about next year’s budgets.

The results are consistent with a drumbeat of bad economic news for states that several budget groups have produced in the past few months.

Last week, the Washington-based Center on Budget and Policy Priorities said 27 states are reporting projected budget shortfalls next year totaling at least $39 billion.

President Bush said Tuesday that the economy was not in a recession but a period of slower growth. However, some economists have pointed to the string of declines in manufacturing orders to argue that the economy has fallen into a recession.

Bolstering their position, the Commerce Department reported Thursday that sales of new homes plunged in March to the lowest level in 16 1/2 years. The government also reported that orders to factories for big-ticket goods fell for a third straight month in March, the longest string of declines since the 2001 recession.

Some states “have declined so much that they appear to be in a recession,” the NCSL report said.

It also noted the silver lining for states where the economy is based on energy, such as North Dakota and Wyoming. Alaska is making so much money from oil that it announced an estimated surplus next year of $8 billion, almost twice the state’s annual budget.

In North Dakota, revenue is above legislative predictions by 13 percent, and in Louisiana, the oil and gas sector is robust.

“For energy-producing states, the fiscal situation is strong and the outlook is good,” the report said.

Among other findings:

_More than half the 16 states reporting deficits this year have cut spending, including $1 billion by Florida lawmakers last year and across-the-board cuts in Nevada. At least eight states are debating raising taxes or fees, including a proposed $1-per-pack cigarette tax increase in Massachusetts to raise $175 million.

_Twelve states, including Georgia, Idaho and Illinois, reported that personal income tax collections were failing to meet estimates, and in eight of these, collections were even below a reduced forecast.

_Many states, including Alabama, Arizona, Massachusetts, Minnesota, Nevada and Wisconsin, plan to tap their rainy day funds, which contain money set aside for fiscal emergencies. Nevada may use its entire rainy day balance.

By ANDREW WELSH-HUGGINS
Credit:  myway.com

 From the Editor: Why is everyone in such an uproar over this?  He would definitely get my vote for re-election.  We need more of our law enforcement officials to follow his example.  Comment below.

GUADALUPE, Ariz. (AP) – The self-proclaimed “toughest sheriff in America” has been making forays into Phoenix and nearby Guadalupe and sweeping up illegal immigrants, drawing howls of protest from the cities’ mayors and other community leaders.

While Maricopa County Sheriff Joe Arpaio has legal authority to enforce the law in cities within his county, politicians and activists are accusing him of grandstanding and, worse, racial profiling.

A total of 150 people – 73 of them illegal immigrants – were arrested by Arpaio’s deputies in the raids on heavily Hispanic sections in late March and early April.

“I was upset. We did not request them here,” said Guadalupe Mayor Rebecca Jimenez, who charged that the patrols were meant to raise Arpaio’s profile for his re-election campaign this year.

Guadalupe, a community of about 6,000 people that relies on the sheriff’s office for police protection, is taking steps to find another department to patrol its streets.

As for Phoenix, Mayor Phil Gordon said Arpaio should be concentrating on more pressing duties such as finding people with warrants against them, and he has asked for a federal civil rights investigation, complaining the sheriff is singling out people who are “driving with a broken taillight or have brown skin.” The U.S. Justice Department refused to comment.

And in Mesa, Arizona’s third-largest city, the police chief has requested two days’ notice of any sweeps Arpaio might conduct there, so that his officers can be prepared for any unrest.

Arpaio has long had a reputation for in-your-face tactics. He is known for making jail inmates wear pink underwear, assigning them to old-style chain gangs, and serving them green bologna sandwiches.

He began pushing the boundaries on immigration three years ago when he set up a special unit to deal with people sneaking across the border. Since then, his office has arrested 900 illegal immigrants under a state human smuggling law and set up a hot line for reporting immigration violations.

Arpaio said the recent sweeps were prompted in part by business owners’ complaints about crime among illegal immigrants.

“It isn’t racial profiling,” the sheriff said. “We don’t arrest just anybody on a street corner.”

He said the 150 people arrested were approached or pulled over in traffic stops because deputies had probable cause to believe they had committed crimes. It was only afterward that deputies found nearly half were illegal immigrants, the sheriff said.

The crackdowns have led to demonstrations by protesters on both sides of the immigration debate.

Opponents lined streets in Guadalupe earlier this month, honking horns and holding up signs with slogans such as “Arpaio Stop Using Guadalupe!” One vehicle had “Proud to Be Brown” written on one of its windows.

Alex Rivera, an American-born landscaper living in Guadalupe, said that during the crackdown there, he saw a Hispanic driver get pulled over twice by deputies.

“It made me angry,” Rivera said. “If they let him go once, it gives you the point that he didn’t do anything or he didn’t have anything. So they let him go once. And then they pulled him over? Of course, the guy looked totally Hispanic.”

Civil rights advocates said Arpaio is spreading fear among Hispanics, illegal or not. “You have cooks, landscapers, nannies afraid to drive,” said Hector Yturralde, president of the group Somos America.

Still, many others in Arizona are frustrated over the flow of illegal immigrants across the border, and the sheriff has received hundreds of letters of support, along with a request from a group of state lawmakers to go into Mesa. (Arpaio said he is planning a sweep in Mesa but is reluctant to warn the police department there for fear the chief will tip off the community and stir up demonstrations.)

Judith Bederka, a retired postal worker from Mesa, said Arpaio is the only local official doing something about illegal immigration. “He is doing what everybody wants him to do,” Bederka said.

The U.S. Immigration and Customs Enforcement agency said the sheriff has stayed within the bounds of an agreement that gave special immigration training and powers to 160 of his officers. The agency said it knows of no abuses by Arpaio’s office.

Weeks after the crackdown, 20 Spanish-speaking day laborers gathered at a dusty intersection to wait for people to offer them work. Ramon Arajon Contreras, a laborer from Mexico who has lived in Guadalupe for eight years, said the sweep frightened him so much that he hid out in his house until it was over. He said he is still afraid.

“If I see immigration officers,” he said, “it’s like I see the devil.”

By JACQUES BILLEAUD

Credit: myway.com

Democrats said they were glad the rebate checks were about to go out, but suggested that multinational oil companies were not among the businesses the stimulus package was originally designed to help.

“Starting Monday, the effects of the stimulus will begin to reach millions of households across our country,” Bush said Friday in remarks on the South Lawn of the White House.

Those first rebates will be directly deposited into people’s bank accounts. The Internal Revenue Service had been saying direct deposits wouldn’t start until next Friday. Bush said paper checks would begin going out on May 9, a week earlier than previously announced.

“The money is going to help Americans offset the high prices we’re seeing at the gas pump, the grocery store, and also give our economy a boost to help us pull out of this economic slowdown,” Bush said.

Bush’s emphasis on fuel and food prices differed from other comments he’s made since signing the economic stimulus legislation, intended to aid the economy by boosting overall consumer spending – which accounts for roughly two-thirds of the nation’s economic activity.

Bush has suggested the rebates could trigger a spending spree. “When the money reaches the American people, we expect they will use it to boost consumer spending,” he said last month.

By saying expressly that people could use these one-time checks to pay for such necessities as food and gas, Bush underscored the deepening challenges facing the economy.

Democrats were quick to pick up on the change of focus.

“It’s galling to think that taxpayers’ stimulus checks will be lining the pockets of OPEC. The sad truth is that the average American family will spend almost their entire stimulus check on higher gas prices this year,” said Sen. Charles Schumer, D-N.Y., chairman of the Joint Economic Committee of Congress.

OPEC is the Organization of Petroleum Exporting Countries.

“Unless the administration gets OPEC to increase oil supply, American consumers are going to be in for a scorching summer of $4 gasoline with no relief in sight,” Schumer said.

House Speaker Nancy Pelosi, D-Calif., agreed that people “need this rebate to cope with the rising cost of gas and groceries.” She said that, while the rebates would help to get the economy moving, there was a need for a second stimulus package “and we have begun some conversation with the administration and Republicans.”

As he had earlier in the week, Bush used the word “slowdown” to describe the state of the economy. He has denied that the nation is in a recession, although many economists say it is.

“It’s obvious our economy is in a slowdown. But, fortunately, we recognized the signs early and took action,” Bush said.

The rebates – up to $600 for an individual, $1,200 for a couple and an additional $300 for each dependent child – are the centerpiece of the government’s $168 billion stimulus package, enacted in February. Roughly 130 million households are expected to get them.

Bush made the comments before boarding his helicopter at the start of a day trip to Connecticut.

People must file a tax return for their 2007 income to be eligible for a rebate check.

The IRS now says all checks for those who filed tax returns on time are scheduled to be deposited or mailed by July 11.

The economy – burdened by the collapse of home prices, a financial and credit crisis, and now rising energy and food prices – grew at an anemic 0.6 percent in the final three months of last year and is believed to have gotten even weaker in the first three months of this year.

The government will report on the first quarter’s performance next week.

With the economy faltering, the nation’s unemployment rate has climbed to 5.1 percent, the highest since September 2005, when it suffered from the devastating blows of the Gulf Coast hurricanes. Job losses in the first three months of this year neared the quarter-million mark.

Foreclosures have surged to record highs and financial companies have taken multibillion losses on mortgage investments that soured. The situation has sent a tremor through Wall Street and has sent the administration, Congress and presidential contenders looking for ways to provide relief.