What's Important Today (3/29/2012) PetroChina Tops Oil Production, Goldman Board Meets

Europe moved closer to raising the value of all of its bailout funds to a total of $1.3 trillion. Many economists believe that sum will calm the global capital markets. Worry remains that the amounts of money have been inadequate until now because of the threats of financial collapse in Spain and Portugal. Governments in the region will set a new European Stability Mechanism, which will be a permanent facility with an initial balance of 500 billion euros. A temporary fund of more than 200 billion euros will remain. The possibility that the funds might be established has helped lower bond yields paid by some troubled nations. The money, however, cannot offset political turmoil in some of these countries, where many citizens want to see the ouster of leaders who have accepted austerity measures in exchange for bailout funds.

PetroChina Surpasses Exxon

Exxon Mobil (NYSE: XOM) is no longer the world’s largest corporate producer of oil. That distinction has gone to PetroChina (NYSE: PTR). Reuters reports that “PetroChina announced Thursday that it pumped 2.4 million barrels a day last year, surpassing Exxon by 100,000.” The change was inevitable. China’s thirst for oil makes it the second-largest net importer in the world after the U.S. PetroChina is also a quasi-governmental operation. It has access to Chinese capital. The central government of the People’s Republic needs an ever-growing supply of crude to fuel industry and consumer uses — particularly for the use of cars and light trucks. And China can afford only so much in terms of crude price increases. China may have a strong central government, but the power of that government can offset a huge rise in energy prices only for so long before it must pass some of it along to consumers.

German Jobless Rate

Germany continues to strengthen as the most powerful economy in Europe as it avoids a regionwide recession. Its Labor Office reports that the jobless rate fell to 6.7% in March. Reuters says this is the lowest level since the reunification of East and West Germany. It may be hard for Germany to continue the trend, though. Its gross domestic product relies heavily on exports. The economies of many of its neighbors in the European Union are nearly in ruin, which is bound to hurt German exports significantly. The Chinese economy has cooled somewhat. U.S. GDP has started to rise again, but it is unclear that the recovery will hold and that import traffic to America can stay high.

Goldman Board Meets

As it meets in India, the board of Goldman Sachs (NYSE: GS) apparently still is considering whether the roles of chairman and CEO at the investment bank should be split. If they are, embattled chief Lloyd Blankfein may lose much of his power. Some investors and Goldman customers would support this. Blankfein ruled the company during the period leading up to the credit crisis. Goldman has been accused of creating some and selling many of the financial instruments that caused the global financial collapse. Blankfein, whose annual compensation is regularly in the tens of millions of dollars, has become one of the primary symbols of what is wrong with Wall St. compensation.

Douglas A. McIntyre