Monday morning headlines

Americans cutting back on gas: What began in California last year appears to have caught on nationwide. In the past six weeks, gas consumption has fallen by an average 1.1 percent from year-earlier levels. Not counting the post-Katrina pullback, that's the most sustained drop in demand in at least 16 years. From the WSJ:

Economists and policy makers have puzzled for years over what it would take to curb Americans' ravenous appetite for fossil fuels. Now they appear to be getting an answer: sustained pain. Over the past five years, the climb in gasoline prices, driven largely by the run-up in crude oil, hardly seemed to dent the nation's growing thirst for the fuel. Conventional thinking held that consumption would begin to taper off when gasoline hit $3 a gallon. But $3 came and went in September 2005, and gasoline demand didn't flinch. Consumers complained about the cost of filling their tanks, pinched pennies by shopping at Wal-Mart, and kept driving.

Today, a weakening economy is intensifying the effects of high gasoline prices, at the same time Americans are being pinched by broader inflation. In January, consumer prices were up 4.3% from a year earlier, a 16-year high, led by sharply rising food and energy costs. Even stripping out food and energy, the so-called core inflation rate was up 2.5% from the previous year, reflecting higher costs for purchases such as education and medical care. The combination of forces is prompting Americans to cut back on driving, sometimes taking public transportation instead. It's also setting the stage for what may be a long-term slowdown in gasoline demand by forcing Americans to become more fuel-efficient faster.

It's official: When oil closed above $100-a-barrel for the first time, some analysts and reporters were careful not to call it a "record high" because the price was still below the April 1980 level when adjusted for inflation. Well, you can now scratch that. Oil jumped this morning to $103.92 a barrel - and that's a new high, even accounting inflation. (WSJ)

Countrywide's portfolio deteriorates: The Calabasas-based lender saw a big increase in late payments on option adjustable-rate mortgages, which are at the heart of the real estate meltdown because they allow borrowers to make only minimal initial payments (only to see payments jack up later on). The lender also said it took a big loss in the fourth quarter on home-equity lines of credit. Oh, and remember back in October when CEO Angelo Mozilo projected a fourth-quarter profit? An SEC filing explains what happened. From the WSJ:

Countrywide was blindsided during the quarter by obligations on home-equity lines of credit that it had sold to investors in the form of securities. Normally, the trusts that control such securities reimburse the lender when borrowers make further draws on these lines of credit. But if losses on the loans exceed certain levels, Countrywide isn't reimbursed immediately and may never be reimbursed unless income from the loans outstanding is sufficient to meet obligations to investors in the securities. Countrywide said the likelihood of such a situation was "deemed remote" until late 2007. It blamed a "sudden deterioration" in the housing market.

Virgin America turning up the heat: Its arrival at LAX has resulted in fare wars involving several routes (SF and NY’s JFK, in particular), and the pending arrival of JetBlue, which at one time made it a point of steering clear of LAX. When Virgin America announced it would begin flying between LAX and Seattle, Alaska responded by adding three more flights. VA has had such a good reception that there's talk of the carrier moving from Terminal 6 to Terminal 3, where it would like to eventually have as many as six gates. (LAT)

William Morris cuts deal: Call it the merging of Hollywood and Silicon Valley. The Bev Hills-based agency is teaming up with venture capital firms Accel Partners and Venrock to invest in digital media start-up companies based in Socal. And in a twist, AT&T is a limited partner (wireless carriers are often seen as too controlling in these kinds of deals). From the NYT:

AT&T is not looking exclusively for content; the likes of CBS, ESPN and NBC already provide much of that for cellphones. Instead, it is hoping to invest in technologies that will make it easier to run ads on cellphones, as well as to nurture social networks like Facebook and MySpace, online hits that have migrated to hand-held devices. AT&T has spread money around Hollywood before — it invested in the film producer Media Rights Capital — but those investments were largely passive.

Judge order newspaper to pay: The Chinese Daily News, based in L.A. and NY, has been ordered to pay $5.2 million to past and current employees who were forced to work 12-hour days without breaks or overtime pay. The Chinese-language newspaper will appeal. The case has been dragging on since 2004, when three former reporters filed a class-action lawsuit to halt the alleged abuses. In January 2007, the jury awarded them $2.5 million in damages. They then sought additional payment through penalties and interest on the unpaid wages that had accumulated during the trial. (LAT)

More SAG squabbling: This time it 's with the American Federation of Television and Radio Artists. At first AFTRA issued a statement that seemed to back SAG President Alan Rosenberg, who said last week that contract talks with the studios and networks would not start until at least April. But on Saturday, an AFTRA honcho repudiated the statement. AFTRA, which had been expected to negotiate with SAG, might wind up negotiating on its own. (Deadline Hollywood Daily)

THR launches Asia site: THR-Asia.com will be edited out of The Reporter's Beijing bureau. Among examples of content: Q&As with director Johnnie To, actress-heiress Josie Ho, Singapore director Royston Tan, Chinese director Li Ying and Thai director Pen-Ek Ratanaruang. The focus will be on China, Hong Kong, India, Japan, Korea, Singapore and Thailand. (THR)