>> tom: while stocks have posted strong gains this year, commodities have been on the real bull run. so where do we go from here? >> reporter: i'm erika miller. coming up, i'll have a look at the outlook for heating oil prices as we head into the new year. >> tom: from oil to cotton to gold, stay tuned for our commodities round up. you're watching "nightly business report" for thursday, december 30. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

this program is made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt >> tom: good evening and thanks for joining us. susie gharib is off tonight. with 2010 just one day away from being one for the history books, we look back on the year's star performer: commodities. while the s&p 500 is up almost 13% on the year, the basket of commodities tracked by the c.r.b. index is up over 16%. leading the charge are commodities you'll probably find around your house. cotton is up almost 90%, coffee prices have jumped more than 70% and sugar hit generational highs, up almost 13%. gold has gotten a lot of attention-- it's up 28%-- but silver stole the show, rising

81%. oil prices have moved about 13% higher. that increase in crude oil prices is bad news for anyone buying heating oil. its price has been climbing steadily this winter, and is almost 20% higher than a year ago. as erika miller explains, even higher prices may be in the pipeline. >> reporter: kevin bunk has owned his long island home for over 12 years, and knows what it typically costs to heat it. already, he is bracing for significantly higher bills than last year. >> over the course of the winter, if prices remain where they are right now, we're probably going to spend close to $1,500 to $2,000 on heating oil for the winter. >> reporter: and how does that compare to what you spent last year? >> probably 30% to 40% more. >> reporter: his heating oil is supplied by protostar energy, a family run business with over 2,000 customers, mainly on long island.

>> do you have fuel? >> reporter: his mother irene mans the office, taking customer orders. she says her wholesale costs have soared almost $1 a gallon since august, forcing her to raise prices. some customers are panicking. >> oh definitely! oh definitely! where they used to order 200 gallons, 150, now they are ordering 50 gallons. because they can't afford to fill up their tanks. prices are so high right now, you have to pick and choose what you are going to do. you gonna heat your house or you gonna feed your kids? >> reporter: unfortunately for many consumers, the cost of heating oil is expected to keep climbing. that's because of strong seasonal demand, as well as the higher prices for crude oil. the energy information administration projects heating oil will average $3.18 a gallon nationwide this winter. that would be a 12% increase from last year. admittedly, there's not much consumers can do but consider stocking up now and conserve. >> we don't use more than we really need.

just hot water and keeping the house warm. >> reporter: and if you think higher energy prices are good for profits at companies like protostar, think again. >> we're out there longer hours. we are delivering less gallons, but we're out longer. so it's costing us more because our trucks-- our diesel trucks-- they are running constantly. so, on the whole, it affects everybody. erika miller, "nightly business report," sayville, new york. >> tom: $1,500 an ounce. some think gold prices will hit that price and more next year. coming up, we look at both sides of the gold coin for investors in the new year. here are the stories in tonight's n.b.r. newswheel: stocks under a bit of pressure today as traders fretted over rising mortgage rates. at the bell, the dow had fallen 15 points, the nasdaq lost almost four and the s&p 500 was off nearly two points.

trading volume near its lowest level of the year, but holding steady this week. just over a half billion shares on the big board and one billion shares on the nasdaq. we may be ready to kiss 4% mortgages goodbye. the average 30-year fixed rate loan neared 5% this week, coming in at 4.86%. new claims for jobless benefits fell by 34,000 in the last week to 388,000. that marks the lowest level since july 2008. more homes had signed sales contracts in november. the realtors association's pending home sales index was up 3.5% to its highest level in seven months. the trade group says that supports its forecast for a gradual recovery in housing next year. and the nation's online retailers had a holly jolly christmas. holiday sales were up 13%. tracking firm comscore says that works out to almost $31 billion in sales. still ahead, keeping fragile items safe with environmentally friendly fungus. could this be the end of styrofoam packaging?

some answers in tonight's "planet forward" report. in a year of double-digit stock gains, one of the oldest known forms of money did even better. gold began this year around $1,100 an ounce and went over $1,400 an ounce in december. adolfo laurenti is the deputy chief economist at mesirow financial. he joins us from the c.m.e. group in chicago. frank mcghee is the head metals strategist at i.b.s. metals. >> frank, want to different with you what is your prediction for gold prices in 2011? >> well, i ultimately think the gold market will have a next internal highway somewhere in the area of 1580 to 1640. now that doesn't say that we are going to go there straight and probably the best thing that could happen to this market is if we were to get a sharp --off because it gives people who haven't gotten in the ability to get in. but we're ultimately going higher tz sounds like a bullish sentiment. adolfo how about it, do you

like gold in 2011. >> well, 1600, 1500, everything is possible nay market that has disconnect from macroeconomic fundamentals. we becoming more optimistic about the outlook and i think that will go against gold. we see good numbers coming from industrial production. manufacturing service. even the u.s. consumer seems to be become. i think the fed will stop qe 2 at the end of the program, that is the resulting high the middle of the year. probably the dollar will stabilize, this does not seem to be an economic environment very supportive for gold to continue its rally. >> what about too that point that adolfo made that gold may be separate from the macroeconomic environment. do you think it has and is just a financial asset. >> well w i actually, as you've known me for a number of years, i always use gold as a currency play rather than a commodity play and as an ultimate level of currency we continue to see the economic power shift

from the rich countries to the developing countries, specifically the central banks of india and china. >> adolfo how about that, improving u.s. economy may not necessarily translate into a stronger dollar because that is more of a global story because wouldn't that play into a gold story. >> it was, the disconnect between the gold and other commodities. i believe there is a connection over there that should be reassigned sometime. i think the gold gets ahead of itself. i believe other commodities will outperform the dollar in 2011. we see improvements in emerging economies. i think there is still some doubt about a recovery in europe but they improved outlook for the u.s. is the major driver for more confidence to the market. and i think the confidence in the u.s. domestic economy will improve, there will go gold. >> the thing that i i have to you have to put into context here is you can have

gold rally and 9 dollar rally. they are both acting as a stored value and they are both acting as a safe haven and we have seen that for the last two years and there is nothing to indicate that they will go back to the relationships they've had in the past. i think you've got gold reestablishing itself as a very viable asset class and as an independent form of value when all currencies are under pressure. i ultimately think will you see all currencies continue under pressure for the next year, wouldn't you agree? >> no, i really think that at one point investors will begin to look at the opportunity available on the market and all of a sudden gold will not look so encouraging any more. after all it doesn't pay interest. it is just, you know, an investment on a commodity whose fundamentals are mostly as commodities, in fact. and so when opportunity will come back in the equity space, in some -- income,

they will become cheaper, i think with the confidence returning and some of the uncertainty dissipating, opportunities will pop and many people will decide to rerealize their gains on gold and do something else with their money. >> this is what makes the gold story so interesting t is about the economy, it is about inflation expectations, it's about jobs, about interest rates all coming into play in the new year. we appreciate both of you and both of the insights. on top frank mcghee and adolfo laurenti.

>> tom: the major stock indices slipped ever so slightly from their 2010 highs. let's take a look at what was moving in tonight's market focus. again, energy stocks held their own. the sector was helped out by speculation surrounding anadarko petroleum. you may recall anadarko was one of the companies involved in this year's gulf of mexico oil disaster. a-p-c stock jumped to a new 52- week high over the $74 it was traded at when the gulf oil disaster began in april. the stock was then cut in half after that, but cleary has come roaring back. according to united kingdom newspaper the "daily mail," b.h.p. billiton may offer $90 per share. now without debt, that would be a $45 billion deal. neither company commented.

b.h.p. shares were up to their highest price since the spring of 2008. its effort to buy fertilizer maker potash was recently blocked by the canadian government. another source of energy was coal stocks. coal prices are at two-year highs, helping out coal mining stocks. international coal group led the group, gaining more than 8%. one analyst says it may benefit from exporting coal. patriot coal added almost 5% to a seven-month high. alpha natural resources hit a new 52-week high. all three of these moves came on heavier-than-usual volume. m.b.i.a. was a high flier during the boom years, but it fell on hard times as its bond insurance business came under intense pressure. during the credit crisis. shares jumped more than 14% on strong volume. j.p. morgan and barclays bank dropped their efforts to stop m.b.i.a. from splitting into two

businesses, one that will insure municipal bonds, the other only structured finance like mortgage-backed bonds. in the past couple of sessions, we've seen some unusually heavy volume in several chinese metal and mining stocks trading in the u.s. usually these stocks trade fewer than one million shares. this trio has seen volume spike into the multi-million share range. xing universal was among the most active on the nasdaq. it continues building on the gains we spotlighted last night. china direct is at its highest price since january. and china precision hit a seven- month high. finally, it's worth pointing out a new high for a global currency, the swiss franc. here's the exchange-traded fund that follows the franc. the currency hit record highs against the u.s. dollar and euro. foreign exchange traders point to the swiss currency as an alternative to the euro, especially with continued concerns about european government debt. and that's tonight's "market focus."

>> tom: along with all the wrapping paper and cardboard boxes left over from christmas, you may have thrown out some styrofoam packing peanuts. but that styrofoam will stay in landfills for hundreds of years. tonight we continue our partnership with "planet forward," the george washington university social media project using your ideas to change the future. frank sesno considers, what if you could pack stuff in a material that's cheap, more environmentally friendly and made from mushrooms? >> reporter: eben bayer is the portrait of the young, idealistic entrepreneur. >> reporter: on "planet forward," bayer talked about his big idea, which he developed as an undergrad studying mechanical engineering.

bayer thinks he can transform an industry, reduce energy consumption and make money. >> reporter: instead of using petroleum, bayer's company uses agricultural waste. we wanted to see for ourselves. could this really mushroom into a business that could make a difference? we visited the plant outside albany, new york. and eben bayer showed us around. >> our business model is to transform these low-value wastes into something with value. we do that by binding them together and adding a shape. >> reporter: they mix seed husks with a cultured fungus and pour it all into molds. >> reporter: you mix the mushroom roots with the seed husks and the mushroom roots grow around the seed husks and bind it like a glue. it's spongy and it's cold. it's alive. >> last step in our process is ahhh!

>> reporter: it smells like you're baking bread. the end product? packaging materials, used to ship everything from keyboards to couches. the secret sauce-- the natural glue-like substance from fungus called mycelium-- is highly adaptable. college classmate and co- founder, gavin mcintyre, took us into the lab. >> reporter: anything i shouldn't be breathing or doing here? >> no, we're wearing these garments to protect the fungus. >> reporter: they're more important than we are. >> we've gone out into nature and we've isolated our own types of fungi for their physical properties. growth rate is really important to us. >> reporter: this idea, like so many, is built on risk, research and passion. >> i wanted to create something that had radically less energy per unit volume than plastic. the biggest drawback with plastic is it takes so much energy to make and takes so long to get rid of. this has a fraction of the energy, requires waste feed stocks and has no negative impact on the planet when you dispose of it.

bayer demonstrates one of the products biggest advantages. bayer estimates polystyrene-- used in everything from packing materials to surf boards and coffee cups-- is a $20-billion- a-year industry. his business plan? ramp up this facility, open a much bigger one in then next 18 to 36 months and do a lot of licensing. so if you're successful and your vision comes to pass, ten years from now what does the world look like? >> a significant amount of disposable packaging is made using natural solutions like this. we think we can do all the styrofoam that's use for heavy goods. >> reporter: you're going to put styrofoam out of business? that's one of our visions-- get rid of the toxic white stuff. at this stage, the business has a lot to prove before turning a profit. but, bayer says his product is cost-competitive and is gaining customers. he exudes confidence and determination. after all, this innovator is just 26 years old.

how can bio products, like ecocradle, have an impact? what other types of materials can they replace? we're looking for other ideas, experiences and comments, voices and videos at planetforward.org. i'm frank sesno. >> tom: here's what we're watching for tomorrow: government offices are closed in observance of new year's, but the stock and bond markets are open. of course, we'll have full coverage of the last trading day of the year. also tomorrow, sam stovall joins us to wrap up stocks for the year and to give us his outlook for 2011. he's chief market strategist at standard & poor's. investment banker steve rattner will pay $10 million to settle charges he paid kickbacks to get new york state's pension fund to invest with his company. rattner admitted no wrongdoing as part of the deal with new york's attorney general. rattner has also agreed he will not do business with any new

york pension fund for five years. you may recall rattner was once the obama administration's so- called "car czar" leading the auto industry bailout. >> tom: speaking of the auto industry, chrysler is recalling almost 150,000 cars and trucks. it's actually three separate recalls. in the largest, 65,000 dodge journey vehicles, all model year 2009, could have faulty wiring. 56,000 ram 1500 trucks, all model year 2011, have rear axles that could seize up. and more than 22,000 dodge rams from the last four model years could have steering problems.

>> tom: a rising tide lifts all boats, or so americans hope. commentator todd buchholz thinks that's why the bush tax cuts were extended, even for the richest americans. todd is author of "lasting lessons from the corner office." >> i've got a puzzle for you: why don't americans favor superhigh taxes on folks who earn lots of money? whenever politicians sing the soak-the-rich tune, it falls flat. here's why. americans aspire. they don't resent money. they'd like some for themselves. when they get it, they are generous in giving it away. americans believe in income mobility. and they are not stupid to think

they can climb the ladder. just look around. homes are 60% bigger than they were in 1970. the number of families with two or more cars has jumped 50%. life expectancy has climbed a staggering seven years. second, in the great recession, the average joe noticed that his boss was driving up in the same unwashed car, taking fewer vacation days, and bemoaning college payments. small business owners have been struggling to meet payrolls. employees are smart enough to realize that jacking up taxes on their bosses will hurt everybody. after all the doomsday talk, how do americans find the courage to aspire? well, they've seen that hard work usually works. in addition, our immigrant forefathers planted new roots in america, different from the ones they left behind in europe, africa and asia. americans don't remember a feudal hierarchical tradition. therefore, we don't bestow knighthoods. we don't bow to kings. nor do we resent it when a neighbor makes a buck, or 250,000 bucks. we don't punish success. heck, we give royal names only to guys like duke ellington and count basie. that's the secret-- and the

noble rhythm of america. i'm todd buchholz. >> tom: from noble rhythms to a little night music. for many people, that involves buying pricey tickets from a box office. but that's not always the case. some nonprofits work to make arts and culture affordable to everyone. the groups rely on donations to stay afloat, and as you might imagine, those gifts are harder to come by in this economy. >> it's kind of immeasurable, because not only do we get to do what we do, but people that wouldn't ordinarily get to experience it get to experience it. >> reporter: that's michael noonan, a musician with united jazz ensemble. he's at a middle school in suburban maryland bringing jazz to students who might never have had the chance to experience a live show. >> we have a special focus on bringing arts programs into those communities that don't otherwise have access. >> reporter: joan burns is the executive director of the nonprofit group class acts arts.

it brings artists and performers to places like this. that would be low income schools, senior centers and even incarcerated youth programs across the region. these types of programs have been cut by nearly 30% this year because donations are way down. >> in a recession where there's a lot of emphasis on meeting the needs of fragile communities, certainly we're in competition with the nonprofits providing food for hungry people and shelter for homeless people. >> reporter: stacy palmer at the "chronicle of philanthropy" says that's a real problem for arts and cultural nonprofit groups. >> it's very challenging for nonprofits that work in areas that aren't providing direct social services to the very neediest people to be able to get that message across about why the arts or the environment or those kinds of things are important. >> reporter: according to giving u.s.a. foundation, donations to arts, culture and humanities organizations dropped by almost 2.5% to $12.3 billion last year.

with funding from government and foundations also down, class acts arts made sacrifices. >> we unfortunately had to take mandatory furloughs, and we took a pretty significant payroll cut last year. >> reporter: the other consequence when arts nonprofits lose money is the impact on artists themselves. people performing for and teaching the disadvantaged may also be having trouble making ends meet. but there is one bright spot. palmer says affluent people have recognized the arts are suffering, and they haven't stopped giving. over 70% of high-net-worth households gave directly to arts nonprofits in the last year. >> it's been helpful to many organizations, and i think that's one reason we haven't seen so many of them close, is because the very rich have helped those organizations survive. >> reporter: still, the number of people who say they're not giving to charities at all has doubled over the past year.

burns is trying to stay optimistic, making the case that organizations like hers are essential. >> clearly the priorities need to be there, but we feed the soul. i think that's a critical part of what we do. the arts can be transforming, especially in tough times, and when we can find joy. that can mean a lot. anna olson, "nightly business report," riverdale, maryland. >> tom: finally tonight, a programming note. if you're watching us in los angeles, on monday we move to a new home. you can watch "nightly business report" on kvcr each weeknight at 6:30 p.m. pacific time. watch your local listings for other broadcasts of the program in the l.a. area in the near future. and of course, you can always watch our streaming video on our website, n.b.r. on pbs.org. >> tom: that's "nightly business report" for thursday, december 30. i'm tom hudson. good night everybody. we hope to see all of you again tomorrow night. "nightly business report" is made possible by:

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