Much to the respite of US dwellers, gasoline prices have seen a sustained downtrend over the past three months. Gas prices fell for 13 consecutive weeks, a fresh record.
This decline was driven primarily by a fall in global oil prices, which impacted gas prices downstream, as well as a marked slowdown in demand after the end of the summer driving season in the US.
With civilians battling high prices at the pump, the Biden administration has been deploying the Strategic Petroleum Reserve (SPR) since March 2022.
Much to the relief of the Democratic party, gasoline prices have fallen to a national average in the three-dollar seventy cents range.
However, it is unclear if this easing will continue, or if prices will erupt once more.
As noted in my article at the end of August, analysts’ expectations of oil prices diverged drastically from each other, ranging from a low of $75-$85 per barrel to $120-$130 by the end of the year.
To get an in-depth picture of the latest developments, be sure to check out more of Invezz’s research on the oil market here.
Tightness in the US market
With the 5th of December Russian ban deadline fast approaching, the US mid-term elections around the corner, and the chaotic developments in the Europe-Ukraine-Russia stand-off, the issue of gas prices does not seem to be dying down.
In the United States, the energy market has tightened for the following reasons:
- The SPR comes to an end in October. There have been suggestions that the US government could extend the program. However, reserves are at their lowest since 1984 and the administration would be in a precarious position in case of a sudden demand shock or natural calamity.
- As reported previously on Invezz, OPEC+ seems incapable of boosting global production meaningfully.
- Perhaps most importantly, US refining capacity is insufficient, and approximately 5% below pre-pandemic levels. The prolonged lack of demand, restrictions on movement and chronic underinvestment mean that the rapid expansion of supply is very difficult.
- Energy firms in the US have been cashing in on higher profits rather than increasing production.
To learn more about the global energy scenario, check out Invezz’s Energy category.
Renewables starve capital
An often under-discussed element in the energy crisis is the negative incentives that are presented to long-term investors following the push for the energy transition. With energy projects taking years or even decades to reach profitability, capital for fossil fuel infrastructure has dried up significantly in an environment where green seems to be the flavour of the future.
Given the expectation that the market will transition to clean energy in the next decade, investors are dissuaded from backing traditional production, refining and storage projects that are needed now more than ever.
Even as clean energy technologies rapidly improve, they are still in relative infancy, and certainly far from the required adoption levels.
Rick Newman, Senior Columnist at Yahoo Finance noted:
Renewables is probably going to take 30 years or 40 years.
This is a highly worrying trend, as much-needed output is likely to stay depressed over the next few years, ushering in periodic mismatches in global energy demand and supply.
European reliance on Russia
As per the International Energy Agency, Europe relies on Russia to meet approximately 40% of its energy demand.
However, with the invasion of Ukraine earlier this year, EU Commissioner for the Economy, Paolo Gentiloni, made it clear that Europe had two key goals vis-à-vis Russia:
…denying Russia revenues to fund Putin’s brutal war against Ukraine and putting downward pressure on global energy prices.
Gentiloni also confirmed in early September, that as part of the EU’s sixth sanctions package, the G7 shall look to roll out price caps on Russian oil exports and ban all seaborne imports of Russian oil by 5th December 2022.
These restrictions would apply to all petroleum products by the 5th of February 2023.
Appearing on Yahoo! Finance LIVE Newman noted that markets are underestimating the likelihood of the disruption that would ensue if the ban materializes. He stated:
…the market has not priced in that kind of tightening of the market.
Despite what many may see as the moral imperative, treading this path has proved to be strategically and politically challenging for the European bloc, while downright painful for most households.
If enforced, estimates suggest that the ban could have a seismic effect on the global fossil fuels market with 2.4 million barrels per day of oil going offline immediately.
This would force prices higher in Europe, but also impact gasoline prices in the US, where the Fed is expected to continue to raise interest rates.
Having been unable to secure sufficient alternative supplies to fill this vacuum, and with a potentially harsh winter on the way, one can’t help but wonder if European leaders, in their quest to do good, have been too enthusiastic to subject Russia to punitive measures.
A BBC reporter spoke with Gianandrea Pipolo, the owner of an ice cream parlour in Trieste, Italy who said:
We’ll have to stop paying (energy) bills soon. So they will shut us down. My grandfather opened this place in 1929. We survived the second world war and now it will hurt a lot if we have to close…. maybe the government should look at how hungry its people are and ask if it can still help Ukraine.
As I mentioned in my earlier piece here, it is quite likely that there is a growing wave of resentment sweeping across Europe, as natural gas prices trade 10x of last year’s levels.
However, European officials insist that the shortages are due to Russia’s closure of Nord Stream 1, a pipeline that runs from Russia to Germany.
Vladimir Putin on his part has pointed to Europe suspending the licensure of Nord Stream 2 earlier in the year.
At the recent Shanghai Cooperation Summit (SCO) in Samarkand, Uzbekistan, Putin stated:
They don’t want to open it, and we are to blame.
As per the Kremlin, supplies can return to normal if sanctions are lifted.
However, the war in Ukraine shows no signs of easing, and reports suggest that Russian military forces have ceded territory in some areas, adding to the risk of an oil shock in the coming months.
Moreover, the situation on the ground is escalating, with the US agreeing to supply additional weapons systems to Ukraine in the new few weeks.
Effects on US gas prices
To manage the possible fallout of declining Russian oil deliveries and a heating up of the Ukraine conflict, the United States and other G7 members are looking to institute price caps on Russian oil exports, as mentioned above.
No easy task at the best of times, it is yet to be seen if the US will be able to follow through with concrete steps, since the upcoming mid-terms may prove to be the Achilles’ heel of the Biden government.
The White House may be wary of the Russian government using this as an opportunity to disrupt oil flows and gain leverage.
Given the sensitive position of the administration, it may be prudent to prepare the country for a potentially deep cut in Russian natural gas and oil supplies to the global market, as retaliation for instituting price caps.
If oil supplies were to plunge, gasoline prices would shift higher and likely breach the $4 mark in the US by the beginning of 2023.
Earlier today, the EIA saw an inventory build-up of 1.6 million barrels of gasoline, signalling weak demand. This is a reversal of last week’s drawdown of 1.8 million barrels and may be partly due to cautious markets ahead of the Fed press conference today.
Be sure to visit our economy news section to stay up to speed with the latest developments on the Fed and global markets.
For Europe, the consequences could prove to be much more grave in the near term, with Elliot Clarke, an economist at Westpac Banking, noting that:
…a recession (is) essentially guaranteed if gas inventory cannot be raised further ahead of winter, or the weather proves harsh.
In the coming days
One of the most important events in the run-up to December 5, will be Italy’s snap elections later this week. There is the possibility of a new far-right-led government coming to power, that will likely move to end sanctions on Russian oil.
This would be beneficial to the average householder but may lead to even deeper splinters in European integration.
To avoid any fresh political frictions, Europe may be best served by keeping in mind the unfortunate position of common citizens, the viability of the collective and agreeing to water down the ban for the time being.
At the macro level, the broader headwinds across the energy sector led by a combination of under-investment and a lack of renewable replacements will likely mean that shortages will continue to flair up in the US and Europe for years to come.
With gasoline accounting for above 4% of the US CPI, long-term instability in energy prices could be an added headache for the Fed.
The post Amid Europe’s Russia ban, renewables mismatch could drive long-term instability in US gasoline prices appeared first on Invezz.recession pandemic fed white house us government interest rates oil european europe italy germany russia ukraine eu
I’m headed to London soon for #EUBIO22. Care to join me?
It was great getting back to a live ESMO conference/webinar in Paris followed by a live pop-up event for the Endpoints 11 in Boston. We’re…
It was great getting back to a live ESMO conference/webinar in Paris followed by a live pop-up event for the Endpoints 11 in Boston. We’re staying on the road in October with our return for a live/streaming EUBIO22 in London.
Silicon Valley Bank’s Nooman Haque and I are once again jumping back into the thick of it with a slate of virtual and live events on October 12. I’ll get the ball rolling with a virtual fireside chat with Novo Nordisk R&D chief Marcus Schindler, covering their pipeline plans and BD work.
After that I’ve teed up two webinars on mRNA research — with some of the top experts in Europe — and the oncology scene, building better CARs in Europe.
That afternoon, we’ll switch to a live/streaming hybrid event, with a chance to gather once again now that the pandemic has faded. I’ve recruited a panel of top biotech execs to look at surviving the crazy public market, with Adrian Rawcliffe, the CEO of Adaptimmune, SV’s Kate Bingham, Mereo CEO Denise Scots-Knight and Andrew Hopkins, chief of Exscientia.
That will be followed by my special, live fireside chat with Susan Galbraith, the oncology R&D chief at AstraZeneca. And then we’ll turn to Nooman’s panel, where he’ll be talking with Katya Smirnyagina with Oxford Science Enterprises, Maina Bhaman with Sofinnova Partners and Rosetta Capital’s Jonathan Hepple about navigating the severe capital headwinds.
You can review the full schedule and buy tickets here and review everything we have planned. It will be a packed day. I hope to see you there. It’s been several years now since I’ve had a chance to meet people in the Golden Triangle. I’m very much looking forward to it.europe pandemic
We can turn to popular culture for lessons about how to live with COVID-19 as endemic
As COVID-19 transitions from a pandemic to an endemic, apocalyptic science-fiction and zombie movies contain examples of how to adjust to the new norm…
In 2021, conversations began on whether the COVID-19 pandemic will, or even can, end. As a literary and cultural theorist, I started looking for shifts in stories about pandemics and contagion. It turns out that several stories also question how and when a pandemic becomes endemic.
The 2020 film Peninsula, a sequel to the Korean zombie film, Train to Busan, ends with a group of survivors rescued and transported to a zombie-free Hong Kong. In it, Jooni (played by Re Lee) spent her formative years living through the zombie epidemic. When she is rescued, she responds to being informed that she’s “going to a better place” by admitting that “this place wasn’t bad either.”
Jooni’s response points toward the shift in contagion narratives that has emerged since the spread of COVID-19. This shift marks a rejection of the push-for-survival narratives in favour of something more indicative of an endemic.
Contagion follows a general cycle: outbreak, epidemic, pandemic and endemic. The determinants of each stage rely upon the rate of spread within a specified geographic region.
Etymologically, the word “endemic” has its origins with the Greek words én and dēmos, meaning “in the people.” Thus, it refers to something that is regularly found within a population.
Infectious disease physician Stephen Parodi asserts that an endemic just means that a disease, while still prevalent within a population, no longer disrupts our daily lives.
Similarly, genomics and viral evolution researcher Aris Katzourakis argues that endemics occur when infection rates are static — neither rising nor falling. Because this stasis occurs differently with each situation, there is no set threshold at which a pandemic becomes endemic.
Not all diseases reach endemic status. And, if endemic status is reached, it does not mean the virus is gone, but rather that things have become “normal.”
We’re most likely familiar with contagion narratives. After all, Steven Soderbergh’s 2011 film Contagion, was the most watched film on Canadian Netflix in March 2020. Conveniently, this was when most Canadian provinces went into lockdown during the early stages of the COVID-19 pandemic.
In survival-based contagion narratives, characters often discuss methods for survival and generally refer to themselves as survivors. Contagion chronicles the transmission of a deadly virus that is brought from Hong Kong to the United States. In response, the U.S. Centers for Disease Control is tasked with tracing its origins and finding a cure. The film follows Mitch Emhoff (Matt Damon), who is immune, as he tries to keep his daughter safe in a crumbling Minneapolis.
Ultimately, a vaccine is successfully synthesized, but only after millions have succumbed to the virus.
Like many science fiction and horror films that envision some sort of apocalyptic end, Contagion focuses on the basic requirements for survival: shelter, food, water and medicine.
However, it also deals with the breakdown of government systems and the violence that accompanies it.
A “new” normal
In contrast, contagion narratives that have turned endemic take place many years after the initial outbreak. In these stories, the infected population is regularly present, but the remaining uninfected population isn’t regularly infected.
A spin-off to the zombie series The Walking Dead takes place a decade after the initial outbreak. In the two seasons of The Walking Dead: World Beyond (2020-2021) four young protagonists — Hope (Alexa Mansour), Iris (Aliyah Royale), Silas (Hal Cumpston) and Elton (Nicolas Cantu) — represent the first generation to come of age within the zombie-infested world.
The four youth spent their formative years in an infected world — similar to Jooni in Peninsula. For these characters, zombies are part of their daily lives, and their constant presence is normalized.
The setting in World Beyond has electricity, helicopters and modern medicine. Characters in endemic narratives have regular access to shelter, food, water and medicine, so they don’t need to resort to violence over limited resources. And notably, they also don’t often refer to themselves as survivors.
Endemic narratives acknowledge that existing within an infected space alongside a virus is not necessarily a bad thing, and that not all inhabitants within infected spaces desire to leave. It is rare in endemic narratives for a character to become infected.
Instead of going out on zombie-killing expeditions in the manner that occurs frequently in the other Walking Dead stories, the characters in World Beyond generally leave the zombies alone. They mark the zombies with different colours of spray-paint to chronicle what they call “migration patterns.”
The zombies have therefore just become another species for the characters to live alongside — something more endemic.
The Walking Dead, Fear the Walking Dead (2015-), Z Nation (2014-18), and many other survival-based stories seem to return to the past. In contrast, endemic narratives maintain a present and sometimes even future-looking approach.
Learning from stories
According to film producer and media professor Mick Broderick, survival stories maintain a status quo. They seek a “nostalgically yearned-for less-complex existence.” It provides solace to imagine an earlier, simpler time when living through a pandemic.
However, the shift from survival to endemic in contagion narratives provides us with many important possibilities. The one I think is quite relevant right now is that it presents us with a way of living with contagion. After all, watching these characters survive a pandemic helps us imagine that we can too.
Krista Collier-Jarvis does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.disease control pandemic covid-19 vaccine spread lockdown transmission hong kong
Xi Reemerges In 1st Public Appearance After ‘Coup’ Rumors
Xi Reemerges In 1st Public Appearance After ‘Coup’ Rumors
So much for the "coup in China" and "Xi is missing" rumor mill of the past week,…
So much for the "coup in China" and "Xi is missing" rumor mill of the past week, which at one point saw Chinese President Xi Jinping's name trending high on Twitter...
"Chinese President Xi Jinping visited an exhibition in Beijing on Tuesday, according to state television, in his first public appearance since returning to China from an official trip to Central Asia in mid-September – dispelling unverified rumours that he was under house arrest."
He had arrived in Samarkand, Uzbekistan on September 15 - and attended the days-long Shanghai Cooperation Organization (SCO) summit - where he met with Russian President Vladimir Putin, among others.
Importantly, it had been his first foreign trip in two years. Xi had not traveled outside of the country since before the Covid-19 pandemic began.
But upon returning the Beijing, he hadn't been seen in the public eye since that mid-September trip, fueling speculation and rumors in the West and on social media. Some pundits floated the idea that he had been under "house arrest" amid political instability and a possible coup attempt.
According to a Tuesday Bloomberg description of the Chinese leader's "re-emergence" in the public eye, which has effectively ended the bizarre rumors:
Xi, wearing a mask, visited an exhibition in Beijing on Tuesday about China's achievements over the past decade, state-run news outlet Xinhua reported. The Chinese leader was accompanied by the other six members of the Politburo Standing Committee, a sign of unity after rumors circulated on Twitter about a challenge to his power.
He'll likely cinch his third five-year term as leader at the major Chinese Communist party’s (CCP) meeting on October 16. The CCP meeting comes only once every half-decade.
Taking notes of all the big accounts spreading rumors of coup in China, put on a list pic.twitter.com/BHVFCPD7pU— Carl Zha (@CarlZha) September 24, 2022
What had added to prior rumors was the fact that the 69-year old Xi recently undertook a purge of key senior security officials. This included arrests on corruption charges of the former police chiefs of Shanghai, Chongqing and Shanxi.
More importantly, former vice minister of public security Sun Lijun and former justice minister Fu Zhenghua were also sacked and faced severe charges.
Zhenghua was given a suspended death sentence following a bribery conviction. The sentence comes amidst a strict anti-corruption crusade by Chinese Premier Xi Jinping.https://t.co/nwLxknJNVn— nasim raza (@razanasim3) September 22, 2022
Concerning Sun Lijun, state media made this shocking announcement a week ago: "Sun Lijun, former Chinese vice minister of public security, was sentenced to death with a two-year reprieve for taking more than 646 million yuan of bribes, manipulating the stock market, and illegally possessing firearms, according to the Intermediate People's Court of Changchun in Northeast China's Jilin Province on Friday." The suspended death sentence means he'll spend life in prison.
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