I would not expect rising gas prices to go anywhere, but it’s interesting to see how one hand of the economy (the oil industry) is attacking the other (consumerism) and I don’t know how it’ll eventually shake out. All that and more in The Morning Shift for February 14, 2022.
1st Gear: I’m In The Oil-Driven Economy. I’m In The Consumer-Driven Economy. I’m In The Combination Oil-Driven Consumer Economy
I love writing these Morning Shift articles because I get to delve into business publications, enter into Business Mindset. This is why I used to like perusing through issues of The Economist to see how many articles were like “The Great Africa Question: How Will We Exploit These Budding National Economies?”
Anyway! Here is a great one from Bloomberg that seems conflicted. On one side, it explains how rising oil prices, hitting records not seen since 2014, can continue to drive inflation and harm the consumer economy as a whole. On the other side, rising oil prices will help oil companies. What are we to think!
While energy exporters stand to benefit from the boom and oil’s influence on economies isn’t what it once was, much of the world will take a hit as companies and consumers find their bills rising and spending power squeezed by costlier food, transportation and heating.
According to Bloomberg Economics’ Shok model, a climb in crude to $100 by the end of this month from around $70 at the end of 2021 would lift inflation by about half a percentage point in the U.S. and Europe in the second half of the year.
JPMorgan Chase warns a run-up to $150 a barrel would almost stall the global expansion and send inflation spiraling to over 7%, more than three times the rate targeted by most monetary policy makers.
“The oil shock feeds into what is now a broader inflation problem,” said long-time Fed official Peter Hooper, who’s now global head of economic research for Deutsche Bank. “There’s a decent chance of a significant slowing of global growth” as a result.
I guess we are in it for the long haul with high gas prices. At least we have tons of cheap, affordable, fuel-efficient cars to buy these days!
2nd Gear: Japan Mulling A Radical Plan To Relax Gas-Burning Car Restrictions As EVs Rise
This is a weird one from Japan, which is considering revising some emissions restrictions in five years. That is, Japan is considering relaxing some emissions restrictions, per the Japan Times:
The Environment Ministry plans to review its automobile emission controls in five years in response to an improvement in air quality in major cities covered by the existing measures of the central government.
The ministry will consider the possibility of abolishing the emission regulations as the use of electric and other vehicles that do not emit exhaust gases is likely to expand, contributing to a better air quality, sources familiar with the matter said.
Here are some of those restrictions that could stand to be lifted, if EV adoption is sufficiently high:
Municipalities in Tokyo and five prefectures — Saitama, Chiba, Kanagawa, Osaka and Hyogo — were initially designated for the emission controls under the law on emissions of nitrogen oxides from automobiles, which came into force in 1992. Aichi and Mie prefectures were added to the list under a law revision in 2001.
In the areas covered by the countermeasures, heavy and diesel vehicles that do not meet the state-set emission standards cannot be registered.
I had never really thought about this being possible. So long as air quality standards are met, we might see a lift in emissions restrictions. It’s hard to imagine now, but I guess it could be possible that the last few non-electric cars could be belching as much soot and raw fumes as they want. At some point, maybe the last gas-burning cars will all be big-block ‘66 Coronets or whatever.
3rd Gear: EV Mail Truck Stalling
Not enough money is going to the electric USPS project, per Bloomberg:
Last year, [the USPS] awarded a 10-year contract worth an estimated $11.3 billion to Oshkosh Corp. to furnish as many as 165,000 new vehicles. They’re rather cute and sparked a social media sensation when the Postal Service posted their preliminary images. The agency’s initial order includes 5,000 electric ones.
Sounds encouraging. But not as far as the White House is concerned. The Biden administration has scolded the USPS for not ordering more EVs. “The Postal Service’s proposal as currently crafted represents a crucial lost opportunity to more rapidly reduce the carbon footprint of one of the largest government fleets in the world,” Vicki Arroyo, the EPA’s associate administrator for policy, wrote to U.S. Postmaster General Louis DeJoy earlier this month.
The irony perhaps is that the White House and its congressional allies did try to make $6 billion available in the sprawling $2 trillion Build Back Better bill for electric postal vehicles and charging infrastructure. But after month of tortured negotiations, they couldn’t round up enough votes from their own party members to pass it. With the midterm elections approaching, it may be too late.
Making America’s most uniform fleet vehicle electric seems like a no-brainer, but hey, this is America we’re talking about.
4th Gear: Here’s A Fun Story Salivating Over Bolivia’s Rich, Rich Lithium
All of these modern EVs need lithium for their batteries, and that has spawned all kinds of mad rushes at lithium resources around the world. People are getting impatient. They are getting mad at anyone who is keeping them from their precious, precious lithium, as we can see in this drool-covered Financial Times piece:
“Argentina is definitely standing out above its peers in attracting major investments in lithium extraction,” says Emily Hersh, chief executive of Luna Lithium in Nevada and a specialist on mining in South America. “Argentina has had multiple close-to-billion-dollar transactions and investments . . . in the last eight to 12 months.”
Lithium miners were drawn by the investor-friendly policies of the 2015-19 Mauricio Macri administration and pro-mining provincial governments also helped, executives say.
Across the border in Bolivia, the story is radically different. The country has potential: the world’s largest lithium salt flat and the biggest proven reserves.
But successive socialist governments have given the state a central role in exploiting lithium, private companies have gone away empty-handed and local communities have rejected the central government’s authority to negotiate. Despite years of promises, large-scale production has yet to begin.
These guys all long for the days of colonialism, when they could just enslave people and force them to do their resource extraction.
5th Gear: Climate Change Is Trashing Roads
While cars continue to contribute to climate change, climate change is now fighting cars themselves. I don’t mean in one particular way. Climate change is fighting roads across the world, using all kinds of exciting methods, as the BBC explains:
Australia’s floods of 2010-11 spread devastation and damage across Queensland, with 33 people losing their lives and causing billions in losses across the state. The floods also damaged 19,000km of roads, including those needed for emergency and delivery vehicles.It was a stark lesson in the importance of weather-proofing Queensland’s most vulnerable roads, to ensure that future flooding would lead to fewer people being cut off.Since then, Queensland has been using a process called foamed bitumen stabilisation. This injects small amounts of air and cold water into hot bitumen, the sticky dark substance typically used for road surfaces.[...]This is one of many technologies that authorities are testing on streets around the world. From landslide-blocked roads in Nepal, washed-out coastal highways in the US, collapsed bridges in Kenya to melting ice roads in Canada - an increasingly volatile global climate is threatening to disrupt essential transport networks.
The obvious solution would be to let all roads simply deteriorate, effectively banning cars and helping halt climate change itself. Two birds, one stone!
Reverse: Famous Road Trip Ends Poorly
Neutral: How Do You Track Your Gas Costs?
I tend not to look at the price per gallon so much as the cost of a fill-up, and somehow my VW continues to not drink more than $20 of gas at a time.