even tougher winter next year as natural gas stocks are used up and as new supplies to replace Russian gas, including increased shipments from the United States or Qatar, are slow to come online, the International Energy Agency said in its annual World Energy Outlook, released last week.

Europe’s activity appears to be accelerating a global transition toward cleaner technologies, the I.E.A. added, as countries respond to Russia’s invasion of Ukraine by embracing hydrogen fuels, electric vehicles, heat pumps and other green energies.

But in the short term, countries will be burning more fossil fuels in response to the natural gas shortages.

gas fields in Groningen, which had been slated to be sealed because of earthquakes triggered by the extraction of the fuel.

Eleven countries, including Germany, Finland and Estonia, are now building or expanding a total of 18 offshore terminals to process liquid gas shipped in from other countries. Other projects in Latvia and Lithuania are under consideration.

Nuclear power is winning new support in countries that had previously decided to abandon it, including Germany and Belgium. Finland is planning to extend the lifetime of one reactor, while Poland and Romania plan to build new nuclear power plants.

European Commission blueprint, are voluntary and rely on buy-ins from individuals and businesses whose utility bills may be subsidized by their governments.

Energy use dropped in September in several countries, although it is hard to know for sure if the cause was balmy weather, high prices or voluntary conservation efforts inspired by a sense of civic duty. But there are signs that businesses, organizations and the public are responding. In Sweden, for example, the Lund diocese said it planned to partially or fully close 150 out of 540 churches this winter to conserve energy.

Germany and France have issued sweeping guidance, which includes lowering heating in all homes, businesses and public buildings, using appliances at off-peak hours and unplugging electronic devices when not in use.

Denmark wants households to shun dryers and use clotheslines. Slovakia is urging citizens to use microwaves instead of stoves and brush their teeth with a single glass of water.

website. “Short showers,” wrote one homeowner; another announced: “18 solar panels coming to the roof in October.”

“In the coming winter, efforts to save electricity and schedule the consumption of electricity may be the key to avoiding electricity shortages,” Fingrad, the main grid operator, said.

Businesses are being asked to do even more, and most governments have set targets for retailers, manufacturers and offices to find ways to ratchet down their energy use by at least 10 percent in the coming months.

Governments, themselves huge users of energy, are reducing heating, curbing streetlight use and closing municipal swimming pools. In France, where the state operates a third of all buildings, the government plans to cut energy use by two terawatt-hours, the amount used by a midsize city.

Whether the campaigns succeed is far from clear, said Daniel Gros, director of the Centre for European Policy Studies, a European think tank. Because the recommendations are voluntary, there may be little incentive for people to follow suit — especially if governments are subsidizing energy bills.

In countries like Germany, where the government aims to spend up to €200 billion to help households and businesses offset rising energy prices starting next year, skyrocketing gas prices are hitting consumers now. “That is useful in getting them to lower their energy use,” he said. But when countries fund a large part of the bill, “there is zero incentive to save on energy,” he said.

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An Israel-Lebanon Border Deal Could Increase Natural Gas Supplies

Israel and Lebanon have been at war since 1948, but the countries are close to an agreement that could increase production of natural gas, helping energy-starved Europe.

Officials from the two countries have said they are close to resolving long-running disputes over their maritime borders, which would allow energy companies to extract more fossil fuels from offshore fields in the Mediterranean Sea.

The increased production won’t make up for the gas that Europe is no longer getting from Russia. But energy experts say an Israel-Lebanon agreement should give a vital push to efforts to produce more gas in that part of the world. Over the last four years, energy production in the eastern Mediterranean has been growing as Israel, Egypt, Jordan and Cyprus have worked together to take advantage of oil and gas buried under the sea.

“This is a very important step for the region to come into its own,” said Charif Souki, the Lebanese-American executive chairman of Tellurian, a liquefied natural gas company based in Houston. “Players are finally realizing that it’s better to cooperate than to continuously fight.”

The Israel-Lebanon negotiations will most directly affect the Karish field, which is set to produce gas for Israel’s domestic use. That fuel is expected to displace gas produced from other fields, which can then be exported. The new field is also expected to produce a small amount of oil.

Chevron, the second-largest U.S. oil and gas company, and several smaller businesses are already producing gas from two larger fields off Israel’s coast. That fuel has increasingly replaced coal in the country’s power plants and factories. Israel now has so much gas that it has become a net exporter of energy, sending fuel to neighbors like Jordan and Egypt. Some of that gas has also found its way to Europe and other parts of the world from L.N.G. export terminals in Egypt.

The U.S. government, across several administrations, has encouraged the growth of the gas trade in the region by helping to negotiate deals between countries that have long had tense relations. The Ukraine crisis has accelerated efforts to explore and produce natural gas because of the soaring cost of the fuel in Europe, where countries are desperate to end their dependence on Russian gas.

Chevron and its Israeli partners are discussing the possibility of building a floating liquefied natural gas platform in the Leviathan gas field, Israel’s largest. The companies are expected to make a decision on the project in a few months.

But getting the gas out of the region will not be easy. Floating export terminals are vulnerable to terrorist attack. And, even if they could be adequately secured, the terminals will not be able to process as much gas as the larger coastal facilities used in major gas producers like the United States, Qatar and Australia. Building terminals on land can take several years, if not often longer, because of opposition from environmental and other groups.

“Energy infrastructure offshore is very volatile and vulnerable,” said Gal Luft, a former Israeli military officer who is the co-director of the Institute for the Analysis of Global Security in Washington. “You have to manage risk.”

Theoretically, transporting gas by pipelines would be easier than liquefying natural gas for export before converting it back into gas at its destination. But building long-distance pipelines is expensive and difficult. A long-running conflict between Turkey, Cyprus and Greece, for example, has made constructing a pipeline from Israel to southern Europe incredibly challenging, if not impossible.

Even an Israel-Lebanon border agreement faces risks. Hezbollah has threatened to attack the Karish field, and it sent unarmed drones over it in July; Israeli officials said they had shot down the ‌aircraft.

Still, Israeli and Lebanese officials have said in recent days that they are pressing on with the negotiations, with officials from the Biden administration acting as a go-between, and are close to a deal. The talks gathered momentum during the United Nations General Assembly last week.

Prime Minister Najib Mikati of Lebanon said on Thursday at the United Nations that he was confident about reaching an agreement with Israel. “Lebanon is well aware of the importance of the promising energy market in the eastern Mediterranean for the prosperity of all countries in the region,” he said, “but also to meet the needs of importing nations.”

U.S. and other Western oil companies have long shied away from Israel, in part because they do not want to alienate Arab countries. But, as relations between Israel and countries like Egypt, Jordan and, more recently, the United Arab Emirates have improved more companies have expressed interest in the eastern Mediterranean.

An agreement between Israel and Lebanon could accelerate that trend.

“I think it will appease many minds,” said Leslie Palti-Guzman, chief executive of Gas Vista, a consulting firm. “Companies that have been reluctant to invest could be more incentivized to develop additional projects.”

Gas fields in the Mediterranean are one of several new suppliers that Europe will need as it seeks a long-term replacement for Russian gas. Other suppliers include energy companies operating in the United States, Qatar, Africa, the Caspian Sea and the North Sea.

“There is no silver bullet,” said Paddy Blewer, spokesman for Energean, a London-based exploration company that hopes to begin producing gas in the Karish field. “The East Mediterranean is one of a series of marginal gains that Europe has to look at.”

Energean plans to begin production in the next few weeks, and has said it expects to produce up to 8 billion cubic meters of gas a year by 2025. If it is successful, the company could significantly add to Israel’s output. The country will produce roughly 22 billion cubic meters this year. Once an importer of almost all of its energy, Israel increased gas production by 22 percent in the first half of the year compared with the same period in 2021. It exported roughly 40 percent of its gas, earning the government royalties of $250 million.

The agreement between Israel and Lebanon will also open the way to drilling in Lebanese waters by a consortium led by Eni of Italy and TotalEnergies of France. Lebanese officials view natural gas as a critical financial tool in its attempts to revive the country’s depressed economy. The government has wanted to drill offshore since at least 2014, but disputes with Israel over the border have delayed exploration.

“It’s not for sure Lebanon will find gas,” said Chakib Khelil, a former president of the Organization of the Petroleum Exporting Countries. “But, if they do, Lebanon will get a big boost.”

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Shock Waves Hit the Global Economy, Posing Grave Risk to Europe

Russia’s invasion of Ukraine and the continuing effects of the pandemic have hobbled countries around the globe, but the relentless series of crises has hit Europe the hardest, causing the steepest jump in energy prices, some of the highest inflation rates and the biggest risk of recession.

The fallout from the war is menacing the continent with what some fear could become its most challenging economic and financial crisis in decades.

While growth is slowing worldwide, “in Europe it’s altogether more serious because it’s driven by a more fundamental deterioration,” said Neil Shearing, group chief economist at Capital Economics. Real incomes and living standards are falling, he added. “Europe and Britain are just worse off.”

eightfold increase in natural gas prices since the war began presents a historic threat to Europe’s industrial might, living standards, and social peace and cohesion. Plans for factory closings, rolling blackouts and rationing are being drawn up in case of severe shortages this winter.

China, a powerful engine of global growth and a major market for European exports like cars, machinery and food, is facing its own set of problems. Beijing’s policy of continuing to freeze all activity during Covid-19 outbreaks has repeatedly paralyzed large swaths of the economy and added to worldwide supply chain disruptions. In the last few weeks alone, dozens of cities and more than 300 million people have been under full or partial lockdowns. Extreme heat and drought have hamstrung hydropower generation, forcing additional factory closings and rolling blackouts.

refusing to pay their mortgages because they have lost confidence that developers will ever deliver their unfinished housing units. Trade with the rest of the world took a hit in August, and overall economic growth, although likely to outrun rates in the United States and Europe, looks as if it will slip to its slowest pace in a decade this year. The prospect has prompted China’s central bank to cut interest rates in hopes of stimulating the economy.

“The global economy is undoubtedly slowing,” said Gregory Daco, chief economist at the global consulting firm EY- Parthenon, but it’s “happening at different speeds.”

In other parts of the world, countries that are able to supply vital materials and goods — particularly energy producers in the Middle East and North Africa — are seeing windfall gains.

And India and Indonesia are growing at unexpectedly fast paces as domestic demand increases and multinational companies look to vary their supply chains. Vietnam, too, is benefiting as manufacturers switch operations to its shores.

head-spinning energy bills this winter ratcheted up this week after Gazprom, Russia’s state-owned energy company, declared it would not resume the flow of natural gas through its Nord Stream 1 pipeline until Europe lifted Ukraine-related sanctions.

Daily average electricity prices in Western Europe have reached record levels, according to Rystad Energy, surging past 600 euros ($599) per megawatt-hour in Germany and €700 in France, with peak-hour rates as high as €1,500.

In the Czech Republic, roughly 70,000 angry protesters, many with links to far-right groups, gathered in Wenceslas Square in Prague this past weekend to demonstrate against soaring energy bills.

The German, French and Finnish governments have already stepped in to save domestic power companies from bankruptcy. Even so, Uniper, which is based in Germany and one of Europe’s largest natural gas buyers and suppliers, said last week that it was losing more than €100 million a day because of the rise in prices.

International Monetary Fund this week to issue a proposal to reform the European Union’s framework for government public spending and deficits.

caps blunt the incentive to reduce energy consumption — the chief goal in a world of shortages.

Central banks in the West are expected to keep raising interest rates to make borrowing more expensive and force down inflation. On Thursday, the European Central Bank raised interest rates by three-quarters of a point, matching its biggest increase ever. The U.S. Federal Reserve is likely to do the same when it meets this month. The Bank of England has taken a similar position.

The worry is that the vigorous push to bring down prices will plunge economies into recessions. Higher interest rates alone won’t bring down the price of oil and gas — except by crashing economies so much that demand is severely reduced. Many analysts are already predicting a recession in Germany, Italy and the rest of the eurozone before the end of the year. For poor and emerging countries, higher interest rates mean more debt and less money to spend on the most vulnerable.

“I think we’re living through the biggest development disaster in history, with more people being pushed more quickly into dire poverty than has every happened before,” said Mr. Goldin, the Oxford professor. “It’s a particularly perilous time for the world economy.”

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Russia Says the Gas Pipeline to Germany Will Remain Closed

Gazprom said on Friday that it would postpone restarting the flow of natural gas through a closely watched pipeline that connects Russia and Germany, an unexpected delay that appeared to be part of a larger struggle between Moscow and the West over energy and the war in Ukraine.

The Russian-owned energy giant had been expected to resume the flow of gas through the Nord Stream 1 pipeline on Saturday after three days of maintenance. But hours before the pipeline was set to reopen, Gazprom said that problems had been found during inspections, and that the pipeline would be closed until they were eliminated. It did not give a timeline for restarting.

The announcement had the hallmarks of a tit-for-tat move. Earlier on Friday, finance ministers for the Group of 7 countries said that they had agreed to impose a price cap mechanism on Russian oil in a bid to choke off some of the energy revenue Moscow is still collecting from Europe.

Eric Mamer, a spokesman for the European Commission, said that the “fallacious pretenses” for the latest delay were “proof of Russia’s cynicism.”

Russia has, during Mr. Putin’s long tenure, used energy for geopolitical ends, often with the goal of gaining leverage over European policies toward Ukraine. Mr. Putin has taken a keen interest in the oil and natural gas industries, often negotiating deals personally with energy giants in ways that barely hide the political subtext. The Nord Stream pipelines, which are designed to bypass Ukraine by sending gas directly to Germany under the Baltic Sea, have been central to the Kremlin’s political use of energy.

In its statement Friday, Gazprom said it found oil leaks around a turbine used to pressurize the pipeline, forcing it to call off the restart. The German company Siemens Energy, the maker of the turbine, cast doubt on that account. “As the manufacturer of the turbines, we can only state that such a finding is not a technical reason for stopping operation,” the company said late Friday. Siemens also said there were additional turbines available that could be used to keep the pipeline operating.

OPEC Plus group of oil producing countries, headed by Saudi Arabia and Russia, have been hinting that they might pivot away from their gradual post-pandemic production increases and cut output to bolster falling prices. The group is expected to meet on Monday to set oil production levels.

“Putin will endeavor to demonstrate that he has not played his last card and that there are many open windows in his energy war with the West,” Helima Croft, head of commodities at RBC Capital Markets, wrote in a note to clients on Friday.

The latest action by Gazprom will raise fears of a permanent shutdown of the pipeline, which had been the key conduit for gas to Germany, a country heavily dependent on Russian natural gas. Like other European Union nations, Germany has been rushing to fill storage facilities before winter as insurance against Russian cutoffs.

since late July. Well after Russia invaded Ukraine in late February, the pipeline was typically transporting around five times that level.

Britain’s energy regulator said that fuel bills for 24 million households would rise by 80 percent beginning in October, putting pressure on the next prime minister, expected to be Liz Truss, to turn immediate attention to coming up with a massive aid package to head off a catastrophic winter.

Britain’s government is not the only one working to mitigate the energy crisis in Europe. Facing dire circumstances, lawmakers and regulators across the continent are increasingly intervening in the energy markets to protect consumers.

At the same time, the European natural gas market has changed substantially over the last year as Russia crimped supplies and Europe turned to other sources. Flows from Russia to Europe have declined sharply.

imports of liquefied natural gas shipped by sea from the United States and elsewhere, and increased pipeline flows from producers including Norway and Azerbaijan. The problem is that the shifts have forced gas prices higher, as Europe vies with Asia for limited supplies of liquefied gas.

Until Friday’s announcement there was increasing optimism about the prospect for navigating the winter with less Russian gas, leading to the fall in natural gas prices in recent days. Wood Mackenzie, an energy research firm, has projected that Russian pipeline gas imports will steadily decline from supplying more than a third of European demand in recent years to around 9 percent in 2023.

Even the importance of Nord Stream has diminished. Analysts say that Gazprom has so constrained Nord Stream volumes this summer that the pipeline’s performance is no longer crucial to the overall fundamentals of the market. But news about the conduit still has a psychological impact, and some analysts expect gas prices to jump when markets open on Monday.

“A complete shutdown will obviously have implications on market sentiment given how tight the market is,” said Massimo Di Odoardo, vice president for global gas at Wood Mackenzie. Such an event, he added, would “increase the risk of further cuts via other pipelines bringing Russian gas to the E.U. via Ukraine and Turkey.”

Andrew E. Kramer contributed.

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U.S. Gas Prices Fall Below $4 a Gallon, AAA Says. Here’s Why.

Gas prices in the United States fell below $4 a gallon on Thursday, retreating to their lowest level since March, a sign of relief for Americans struggling with historically high inflation and a political boost for President Biden, who has been under pressure to do more to bring down prices.

The national average cost of a gallon of regular gasoline now stands at $3.99, according to AAA. That’s still higher than it was a year ago but well below a peak of nearly $5.02 in mid-June. The average price has fallen for 58 consecutive days.

Energy costs feed into broad measures of inflation, so the drop is also good news for policymakers who have struggled to contain rising prices. It is a welcome development for Mr. Biden, who has spent recent weeks trumpeting the drop in gasoline prices, even as he pledges to do more to bring costs down. Mr. Biden has criticized oil companies for their record profits, and this year he released some of the nation’s stockpile of oil in an effort to reduce price pressures.

cost of gasoline at the pump is determined by global oil prices, which have tumbled to their lowest point since the war in Ukraine began in February, a drop that reflects in part the growing concern of a worldwide recession that will hit demand for crude.

said in a statement, citing it as one example of recent “encouraging economic developments.”

For consumers, falling gas prices offer a respite from a shaky economy, rapid inflation and other worries. “We have new rising diseases and inflation, and people expect a recession,” said Zindy Contreras, a student and part-time waitress in Los Angeles. “If I just had to not worry about my gas tank taking up $70, that’d be a huge relief, for once.”

Ms. Contreras has been filling up her 2008 Mazda 3 only halfway as a result of the higher prices, costing her $25 to $30 each visit to the pump, and she had found opportunities to car-pool with friends. These days, Ms. Contreras usually gets gas twice a week, driving 15 miles to and from work each week and an additional 10 to 50 miles a week, depending on her plans.

The national average price masks wide regional variations. Prices vary according to the health of local economies, proximity to refineries and state taxes, said Devin Gladden, a spokesman with AAA.

weaker demand because of high costs, a sharp decline in global oil prices in recent months and the suspension of taxes on gasoline in a handful of states.

Nearly two-thirds of people in a recent AAA survey said they had altered their driving habits because of high prices, mostly by taking fewer trips and combining errands. On Thursday, the Organization of the Petroleum Exporting Countries revised down its forecast for global oil demand this year.

Regardless of the causes, the lower prices are a welcome change for drivers for whom the added expense — often $10 to $15 extra for a tank of gas — had become yet another hurdle as they sought to get their lives back to normal as the coronavirus pandemic eased.

“The affordability squeeze is becoming very real when you see these high prices at the gas pump,” said Beth Ann Bovino, the U.S. chief economist at S&P Global. “So, in that sense, it’s a positive sign certainly for those folks that are struggling.”

That cushion — cash not spent on gasoline that can go elsewhere — also extends to businesses, particularly as the price of diesel fuel drops. Diesel, which is used to fuel, for instance, farm equipment, construction machinery and long-haul trucks, has also fallen from a June record, though at a slower pace than gasoline prices.

The drop in the price of gas is also good news for the economy, as businesses face less pressure to pass energy costs on to their customers — a move that would add to the country’s inflation problem.

hurricanes later this year could damage Gulf Coast refineries and pipelines, choking off supplies.

For now, though, the steady drop in the cost of fuel offers Americans a reprieve.

“If gasoline prices stay at or near the levels they have reached, that would mean much more cushion for households,” Ms. Bovino said.

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Inflation Cooled in July, Welcome News for White House and Fed

Inflation cooled notably in July as gas prices and airfares fell, a welcome reprieve for consumers and a positive development for economic policymakers in Washington — though not yet a conclusive sign that price increases have turned a corner.

The Consumer Price Index climbed 8.5 percent in the year through July, a slower pace than economists had expected and considerably less than the 9.1 percent increase in the year through June. After food and fuel costs are stripped out to better understand underlying cost pressures, prices climbed 5.9 percent, matching the previous reading.

The marked deceleration in overall inflation — on a monthly basis, prices barely moved — is another sign of economic improvement that could boost President Biden at a time when rapid price increases have been burdening consumers and eroding voter confidence. The new data came on the heels of an unexpectedly strong jobs report last week that underscored the economy’s momentum.

job market stays strong, Americans may begin to feel better about their personal financial situations.

“It underscores the kind of economy we’ve been building,” Mr. Biden said on Wednesday. “We’re seeing a stronger labor market where jobs are booming and Americans are working, and we’re seeing some signs that inflation may be beginning to moderate.”

loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.

Fed officials remain committed to wrestling America’s rapid inflation lower, and they have raised interest rates at the quickest pace since the 1980s to try to slow the economy and bring supply and demand into balance — making supersize rate moves of three-quarters of a percentage point at each of their past two meetings. Another big adjustment will be up for debate at their next meeting in September, policymakers have said.

But investors interpreted July’s unexpectedly pronounced inflation slowdown as a sign that policymakers could take a gentler route, raising rates a half-point next month. Stocks soared more than 2 percent on Wednesday, as Wall Street bet that the Fed might become less aggressive, which would decrease the chances that it would plunge the economy into a recession.

“It was as good as the markets and the Fed could have hoped for from this report,” said Aneta Markowska, chief financial economist at Jefferies. “I do think it removes the urgency for the Fed.”

Still, officials who spoke on Wednesday remained cautious about inflation. Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, called the report the “first hint” of a move in the right direction, while Charles Evans, president of the Federal Reserve Bank of Chicago, said that it was “positive” but that price increases remained “unacceptably high.”

Policymakers have been hoping for more than a year that price increases will begin to cool, only to have those expectations repeatedly dashed. Supply chain issues have made goods more expensive, Russia’s invasion of Ukraine sent commodity prices soaring, a shortage of workers pushed wages and service prices higher and a dearth of housing has fueled rising rents.

toward $4 in July after peaking at $5 in June, based on data from AAA. That decline helped overall inflation to cool last month. The trend has continued into August, which should help inflation to continue to moderate.

But it is unclear what will happen next. The U.S. Energy Information Administration expects that fuel costs will continue to come down, but geopolitical instability and the speed of U.S. oil and gas production during hurricane season, which can take refineries offline, are wild cards in that outlook.

declined in July, perhaps in part because borrowing costs rose. Mortgage rates have increased this year and appear to be weighing on the housing market, which could be helping to drive down prices for appliances.

slow hiring. Wages are still rising rapidly, and, as that happens, so are prices on many services. Rents, which make up a chunk of overall inflation and are closely linked to wage growth, continue to climb rapidly — which is concerning, because they tend to change course only slowly.

Rents of primary residences climbed 0.7 percent in July from the prior month, and are up 6.3 percent over the past year. Before the pandemic, that measure typically climbed about 3.5 percent annually.

Those forces could keep inflation undesirably rapid even if supply chains unsnarl and fuel prices continue to fall. The Fed aims for 2 percent inflation over time, based on a different but related inflation measure.

“The Covid reopening and revenge travel pressures have eased — and are probably going to continue easing,” said Laura Rosner-Warburton, senior U.S. economist at MacroPolicy Perspectives. But she also struck a note of caution, adding: “Under the hood, we’re still seeing pressures in rent. There’s still sticky inflation here.”

And given how high inflation has been for more than a year now, Fed policymakers will avoid reading too much into a single report. Inflation slowed last summer only to speed up again in fall.

“We might see goods inflation and commodity inflation come down, but at the same time see the services side of the economy stay up — and that’s what we’ve got to keep watching for,” Loretta Mester, president of the Federal Reserve Bank of Cleveland, said during a recent appearance. “It can’t just be a one month. Oil prices went down in July; that’ll feed through to the July inflation report, but there’s a lot of risk that oil prices will go up in the fall.”

Ms. Mester said that she “welcomes” a slowdown in some types of prices, but that it would be a mistake to “cry victory too early” and allow inflation to continue without taking necessary action.

For many Americans who are struggling to adjust their lifestyles to rapidly climbing costs at the grocery store and dry cleaners, an annual inflation rate that is still more than four times its normal speed is unlikely to feel like a big improvement, even as lower gas prices and rising pay rates do offer some relief.

Stephanie Bailey, 54, has a solid family income in Waco, Texas. Even so, she has been cutting back on meals at local Tex-Mex restaurants and new clothes because of the climbing prices, which she sees “everywhere.” At Starbucks, she opts for cold, noncoffee drinks, which in some cases are cheaper.

Her son, who is in his 20s, has moved back in with his parents. Rent had become out of reach on his salary working at a vitamin manufacturer. He is now teaching at a local high school.

“It’s just so expensive, with housing,” Ms. Bailey said. “He was having a hard time making ends meet.”

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Biden Administration’s Bid to Cap Russia Oil Prices Faces Resistance

WASHINGTON — The Biden administration’s push to form an international buyers’ cartel to cap the price of Russian oil is facing resistance amid private sector concerns that it cannot be reliably enforced, posing a challenge for the U.S.-led effort to drain President Vladimir V. Putin’s war chest and stabilize global energy prices.

The price cap has been a top priority of Treasury Secretary Janet L. Yellen, who has been trying to head off another spike in global oil costs at the end of the year. The Biden administration fears that the combination of a European Union embargo on Russian oil imports and a ban on the insurance and financing of Russian oil shipments will send prices soaring by taking millions of barrels of that oil off the market.

But the untested concept has drawn skepticism from energy experts and, in particular, the maritime insurance sector, which facilitates global oil shipments and is key to making the proposal work. Under the plan, it would be legal for them to grant insurance for oil cargo only if it was being sold at or below a certain price.

Mike Salthouse, global claims director at The North of England P&I Association Limited, a leading global marine insurer. “If you have sophisticated state actors wanting to deceive people, it’s very easy to do.”

He added: “We’ve said it won’t work. We’ve explained to everybody why.”

That has not deterred Ms. Yellen and her top aides, who have been crisscrossing the globe to make their case with international counterparts, banks and insurers that an oil price cap can — and must — work at a moment of rapid inflation and the risk of recession.

“At a time of global anxiety over high prices, a price cap on Russian oil is one of the most powerful tools we have to address inflation by preventing future spikes in energy costs,” Ms. Yellen said in July.

The Biden administration is trying to mitigate fallout from sanctions adopted by the European Union in June, which would ban imports of Russian oil and the financing and insuring of Russian oil exports by year’s end. Britain was expected to enact a similar ban but has not yet done so.

not solve the world’s oil supply problems. European officials, who have been skeptical, continue to say they are analyzing its viability.

restricted natural gas flows to parts of Europe in retaliation for sanctions, would curb oil exports because of their importance to its economy.

senior fellow at the Atlantic Council who works in the financial services industry, said of Russia’s cooperation with a price cap. “If that were the case, he wouldn’t have invaded Ukraine in the first place.”

But proponents believe that if the European Union bans insurance transactions, an oil price cap may be the best chance to mitigate the economic fallout.

John E. Smith, former director of the foreign assets control unit, said the key was ensuring that financial services firms and maritime insurers were not responsible for vetting every oil transaction, as well as providing guidance on complying with the sanctions.

“The question is will enough jurisdictions agree on the details to move this forward,” said Mr. Smith, who is now co-head of Morrison & Foerster’s national security practice. “If they do, it could be a win for everyone but Russia.”

Matina Stevis-Gridneff contributed reporting from Brussels.

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Germans Tip-Toe Up the Path to Energy Savings

AUGSBURG, Germany — Wolfgang Hübschle went into city government expecting a simple life, planning things like traditional festivals replete with lederhosen.

Instead, these days he has the unpopular task of calculating which traffic lights to shut off, how to lower temperatures in offices and swimming pools — and perhaps, if it comes to it, pulling the plug on Bavarians’ beloved but energy-intensive breweries.

Municipal officials like Mr. Hübschle, the economic adviser to the provincial Bavarian city of Augsburg, sit on the front line of a geopolitical struggle with Russia since European Union leaders agreed this week to try to reduce natural gas consumption by 15 percent, fearing that President Vladimir V. Putin could cut exports in retaliation for Europe’s support for Ukraine.

a second pipeline from Russia, until the war forced the project to be suspended.

underlined the threat this week when it reduced flows through Nord Stream 1 into Germany to just 20 percent, citing, unconvincingly for many, problems with its German-made turbines.

Roughly half of all homes in Germany are heated with gas, while a third of the country’s gas is used by industry. If the coming winter is particularly cold, a cutoff would be brutal.

reopening coal-fired power plants to replace those that burn gas and rapidly expanding infrastructure for liquefied natural gas, along with securing contracts for deliveries from Qatar and the United States.

In a recent social media post, Mr. Habeck admonished people to change their daily habits as part of the effort to reach the country’s goal of saving 20 percent.

“If you think, OK, swapping out the shower head, thawing out the freezer or turning down the heater, none of that makes a difference — you are deceiving yourself,” Mr. Habeck said. “It is an excuse to do nothing.”

Some officials have expressed concern that the government is stoking panic. And some are hoping incentives will encourage careful energy use.

Chancellor Olaf Scholz has pledged to increase housing subsidies and shield renters from evictions over unpaid heating bills. This week, Munich announced an “energy bonus” of 100 euros to households that cut their annual consumption by 20 percent, and its utility company launched an energy-saving competition for customers this autumn.

Germans seem to be responding. The Federal Association of Energy and Water said the country was using almost 15 percent less gas compared to the same period last year, a trend they partly attributed to the record price of energy. Costs will increase further by the beginning of October, when the government introduces a gas surcharge.

In response, space heaters and wood ovens are selling out in many cities, and there is a long wait for mini-solar-panel units to power some home devices.

Claudia Kemfert, an energy economist with the German Institute for Economic Research, said such savings were critical but worried the country had wasted several months with appeals to citizens instead of taking more robust action with business.

Companies have shown they can reduce their gas consumption when they are not given a choice. Automaker Mercedes-Benz said on Wednesday it had trimmed 10 percent of its gas usage, and could cut as much as 50 percent while maintaining full operations.

“There is a lot we can achieve through market-based approaches, we should exhaust every option we have on that front so that we can avoid an emergency situation,” Ms. Kemfert said.

Municipal officials say they will have no way to understand how much their efforts can help until they get more data.

In Munich, capital of the southern state of Bavaria and an epicenter of German industry, the deputy mayor, Katrin Habenschaden, is skeptical.

“I honestly don’t believe that this can be compensated for, as much as I appreciate it through our efforts now to save energy.” she said. “Rather, I believe that we simply need other options or other solutions.”

As the deputy responsible for managing economic affairs, she has been helping the city with a kind of economic triage — assessing what kind of rationing different companies could face. Businesses, big and small, are courting the city, to make their case for why they should be spared.

Bavaria is of particular concern because it is home to companies that are drivers of German industry, like BMW and Siemens. The conservative regional government’s reluctance to challenge its heavy dependence on gas and push forward on renewable energies has also left it particularly vulnerable, Ms. Habenschaden, a Green, argued.

In Augsburg and Munich, local officials have requested that every city employee send their suggestions. One Augsburg civil servant pointed out the city’s two data centers were a major energy drain. They are now considering whether they can rely on just one.

More quietly, many local leaders are pondering which energy-hungry German traditions may have to be put on the chopping block, should the country be forced into energy rationing: Beer making? Christmas markets?

Mr. Hübschle said he believes Bavaria should shut down its famous breweries before letting its chemical industry face gas shortages.

Meanwhile, Rosi Steinberger, a member of Bavaria’s regional parliament, now works in a dark office to cut her consumption, and is debating whether to provoke the inevitable ire of Munich by suggesting it cancel its world-famous Oktoberfest. It is scheduled to return this fall after a two-year pandemic pause.

“I haven’t asked yet,” she said, with a nervous laugh. “But I also think that when people say there should be no taboos in what we consider — well, that’s what you have to think about.”

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Fed Prepares Another Rate Increase as Wall Street Wonders What’s Next

Federal Reserve officials are set to make a second abnormally large interest rate increase this week as they race to cool down an overheating economy. The question for many economists and investors is just how far the central bank will go in its quest to tame inflation.

Central banks around the world have spent recent weeks speeding up their interest rate increases, an approach they’ve referred to as “front-loading.” That group includes the Fed, which raised interest rates by a quarter-point in March, a half-point in May and three-quarters of a point in June, its biggest move since 1994. Policymakers have signaled that another three-quarter-point move is likely on Wednesday.

The quick moves are meant to show that officials are determined to wrestle inflation lower, hoping to convince businesses and families that today’s rapid inflation won’t last. And, by raising interest rates quickly, officials are aiming to swiftly return policy to a setting at which it is no longer adding to economic growth, because goosing the economy makes little sense at a moment when jobs are plentiful and prices are climbing quickly.

released in June suggested that officials would raise rates to 3.4 percent by the end of the year, up from around 1.6 percent now. Many economists have interpreted that to mean that the Fed will raise rates by three-quarters of a point this month, half of a point in September, a quarter-point in November and a quarter-point in December. In other words, it hints that a slowdown is coming.

But policy expectations have regularly been upended this year as data surprises officials and inflation proves stubbornly hot. Just this month, investors were speculating that the Fed might make a full percentage-point increase this week, only to simmer down after central bankers and fresh data signaled that a smaller move was more likely.

That changeability is a key reason that the Fed is likely to emphasize that it is closely watching economic data as it determines policy. Its next meeting is nearly two months away, in September, so central bankers will most likely want to keep their options open so that they can react to the evolving economic situation.

inflation has been running at the fastest pace in more than 40 years, it is likely to slow when July data is released because gasoline prices have come down notably this month.

And, although inflation expectations had shown signs of jumping higher, one key measure eased in early data out this month. Keeping inflation expectations in check is paramount because consumers and companies might change their behavior if they expect quick inflation to last. Workers could ask for higher pay to cover rising costs, companies might continually lift prices to cover climbing wage bills and the problem of rising prices would be perpetuated.

A variety of other metrics of the economy’s strength, from jobless claims to manufacturing measures, point to a slowing business environment. If that cooling continues, it should keep the Fed on track to slow down, said Subadra Rajappa, the head of U.S. rates strategy at Société Générale. While Fed officials want the economy to moderate, they are trying to avoid tipping it into an outright recession.

“When you start to see cracks appear in the unemployment measures, they’re going to have to take a much more cautious approach,” Ms. Rajappa said.

Markets have been quivering in recent days, concerned that central banks around the world will push their war on inflation too far and tank economies in the process. Investors are increasingly betting that the Fed might lower interest rates next year, presumably because they expect the central bank to set off a downturn.

“It is very likely that central banks will hike so quickly that they will overdo it and put their economies into a recession,” said Gennadiy Goldberg, a rates strategist at TD Securities. “That’s what markets are afraid of.”

American employers added 372,000 jobs in June, and wages continue to climb strongly. Consumer spending has eased somewhat, but less than expected. While the housing market is slowing, rents continue to pick up in many markets.

Plus, the outlook for inflation is dicey. While gas prices may be slowing for now, risks of a resurgence lie ahead, because, for example, the administration’s efforts to impose a global price cap on Russian oil exports could fall through. Rising rents mean that housing costs could help to keep inflation elevated.

While Mr. Powell made clear at his June news conference that three-quarter-point rate increases were out of the ordinary and that he did “not expect” them to be common, Fed officials have also been clear that they would like to see a string of slowing inflation readings before feeling more confident that price increases are coming under control.

“We at the Fed have to be very deliberate and intentional about continuing on this path of raising our interest rate until we get and see convincing evidence that inflation has turned a corner,” Loretta Mester, the president of the Federal Reserve Bank of Cleveland, said in a Bloomberg interview this month.

The central bank will get a fresh reading on the Personal Consumption Expenditures index — its preferred inflation gauge — on Friday. That data will be for June, and it is expected to show continued rapid inflation both on a headline basis and after volatile food and fuel prices are stripped out. The Employment Cost Index, a wage and benefits measure that the Fed watches closely, will also be released that day and is expected to show compensation climbing quickly.

Given the recent decline in prices at the gas pump, at least two months of slower inflation readings by September are possible — but not guaranteed.

“They cannot prematurely hint that they think victory over inflation is coming,” Mr. Shepherdson of Pantheon wrote.

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Economy Is at Risk of Recession by a Force Hiding in Plain Sight

This past week brought home the magnitude of the overlapping crises assailing the global economy, intensifying fears of recession, job losses, hunger and a plunge on stock markets.

At the root of this torment is a force so elemental that it has almost ceased to warrant mention — the pandemic. That force is far from spent, confronting policymakers with grave uncertainty. Their policy tools are better suited for more typical downturns, not a rare combination of diminishing economic growth and soaring prices.

Major economies including the United States and France reported their latest data on inflation, revealing that prices on a vast range of goods rose faster in June than anytime in four decades.

China reported that its economy, the world’s second-largest, expanded by a mere 0.4 percent from April through June compared with the same period last year. That performance — astonishingly anemic by the standards of recent decades — endangered prospects for scores of countries that trade heavily with China, including the United States. It reinforced the realization that the global economy has lost a vital engine.

The specter of slowing economic growth combined with rising prices has even revived a dreaded word that was a regular part of the vernacular in the 1970s, the last time the world suffered similar problems: stagflation.

Most of the challenges tearing at the global economy were set in motion by the world’s reaction to the spread of Covid-19 and its attendant economic shock, even as they have been worsened by the latest upheaval — Russia’s disastrous attack on Ukraine, which has diminished the supply of food, fertilizer and energy.

“The pandemic itself disrupted not only the production and transportation of goods, which was the original front of inflation, but also how and where we work, how and where we educate our children, global migration patterns,” said Julia Coronado, an economist at the University of Texas at Austin, speaking this past week during a discussion convened by the Brookings Institution in Washington. “Pretty much everything in our lives has been disrupted by the pandemic, and then we layer on to that a war in Ukraine.”

Great Supply Chain Disruption.

meat production to shipping exploited their market dominance to rack up record profits.

The pandemic prompted governments from the United States to Europe to unleash trillions of dollars in emergency spending to limit joblessness and bankruptcy. Many economists now argue that they did too much, stimulating spending power to the point of stoking inflation, while the Federal Reserve waited too long to raise interest rates.

Now playing catch-up, central banks like the Fed have moved assertively, lifting rates at a rapid clip to try to snuff out inflation, even while fueling worries that they could set off a recession.

Given the mishmash of conflicting indicators found in the American economy, the severity of any slowdown is difficult to predict. The unemployment rate — 3.6 percent in June — is at its lowest point in almost half a century.

American consumers have enhanced fears of a downturn. This past week, the International Monetary Fund cited weaker consumer spending in slashing expectations for economic growth this year in the United States, from 2.9 percent to 2.3 percent. Avoiding recession will be “increasingly challenging,” the fund warned.

Orwellian lockdowns that have constrained business and life in general. The government expresses resolve in maintaining lockdowns, now affecting 247 million people in 31 cities that collectively produce $4.3 trillion in annual economic activity, according to a recent estimate from Nomura, the Japanese securities firm.

But the endurance of Beijing’s stance — its willingness to continue riding out the economic damage and public anger — constitutes one of the more consequential variables in a world brimming with uncertainty.

sanctions have restricted sales of Russia’s enormous stocks of oil and natural gas in an effort to pressure the country’s strongman leader, Vladimir V. Putin, to relent. The resulting hit to the global supply has sent energy prices soaring.

The price of a barrel of Brent crude oil rose by nearly a third in the first three months after the invasion, though recent weeks have seen a reversal on the assumption that weaker economic growth will translate into less demand.

major pipeline carrying gas from Russia to Germany cut the supply sharply last month, that heightened fears that Berlin could soon ration energy consumption. That would have a chilling effect on German industry just as it contends with supply chain problems and the loss of exports to China.

euro, which has surrendered more than 10 percent of its value against the dollar this year. That has increased the cost of Europe’s imports, another driver of inflation.

ports from the United States to Europe to China.

“Everyone following the economic situation right now, including central banks, we do not have a clear answer on how to deal with this situation,” said Kjersti Haugland, chief economist at DNB Markets, an investment bank in Norway. “You have a lot of things going on at the same time.”

The most profound danger is bearing down on poor and middle-income countries, especially those grappling with large debt burdens, like Pakistan, Ghana and El Salvador.

As central banks have tightened credit in wealthy nations, they have spurred investors to abandon developing countries, where risks are greater, instead taking refuge in rock-solid assets like U.S. and German government bonds, now paying slightly higher rates of interest.

This exodus of cash has increased borrowing costs for countries from sub-Saharan Africa to South Asia. Their governments face pressure to cut spending as they send debt payments to creditors in New York, London and Beijing — even as poverty increases.

U.N. World Food Program declared this month.

Among the biggest variables that will determine what comes next is the one that started all the trouble — the pandemic.

The return of colder weather in northern countries could bring another wave of contagion, especially given the lopsided distribution of Covid vaccines, which has left much of humanity vulnerable, risking the emergence of new variants.

So long as Covid-19 remains a threat, it will discourage some people from working in offices and dining in nearby restaurants. It will dissuade some from getting on airplanes, sleeping in hotel rooms, or sitting in theaters.

Since the world was first seized by the public health catastrophe more than two years ago, it has been a truism that the ultimate threat to the economy is the pandemic itself. Even as policymakers now focus on inflation, malnutrition, recession and a war with no end in sight, that observation retains currency.

“We are still struggling with the pandemic,” said Ms. Haugland, the DNB Markets economist. “We cannot afford to just look away from that being a risk factor.”

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