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.”
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.”
Understand the Decline in U.S. Gas Prices
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Understand the Decline in U.S. Gas Prices
Demand is pushing prices down. As gas prices rose, people adjusted their driving habits to accommodate prices, which reached an all-time high in June. Fewer drivers on the road has made gasoline more affordable, and some states have also suspended taxes on gasoline to bring prices down.
Understand the Decline in U.S. Gas Prices
Oil prices have fallen. Just two months ago, oil prices, which are tied to gas prices, surpassed $120 a barrel, helping to push the national average price of gasoline to about $5 a gallon. But prices have steadily decreased with increased oil production, helping to bring gas prices down and easing broader recession fears.
Understand the Decline in U.S. Gas Prices
Gas prices vary. Despite the overall decline, the cost of gas can vary considerably at the state level. In California, regulations to limit pollution make driving more expensive, so gas prices will be higher than in a state like Georgia, which has lower gas taxes.
Understand the Decline in U.S. Gas Prices
A political boost for Joe Biden. The cheaper prices are a political win for President Biden, especially as falling fuel costs have brought down overall inflation. But experts are unsure that the low prices will last, as oil prices are volatile and determined by myriad forces, many of which are hard to predict.
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.”
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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.
Energy experts said the reserve release would pack more punch if other countries, like China, also sold oil from their stockpiles. The International Energy Agency, an organization of more than 30 countries, will meet Friday and may recommend further releases from national reserves.
Russian oil exports normally represent more than one of every 10 barrels the world consumes. The United States, Britain and Canada have stopped importing Russian oil, and many oil companies and shippers in Europe have voluntarily stopped buying Russia’s energy products. That has produced a deficit so far of about three million barrels a day.
The average price of regular gasoline in the United States is $4.23 a gallon, according to AAA, the motor club. That’s about the same as it was a week ago but up 62 cents a gallon in the last month.
Oil prices had dropped this week after peace talks between Russia and Ukraine showed the first signs of progress. Energy traders are also concerned that demand could fall as China, the world’s largest oil importer, imposes lockdowns in Shanghai and other places to deal with coronavirus outbreaks.
“The price effect is likely to be short term,” David Goldwyn, who was a senior State Department official in the Obama administration, said about Mr. Biden’s announcement. “But part of the benefit of this release is that it will provide a bridge to when new physical supply comes online in the second half of this year from the U.S., Canada, Brazil and other countries.”
Some environmentalists criticized the reserve release. “Putting more oil on the market is not the solution to our problem but the perpetuation of our problem,” said Mark Brownstein, a senior vice president at the Environmental Defense Fund.
But Meghan L. O’Sullivan, director of the Geopolitics of Energy Project at Harvard’s Kennedy School, said releasing reserves to ease shortages would not imperil the transition to clean energy. “What the last month has told us is that if there is no energy security today, the appetite for taking hard steps on the path of transition will evaporate,” she said.
A driver in Belleville, N.J., cut his cable and downsized his apartment to save money for gas. A retiree in Vallejo, Calif., said he had stopped driving to go fishing because the miles cost too much in fuel. An auto repairman in Toms River, N.J., doesn’t go to restaurants as often. And an Uber Eats deliveryman said he couldn’t afford frequent visits to his family and friends, some of whom live 60 miles away.
“Times are tough right now,” Chris Gonzalez, 31, the Uber Eats driver, said as he filled up his tank at a Safeway gas station off Interstate 80 in California.
Millions of American drivers have acutely felt the recent surge in gas prices, which last month hit their highest level since 2014. The national average for a gallon of gas is $3.41, which is $1.29 more than it was a year ago, according to AAA. Even after a recent price dip in crude oil, gasoline remains 7 cents more per gallon than it was a month ago.
While consumers are seeing a steady rise in the prices of many goods and services, the cost of gas is especially visible. It is displayed along highways across the country, including in areas where a gallon has climbed as high as $7.59.
survey from the fuel savings platform GasBuddy.
instructed the Federal Trade Commission this week to investigate why prices at the pump haven’t declined as much as might be expected, citing the possibility of “illegal conduct” by oil and gas companies. The administration is also facing calls from Congress to tap the country’s Strategic Petroleum Reserve, which the Senate majority leader, Chuck Schumer, said would help struggling Americans.
Gas prices have gone up in part because of fluctuations in supply and demand. Demand for oil fell precipitously in the early months of the pandemic, so the Organization of the Petroleum Exporting Countries and other oil-producing nations cut production. In the United States, reduced demand led to a substantial decline in drilling; the country’s oil rig count was down nearly 70 percent in summer 2020.
But over the past year, demand for oil recovered far faster than OPEC restored its production, and crude oil prices doubled to as much as $84 a barrel. (Since Nov. 9, the price has declined to just over $76.)
higher in the past; in 2008, the national average rose above $4.10 per gallon. (Adjusted for inflation, that would be equivalent to $5.16 today.) They’re optimistic that the increase in travel and gas demand is a reflection of the economy’s rebound from the pandemic, though they worry that rising prices could make people cut back on other spending.
“If gas prices rise so much that it affects consumers’ disposable incomes, this would weigh on discretionary spending,” said Fawad Razaqzada, a market analyst at ThinkMarkets. “It would be bad news for retailers.”
In California, where the average price of a gallon is the highest in the nation, at more than $4.60, drivers said they were changing their behavior. Some sought out cheaper spots, like Costco and Safeway gas stations, to save a few dollars.
At an Arco station in San Francisco’s NoPa neighborhood, a line of cars extended into the crowded street on Thursday. Some drivers searched for change. Others grumbled about the prices, which have shot up to as much as $4.49 at the Arco — known locally for its normally cheap rates — and up to $5.85 in the most expensive part of the city.
Keith Crawford, 57, who was filling up his Kia Optima, said he had taken to getting smaller amounts of gas twice a week to soften the blow to his bank account.
“You have to spread it out in order to stay afloat,” said Mr. Crawford, a concierge. “It’s part of the budget now.”
Thirty miles northeast of San Francisco in Vallejo, drivers lined up at the Safeway gas station off I-80, where the price was $4.83 per gallon. Several put the blame for their bills on the Biden administration.
“It’s Biden, Gavin Newsom — look at the gas taxes we pay,” said Kevin Altman, a 54-year-old retiree, referring to California’s governor.
Mr. Altman paid $50 to fill up his Jeep and estimated the gas would last him just two days. He said he had stopped driving to go fishing in nearby Benicia to avoid using too much gas, and would do all his Christmas shopping online this year.
The cost can be especially challenging for people who own businesses that depend on transit. Mahmut Sonmez, 33, who runs a car service, spends nearly $800 on gas out of the $2,500 he earns each week driving people around New Jersey. To save money, he moved in September into a Belleville apartment that is $400 cheaper than his previous home. He also cut his cable service and changed cellphone plans.
If gas prices keep rising, Mr. Sonmez said, he will consider changing jobs after nine years in the industry. “Somehow we’ve got to pay the rent,” he said.
In New Jersey, which bans self-service gas, some drivers are directing their ire toward station attendants.
“Every day they’re cursing me out,” said Gaby Marmol, 25, the assistant manager of a BP station in Newark, adding that when she sees how much the customers spend on both gas and convenience store items — $1.19 for ring pops that used to be 50 cents — she feels sympathetic. “We’re just doing our jobs, but they think we set the prices.”
Cheik Diakite, 62, an attendant at a Mobil station in Newark, doesn’t get as many tips as he did before the pandemic, he said, and grows frustrated listening to customers attribute the high prices to Mr. Biden.
Mr. Diakite typically passes afternoons by looking out for his most loyal customers. Bebi Amzad, who works at a nearby school, always has the same request for him: “Fill it up.” But when she pulled in on Thursday, she asked him to give her just $30 worth of gas.
“Today I’m not filling up all the way because I have other expenses,” said Ms. Amzad, 54, who commutes to Newark from Linden, N.J. “Everybody is hurting.”
Because she spends so much on gas and groceries, Ms. Amzad continued, she can’t afford many indulgences. “I don’t go to Marshalls anymore.”
Kuwait announced last month that it planned to invest more than $6 billion in exploration over the next five years to increase production to four million barrels a day, from 2.4 million now.
This month, the United Arab Emirates, a major OPEC member that produces four million barrels of oil a day, became the first Persian Gulf state to pledge to a net zero carbon emissions target by 2050. But just last year ADNOC, the U.A.E.’s national oil company, announced it was investing $122 billion in new oil and gas projects.
Iraq, OPEC’s second-largest producer after Saudi Arabia, has invested heavily in recent years to boost oil output, aiming to raise production to eight million barrels a day by 2027, from five million now. The country is suffering from political turmoil, power shortages and inadequate ports, but the government has made several major deals with foreign oil companies to help the state-owned energy company develop new fields and improve production from old ones.
Even in Libya, where warring factions have hamstrung the oil industry for years, production is rising. In recent months, it has been churning out 1.3 million barrels a day, a nine-year high. The government aims to increase that total to 2.5 million within six years.
National oil companies in Brazil, Colombia and Argentina are also working to produce more oil and gas to raise revenue for their governments before demand for oil falls as richer countries cut fossil fuel use.
After years of frustrating disappointments, production in the Vaca Muerta, or Dead Cow, oil and gas field in Argentina has jumped this year. The field had never supplied more than 120,000 barrels of oil in a day but is now expected to end the year at 200,000 a day, according to Rystad Energy, a research and consulting firm. The government, which is considered a climate leader in Latin America, has proposed legislation that would encourage even more production.
“Argentina is concerned about climate change, but they don’t see it primarily as their responsibility,” said Lisa Viscidi, an energy expert at the Inter-American Dialogue, a Washington research organization. Describing the Argentine view, she added, “The rest of the world globally needs to reduce oil production, but that doesn’t mean that we in particular need to change our behavior.”
For months, Saudi Arabia’s oil minister, Prince Abdulaziz bin Salman, arguably the most powerful individual in the oil business, has urged his fellow producers to keep a tight rein on output, fearing additional crude could flood the world’s markets and cause prices to drop. At the same time, some producers, notably Russia, have been chafing to open the spigot a bit more.
On Thursday, the prince seemed to relent, as the group called OPEC Plus — the members of Organization of the Petroleum Exporting Countries and allies like Russia — agreed to modest output increases over the next three months.
Analysts said the prince, who is the chair of OPEC Plus, appeared to be calculating that by appeasing other producers who want to produce more oil, he can remain in control over the longer term.
The prince repeated his go-slow message on Thursday, arguing that the global economic recovery from the pandemic remained fragile, and so his willingness to sign off on an increase came as something of a surprise. But the decision seemed to be an acknowledgment of the diversity of opinions within OPEC Plus, and that he must take the views of other key producers like Russia and the United Arab Emirates into account to maintain leadership and to keep them from going their own way.
“It is not my decision, it is everybody’s decision,” he said at a news conference after Thursday’s OPEC Plus meeting.
So far traders have signaled their approval by pushing up prices in what had been a weak market. On Friday, Brent crude, the international benchmark was up about 3.4 percent to $64.86 a barrel.
Under the deal agreed Thursday, OPEC Plus will gradually increase production by 350,000 barrels a day in May and June and 441,000 barrels a day in July. Over the same period, the Saudis will also relax the one million barrels a day they have been voluntarily keeping off the market, bringing the total increase to about 2.1 million barrels a day by July.
The plan “points to a still cautious and orderly ramp-up from OPEC Plus, still allowing for a tight oil market,” rather than a flood, analysts at Goldman Sachs wrote in a note to clients on Thursday.
OPEC Plus also retain the option of adjusting output at monthly meetings. Saudi Arabia, the world’s largest exporter, can also take unilateral decisions to trim supplies.
This ability to quickly backtrack “provides the prince with comfort that he is exercising a fairly low-risk option,” Helima Croft, a strategist at RBC Capital Markets, wrote in a note to clients.
OPEC and its allies, including Russia, announced on Thursday they would gradually increase oil production over the next three months.
In agreeing to modest output increases, Saudi Arabia appears to have yielded to pressure from Russia and other producers who are eager to raise output. They want to take advantage of what they see as a likely growing global thirst for oil as economies slowly expand after pandemic lockdowns.
The group, known as OPEC Plus, has been withholding eight million barrels a day from the market.
On this occasion, the Saudis “decided to go with the consensus of the members,” said Helima Croft, a commodity strategist at RBC Capital Markets, an investment bank.
A call on Wednesday from the new U.S. secretary of energy, Jennifer Granholm, to Prince Abdulaziz bin Salman, the Saudi oil minister, may also have had some impact, although the Saudi official denied that the oil markets had been discussed.
wrote on Twitter.
Under the agreement, OPEC Plus will increase production by 350,000 barrels a day in both May and June and by 441 thousand barrels a day in July. Over the same period, Saudi Arabia will gradually unwind additional cuts of one million barrels a day that it has been making voluntarily.
Prince Abdulaziz said during a news conference after the meeting that OPEC Plus wanted to test out increased production but would still be able to change plans if demand failed to materialize.
“We can freeze; we can increase; we can decrease,” he said.
For now, the oil market has accepted the prospect of increases that would amount to less than 1 percent of global consumption per month. Larry Goldstein, an oil analyst at the Energy Policy Research Foundation, said that the approach to relaxing cuts was “very modest and conservative” and would tend to bolster prices over the coming months.
In addition, Ms. Croft said, OPEC’s willingness to increase output is seen as a vote of confidence in the global economic recovery.
France’s reimposition of a national lockdown, announced Wednesday, underlines persistent doubts about the pace of recovery from the pandemic, as have rising case numbers in the United States.
But other producers, including Russia and the United Arab Emirates, have been pushing for increased production.
At the beginning of the meeting, Russia’s deputy prime minister, Alexander Novak, who is co-chair of OPEC Plus,said that the market had “considerably improved” since its meeting last month. He estimated that demand now exceeded supply by about two million barrels a day, a deficit that would lead to a rapid draw down of inventories, potentially leading to higher prices.
Prince Abdulaziz emphasized that he had good rapport with Mr. Novak — a big difference from a year ago, he said, when the two countries clashed in a market-wrenching price war.
“We talk to each other more often than talking to our own families,” the prince said.
Saudi Aramco, Saudi Arabia’s national oil company, said on Sunday that its net income last year had fallen by 44 percent, to $49 billion, as lower oil prices stemming from the pandemic cut into earnings.
The company’s chief executive, Amin H. Nasser, described 2020 in a statement accompanying the earnings data as “one of the most challenging years in recent history.”
But Aramco, the world’s largest oil producer, said that it would stick by a pledge to pay a $75 billion dividend. Nearly all of the payment will go to the Saudi government, which owns about 98 percent of the company.
The company was listed on the local Tadawul exchange in 2019 in the largest valuation for an initial public offering.
a price war with Russia. The surge led the company to hit a record production levels of 12.1 million barrels a day in April and also contributed to a glut of oil and a sharp fall in global prices.
More recently, Aramco has been throttling back production under an agreement with other members of the Organization of the Petroleum Exporting Countries, as well as Russia and some other producers, a group called OPEC Plus. In January, Saudi Arabia said it would cut an additional 1 million barrels a day below the quota agreed with OPEC Plus, a policy which it is continuing. Average production for 2020 was 9.2 million barrels a day.
The data released on Sunday showed that Aramco is paying out more money in dividends than it is earning from oil activities. Free cash flow, a measure of earnings produced after expenses, was also $49 billion, meaning, in effect, the company was borrowing $26 billion to pay shareholders.
In another reflection of last year’s tumult in the oil markets, the company also cut capital spending by 18 percent compared with 2019, to $27 billion. Aramco said it expected capital expenditures in 2021 to be around $35 billion, less than its previous guidance of $40 billion to $45 billion.
Aramco in recent years has held the prize as the world’s most profitable company. But the impact of the pandemic, which briefly caused some oil futures to fall below zero, plus the appeal of tech products and services while people worked from home, has let Apple surge ahead. Apple’s net income for its fiscal year 2020, which ended Sept. 26, was $57 billion.
The earnings statement on Sunday was limited to a few highlights. Saudi Aramco is expected to provide more details during a call with financial analysts on Monday.
work effectively in a remote setting. Empty office buildings are putting a squeeze on city budgets, which are heavily reliant on property taxes.
Salesforce, the software company based in San Francisco, adopted a flex model in which most of its employees would be able to come into the office one to three days a week. In a bet that more people would work from home after the pandemic ends, Salesforce acquired the workplace software company Slack in December.
After the move, Target said it would still occupy about three million square feet of office space in the Minneapolis area.
“It’s not easy to say goodbye to City Center, but the Twin Cities is still our home after all these years,’’ Target’s chief human resources officer, Melissa Kremer, said in an email to employees.
Microsoft offices in Beijing. Microsoft owns LinkedIn, which has operated in China by conforming to the authoritarian government’s tight restrictions on the internet.Credit…Wu Hong/EPA, via Shutterstock
LinkedIn has stopped allowing people in China to sign up for new member accounts while it works to ensure its service in the country remains in compliance with local law, the company said this week, without specifying what prompted the move. A company representative declined to comment further.
Unlike other global internet mainstays such as Facebook and Google, LinkedIn offers a version of its service in China, which it is able to do by hewing closely to the authoritarian government’s tight controls on cyberspace.
It censors its Chinese users in line with official mandates. It limits certain tools, such as the ability to create or join groups. It has given partial ownership of its Chinese operation to local investors.
In 2017, the company blocked individuals, but not companies, from advertising job openings on its site in China after it fell afoul of government rules requiring it to verify the identities of the people who post job listings.
The backdrop to the suspension of new user registrations is not clear. The government has previously blocked internet services that it believes to be breaking the law. In 2019, Microsoft’s Bing search engine was briefly inaccessible in China for unclear reasons. Microsoft also owns LinkedIn.
President Biden addressed the nation after signing the nearly $1.9 trillion stimulus package into law. That jolt of spending, and the easing of virus restrictions, has fed into fears about inflation.Credit…Doug Mills/The New York Times
U.S. stock futures dropped on Friday, indicating the S&P 500 would pull back from the record high it set on Thursday when markets start trading. Another jump in bond yields has rocked equity markets, which also fell in Europe, as investor digested news about the rapid pace of vaccinations in the United States.
S&P 500 futures predicted the benchmark index would open 0.8 percent weaker, and Nasdaq futures dropped 1.6 percent. The yield on 10-year Treasury notes surged 7 basis points, or 0.07 percentage point, to 1.61 percent.
On Thursday, President Biden promised that all adults would be eligible for the vaccine by May 1, signaling a possible return to normality in the summer. As more businesses and services open up, the economy should also be feeling the effects of Mr. Biden’s nearly $1.9 trillion stimulus package, the American Rescue Plan, which he signed into law on Thursday. It provides another round of direct payments to American taxpayers, sending checks of up to $1,400, and more money for state and local governments and industries including airlines.
But so much good news has also fed into fears about inflation, or that central banks will begin to pull back on their stimulus measures, which have helped keep asset prices high.
Higher interest rates and tighter central bank policies are now considered to be the single biggest threat to so-called risk assets, mainly stocks, according to a Bank of America survey of fund managers.
Britain
The FTSE 100 index fell 0.8 percent, the first decline in five days.
Data published on Friday shows that the British economy declined 2.9 percent in January as the country entered its third lockdown, shut schools and left the European Union single market and customs union. Separate data for the same month showed the largest monthly drop in trade since records began in 1997. Exports to the European Union dropped 40 percent and imports fell nearly 30 percent. Some of the fall is because of stockpiling at the end of last year, but many businesses struggled to keep trading as they dealt with new customs requirements.
After the surge in online shopping this past year, the Royal Mail is adding a new Sunday service to parcel deliveries. Earlier this week, the company raised its revenue and profit expectations. Royal Mail shares have jumped more than 10 percent this week.
Burberry shares gained more than 5 percent after the company said it expected its sales to increase by nearly a third in the first three months of 2021, compared with last year.
China
Several tech companies, including Tencent and Baidu, were fined by China’s antitrust regulator over past acquisitions. Shares in Tencent dropped 4.4 percent on Friday after Bloomberg reported that this was just the start of a crackdown on the tech giant. Last year, the target was Alibaba.
Shoppers wait in line at an outlet mall in Southaven, Miss. on Saturday. Many Americans are set to benefit from the new economic relief plan.Credit…Rory Doyle for The New York Times
The economic relief plan that is headed to President Biden’s desk has been billed as the United States’ most ambitious antipoverty initiative in a generation. But inside the $1.9 trillion package, there are plenty of perks for the middle class, too.
An analysis by the Tax Policy Center published this week estimated that middle-income families — those making $51,000 to $91,000 per year — would see their after-tax income rise by 5.5 percent as a result of the tax changes and stimulus payments in the legislation. This is about twice what that income group received as a result of the 2017 Tax Cuts and Jobs Act.
Here are some of the ways the bill will help the middle class.
Direct checks
Americans will receive stimulus checks of up to $1,400 per person, including dependents.
The size of the payments are scaled down for individuals making more than $75,000 and married couples earning more than $150,000. And they are cut off for individuals making $80,000 or more and couples earning more than $160,000. Those thresholds are lower than in the previous relief bills, but they will still be one of the biggest benefits enjoyed by those who are solidly in the middle class.
Tax credits for parents
The most significant change is to the child tax credit, which will be increased to up to $3,600 for each child under 6, from $2,000 per child. The credit, which is refundable for people with low tax bills, is $3,000 per child for children ages 6 to 17.
The legislation also bolsters the tax credits that parents receive to subsidize the cost of child care this year. The current credit is worth 20 to 35 percent of eligible expenses, with a maximum value of $2,100 for two or more qualifying individuals. The stimulus bill increases that amount to $4,000 for one qualifying individual or $8,000 for two or more.
Cheaper health insurance
After four years of being on life support, the Affordable Care Act is expanding, a development that will largely reward middle-income individuals and families, since those on the lower end of the income spectrum generally qualify for Medicaid.
Because the relief legislation expands the subsidies for buying health insurance, a 64-year-old earning $58,000 would see monthly payments decline to $412 from $1,075 under current law, according to the Congressional Budget Office.
A rescue for pensioners
One of the more contentious provisions in the legislation is the $86 billion allotted to fixing failing multiemployer pensions. The money is a taxpayer bailout for about 185 union pension plans that are so close to collapse that without the rescue, more than a million retired truck drivers, retail clerks, builders and others could be forced to forgo retirement income.
The legislation gives the weakest plans enough money to pay hundreds of thousands of retirees their full pensions for the next 30 years.
A drill ship contracted by ExxonMobil off the coast of Guayana in 2018. The temptation to produce more when prices rise has not disappeared completely, especially for countries like Guyana that want to pump as much oil as they can while oil is still valuable.Credit…Christopher Gregory for The New York Times
Even as they are making more money thanks to the higher oil and gasoline prices, industry executives pledged at a recent energy conference that they would not expand production significantly. They also promised to pay down debt and hand out more of their profits to shareholders in the form of dividends.
“I think the worst thing that could happen right now is U.S. producers start growing rapidly again,” Ryan Lance, chairman and chief executive of ConocoPhillips, said at the IHS CERAweek conference.
Scott Sheffield, chief executive of Pioneer Natural Resources, a major Texas producer, predicted that American production would remain flat at 11 million barrels a day this year, compared with 12.8 million barrels immediately before the pandemic took hold.
Even the Organization of the Petroleum Exporting Countries and allied producers like Russia surprised many analysts this month by keeping several million barrels of oil off the market, The New York Times’s Clifford Krauss reports. OPEC’s 13 members and nine partners are pumping roughly 780,000 barrels of oil a day less than at the beginning of the year even though prices have risen by 30 percent in recent months.
Chevron said this week that it would spend $14 billion to $16 billion a year on capital projects and exploration through 2025. That is several billion dollars less than the company spent in the years before the pandemic, as the company focuses on producing the lowest-cost barrels.
“So far, these guys are refusing to take the bait,” said Raoul LeBlanc, a vice president at IHS Markit, a research and consulting firm. But he added that the investment decisions of American executives could change if oil prices climb much higher. “It’s far, far too early to say that this discipline will last.”
Shoppers in Southaven, Miss. Higher spending seems almost certain in the months ahead as vaccinations prompt Americans to get out and about, deploying savings.Credit…Rory Doyle for The New York Times
While the Biden administration’s stimulus bill, which will funnel nearly $1.9 trillion to American households, made its way through Congress, some politicians and economists began to raise concerns that it would unshackle a long-vanquished monster: inflation.
The worries reflect expectations of a rapid economic expansion as businesses reopen and the pandemic recedes. Millions are still unemployed, and layoffs remain high, The New York Times’s Nelson Schwartz and Jeanna Smialek report. But for workers with secure jobs, higher spending seems almost certain in the months ahead as vaccinations prompt Americans to get out and about, deploying savings built up over the last year.
Healthy economies tend to have gentle price increases, which give businesses room to raise wages and leave the central bank with more room to cut interest rates during times of trouble.
Over the long term, inflation can be a concern because it hurts the value of many financial assets, especially stocks and bonds. It makes everything from milk and bread to gasoline more expensive for consumers, leaving them unable to keep up if salaries stall. And once inflation becomes entrenched, it can be hard to subdue.
Inflation is expected to increase in the coming months as prices are measured against weak readings from last year. Analysts surveyed by Bloomberg expect the Consumer Price Index to hit an annual rate of 2.9 percent from April through June, easing to 2.5 percent in the three months after that before easing gradually to year-over-year gains of 2.2 percent in 2022, based on the median projection.
But those numbers are nothing like the staggering price increases of the 1970s, and evidence of renewed inflation is paltry so far.
HOUSTON — Even as oil and gasoline prices rise, industry executives are resisting their usual impulse to pump more oil out of the ground, which could keep energy prices moving up as the economy recovers.
The oil industry is predictably cyclical: When oil prices climb, producers race to drill — until the world is swimming in petroleum and prices fall. Then, energy companies that overextended themselves tumble into bankruptcy.
That wash-rinse-repeat cycle has played out repeatedly over the last century, three times in the last 14 years alone. But, at least for the moment, oil and gas companies are not following those old stage directions.
An accelerating rollout of vaccines in the United States is expected to turbocharge the American economy this spring and summer, encouraging people to travel, shop and commute. In addition, President Biden’s coronavirus relief package will put more money in the pockets of consumers, especially those who are still out of work.
to less than zero.
That bizarre day seems to have become seared into the memories of oil executives. The industry was forced to idle hundreds of rigs and throttle many wells shut, some for good. Roughly 120,000 American oil and gas workers lost their jobs over the last year or so, and companies are expected to lay off 10,000 workers this year, according to Rystad Energy, a consulting firm.
Yet, even as they are making more money thanks to the higher prices, industry executives pledged at a recent energy conference that they would not expand production significantly. They also promised to pay down debt and hand out more of their profits to shareholders in the form of dividends.
“I think the worst thing that could happen right now is U.S. producers start growing rapidly again,” Ryan Lance, chairman and chief executive of ConocoPhillips, said at the IHS CERAweek conference, an annual gathering that was virtual this year.
several million barrels of oil off the market. OPEC’s 13 members and nine partners are pumping roughly 780,000 barrels of oil a day less than at the beginning of the year even though prices have risen by 30 percent in recent months.
rising concerns about climate change reduce the demand for fossil fuels in favor of electric and hydrogen-powered vehicles. Russia has been pressing Saudi Arabia to loosen production caps, while Kazakhstan, Iraq and several other countries are exporting more. Even Iran and Venezuela, which have struggled to sell oil because of U.S. sanctions, are beginning to export more.
attacked American military forces.
Some tensions in the region could ease if the Biden administration and Iranian officials restart negotiations on a new nuclear agreement to replace the one that was negotiated by the Obama administration and abandoned by the Trump administration. Iran would then most likely export more oil.
Of course, U.S. oil executives have little control over those geopolitical matters and say they are doing what they can to avoid another abrupt reversal.
“We’re not betting on higher prices to bail us out,” Michael Wirth, Chevron’s chief executive, told investors on Tuesday.
Chevron said this week that it would spend $14 billion to $16 billion a year on capital projects and exploration through 2025. That is several billion dollars less than the company spent in the years before the pandemic, as the company focuses on producing the lowest-cost barrels.
“So far, these guys are refusing to take the bait,” said Raoul LeBlanc, a vice president at IHS Markit, a research and consulting firm. But he added that the investment decisions of American executives could change if oil prices climb much higher. “It’s far, far too early to say that this discipline will last.”
