Biden's Missed Oil Opportunity and CDC Mistrust

Published Apr 6, 2023, 3:14 PM

President Biden promised to refill the Strategic Petroleum Reserve when oil prices reached a certain threshold. It hit that level, and Biden flinched. Now, he'll pay for it, says Liam Denning, columnist with Bloomberg Opinion. Liam joins us alongside columnists Justin Fox, Faye Flam, and Beth Kowitt. With the Bloomberg Opinion team, we examine New York City's COVID rebound, the CDC's attempt to re-establish trust, and what "workaholism" means for women. Amy Morris hosts.

You're listening to the Bloomberg Opinion podcast. Catch us Saturdays at one and seven pm Eastern on Bloomberg dot Com, the iHeartRadio app and the Bloomberg Business App, or listen on demand wherever you get your podcast. Welcome to Bloomberg Opinion. I'm Amy Morris. Now this week we'll take a look at the top priority. What should it be for the CDC Job One just might be regaining the public trust. There is a race among workaholics and women are starting to gain some ground. We're going to look at why, and we'll take a look at the latest trendy neighborhood used to just be called Wall Street. Let's get started. We begin with a focus on oil and whether the past week changes the narrative in a significant way. After the White House announced last fall it would refill the Strategic Petroleum Reserve at specific oil prices, President Biden making that announcement, United States Godment is going to purchase oil to refill the Strategic Patrol reserved when prices fall to seventy dollars a barrel, and that means oil comments can invest to wrap up production now with confidence they'll be able to sell their oil to us at that price in the future seventy dollars. But it didn't happen, and prices are going up again. So what did happen? Let's bring in Bloomberg opinion columnist Liam Denning, he covers energy and commodities. We can start with the surprise cut that OPEC announced this past week. Liam, How does that change things? Well, it changes things immediately, just in terms of the oil price. You know, it was kind of ironic that the OPEC supply cut was accompanied by a statement talking about preserving the stability of the market, and then the very next thing that happens is an eight percent jump that day in the oil price. OPEC's idea of price stability, of course, tends to err on the side of those prices going up rather than down, and I think it may cause some additional problems for the Biden administration, but also for the FED and other central banks, because the weakness in all prices has obviously been useful for them, as they contemplate, you know, on the one hand, raising rates further to combat inflation, but also on the other mindful of the fact that we've just gone through an acute banking crisis, which which still doesn't seem quite settled just yet. Since the White House did make the announcement that the SPR would be replenished, and it hasn't happened yet, it's been a lot of ups and downs. Walk us through that. Yeah, So what happened was, obviously last year we had the Russian invasion of Ukraine. Oil prices spiked. US gasoline prices got to their highest level ever last June, averaging more than five bucks a gallon for the first time, and in response, President Joe Biden authorized drawing down one hundred and eighty million barrels from the Strategic Petroleum Reserve. In October, the administration announced a plan to replenish the SPR, but in a slightly different way from what we've been used to. They said, you know, our plan is to basically start replenishing the SPR once oil falls into a range, and their words were around sixty nine to seventy two dollars per barrel. Now, what has happened since then? A couple of things have happened. One is, in effect, we have actually replaced about three quarters of that one hundred and eighty million barrels through a sort of congressional slight of hand, Basically, future sales that were mandated by Congress got taken out under legislation, and so that has net net replaced a lot of those barrels. However, there's still forty million barrels outstanding, and that will rise to more than sixty million barrels because we still have some congressionally mandated sales happening this year. But the other big thing that's happened is that effectively the administration has just not really shown any kind of commitment to that process. And that strikes me as quite odd in a couple of ways. Politically, why come out and say it if you don't really plan on following it up, you're just kind of creating a hurdle for yourself that you then fail to clear. But secondly, for the oil market, the whole idea of this was to do two things. One was it was to sort of legitimize drawing down oil from the SPR because the government was effectively saying, look, if all prices get too high, we are going to release barrels from the ESPR to dent the economic impact. On the other hand, if all prices get too low below that sixteen seventy two range, we will step in and start buying barrels for the spr which, if you think about it, is kind of an olive branch to the oil industry's saying, look, price is full too much. We're going to help you out. You can go out and drill with confidence. And it's kind of balancing that green agenda on the one hand for Biden, but also the need to balance it with energy security. But since then, we've seen advisors like Amos hostein, you know, kind of attaching conditions. And then when we saw all prices really drop in the week of Silicon Valley bank failing, we didn't really see the government move. You write in your column that the US is essentially swung from being this huge net importer of oil to a net exporter, usefully repurposing a critical piece of public infrastructure. But then, as you said, the administration attached that new condition and kind of brought everything to a standstill. What did it do, Well, you're you're right now that the US is a net exporter of oil. I think the administration quite rightly said, Look, the main threat to US from oil these days is less that we got to cut off and we actually run out of oil. It's more, one of the economic impacts of high oil prices, if someone like Russia does something disruptive the problem is by by going out there and saying, when oil falls into this range of sixty nine seventy two, we will proactively refill the strategic Petroleum Reserve. What the administration is really doing there was was trying to put a put into the market, and everything the administration has done since then, I don't think, for just to be clear, I don't think anyone is expecting the White House to suddenly turn into a you know, a day trader of oil with its finger constantly, you know, poised over the buttons, sir. The body language, and the lack of quick movement when all prices collapse, I think can only help to shred any credibility that was there that they will actually follow through on this. And more and more it seems like a political act, a desire to be seen to be doing something for energy security without actually following through quickly to really do anything substantive. Liam. Let's also talk about the timing of this. That's significant. We watched the regional bank turmoil, the SVB failure, all of that happening as they're talking about the Strategic Petroleum Reserve and replenishing it. How did they link together? They were separate incidents that seemed to impact each other, or at least one more than the other. I think the link here is is kind of how the Silicon Valley Bank failure affected the old market. And if you look at the data that we get from the CFTC, which shows the physician essentially if hedge funds in all futures, what you see when an SVB fails is just as we saw in other types of asset classes, people sold first and ask questions later. So you saw a huge drop in the positions of hedge funds in oil futures. Think about that another way. It's panic now if you think about it from the perspective of the White House saying it plans to proactively buy barrels when all prices fall. Well, frankly, when you have that kind of blood on the street's moment, when everyone else is panicking, that's exactly when a buyer with huge resources and an ability to take a long term view should be stepping in. Although the White House nominally had this plan to stabilize all prices with spr purchases, it just didn't really feel any pressing need to follow through. I want to talk a little bit about the Biden administration energy policy, because they've been pushing the green energy objectives really hard. Can the administration strike a balance between the strategic petroleum Reserve and having these green energy objectives on the table. Is that something they can work together? If you go back to when President Biden was campaigning for the presidency, you know, he had pretty much the greenest presidential platform we had ever seen. Then we get the invasion of Ukraine and a reminder of how dependent we are, even after the shale boom, how dependent we are on global energy trade. President Biden is trying to balance these two competing objectives. Longer term, you could argue, if we get more of our energy from renewable sources that aren't linked to whatever's happening in places like Russia or the Middle East, that that is that will actually enhance our energy security. The problem is, in the meantime, we still use an awful lot of oil and gas. We still depend on those trade flows, and so you know it's going to be a difficult balancing act. We've seen President Biden not just doing things like tapping the Strategic Petroleum Reserve. But for example, recently approving a controversial a new project on the north slope of Alaska known as Willow which you know it drew criticism from within his own ranks for approving that. He's going to have to steer a very narrow course on this. Bloomberg Opinion colonist Liam Denning covers energy and commodities. Now, coming up, we'll look at how Wild Street turned from an office corridor into a fancy residential area. You're listening to Bloomberg Opinion. You're listening to the Bloomberg Opinion podcast. Catch us Saturdays at one and seven pm Eastern on Bloomberg dot Com, the iHeartRadio app, and the Bloomberg Business App, or listen on demand wherever you get your podcast. You're listening to Bloomberg Opinion. I'm Amy Morris. The rise of remote work during the pandemic has cut demand for office space. It's left some American downtowns feeling like ghost towns. As a result, we've heard a lot of talk of converting downtown offices into apartments. Now we continue to watch the post pandemic job recovery throughout the United States, but what we're finding is that the job's recovery in New York City and maybe some other cities too, is unbalanced. Let's get more information from Bloomberg opinion columnist Justin Fox. Justin New York jobs are not back yet. Where is everybody? Um? I mean they're they're getting close, but there's still about one percent short of where they were right before the pandemic. And what the funny thing is, it's not the office workers, the office jobs that have gone away. It's it's all the leisure and hospitality, retail and actually government as well, which is mostly local government employment and the stuff like finance, information which is publishing, and some internet stuff, professional and business services. Those are all up in New York City. But those people, you know, aren't necessarily coming into the office every day, so they're not in the office. Why would that have a more significant impact on the economy in New York City, especially in Manhattan where all these people come in from other boroughs and the suburbs. If people aren't coming in as many days, there's a lot less spending going on, and you know, restaurants for lunch, going out after work, shopping while you're in at the office, Bloomberg did an estimate a month or two ago that it's maybe a twelve twelve billion a year and lost spending, and that shows up in the retail and leisure to hospitality jobs. And then you can feel it in Manhattan. It's like the middle of the week, it feels like it's totally back Friday especially, it really doesn't. One of the columns that you have on the Bloomberg terminal is about this talk of converting the downtown offices into apartments. Now, I can tell you in Washington, d C. Where I am, a lot of the downtown office space is vacant, and it's federal space. It's, as you mentioned, government workers who are still either working from home close to one hundred percent of the time or more than half of the time. So they're trying to figure out what to do with all these great, big, beautiful boxes that are empty now that used to have offices. Similar in other metropolitan areas it turned. I mean, it's a little hard because they give the monthly jobs data down in all these categories for New York City. They don't do it for many other cities, but they do for DC because it's a state. Basically at least for statistical purposes. It's not voting purposes. That's a whole different column, just exactly. But DC is much much, much worse offce than New York. I mean, the overall jobs are down four and a half percent instead of about one percent like in New York City. And it's just across every single job category except information, which is like the media in DC and some internet stuff everything, but that is down, which in New York a bunch of job categories are up. And I mean, it's kind of funny because in DC government employment is down less than another place, but you're right, government workers of just not coming back. In New York You've had, definitely in the finance sector a lot of pressure to bring people back, and I think in federal government has just been stuck on that. And so that's interesting. You know, the government employment is down more everywhere else in the country, mostly local government, but in DC it's not down much, but those people aren't coming in and that's having a huge effect on the city. So converting those downtown offices into apartments, as you alluded to in your column in Manhattan, specifically Wall Street, actually how would that lure people back? If they won't come downtown to work. Are they going to come downtown to live? Well, I mean in Wall Street, that's happened. You could say at this point it's it's it's more of a residential neighborhood than an office neighborhood. It still feels like an office neighborhood because it's got these narrow streets and very tall buildings. But there are more than sixty thousand people living down in the Financial District, where I think in nineteen seventy there were eight hundred, and that's something. There are couple the Battery Park City was this big new development built on sort of the land the dirt day dug up for the World Trade Center that it's part of it. But since the nineties, well in the nineties, there was this really concerted effort by the city because there was a ton of vacant office space down there to convert especially older buildings into apartments, and it happened. And what's kind of interesting is it's this like really fancy neighborhood now, even though it's all these people who don't need to commute to work but have basically the best transit in the country, and they're increasingly have restaurants and other things to go to as well. Who are the big losers? Is there any sector that can benefit and which sectors are struggling well? Among sort of service sectors where there's a lot of jobs that you don't need a college degree for, it's I mean leisure and hospitality, and it's still down nationally too. Restaurants are almost back, but accommodation, hotels and sort of entertainment is still down from where it was before. And then this category bank carey called other services, which is like dry cleaners, manicurists, all of that is also down. And so I mean one interesting thing in most places, another category that is up that has some very high end jobs but also a lot of not so high end jobs is healthcare, and it's up in most place. Again, in DC it's down, but in most places that's up, But in New York it's up a lot. And at one level it feels a little unsustainable how fast healthcare employment and grown. It's like the biggest part of it is home healthcare services. But on the other hand, I mean, at least given all the other service jobs that have been lost in New York City, it's been kind of a welcome replacement, and you get the sense that some people have shifted from sort of hospitality jobs to those jobs. Let's talk about that shift. Is the workforce completely different now? Has the pandemic fundamentally changed the way most of us work? No, I mean a lot of those jobs are exactly the same as they were before. That's sort of the thing, but it has impacted them. I mean, there are a lot fewer leasure and hospitality jobs. And it's interesting at this point how much of that is, because I think spending on restaurants is significantly higher in real inflation adjusted terms now than it was before the pandemic. There's just a lot fewer workers, and I think part of it is just a lot of people when they lost their jobs and that we're sort of like, I think I'm going to do something else now and have shifted to other fields. I mean, it's just it's funny. In New York City, so much of the attention, understandably has been about high end office workers and will they keep coming to the city and will they stay and that's still an issue, and how often people will come in as an issue, and whether enough of them will use public transit to pay the bills is an issue, But in terms of who's been leaving New York City, it's it's not it's people in the Bronx. I mean the Bronx is now the big pop is the main borow it's losing population, and that's the poorest borrow. It's the working class borough. And I think people there are just like, I'm not finding jobs that can pay my rent, so I'm going to move to North Carolina or Florida or wherever. So where is this going? Will the pendulum swing back? I mean, New York's gonna be different. It's an interesting like New York created a crazy amount of jobs in the last decade, but it feels like those jobs to serve those people there just aren't going to be as many of those. And so it's just an interesting question what it means for New York for its school system, which has a lot fewer students with again the biggest losses in the Bronx because so many people have been leaving to go find better work somewhere else. It's just weird. It's it's very different from the population loss the city had in the sixties and seventies, but it's a lot of population loss, and it's just going to be interesting to see where this goes, and we're going to watch it with you. Justin, thank you so much for taking the time with us. Thanks for having me. Justin Fox is a Bloomberg Opinion columnist. Don't forget We're available as a podcast on Apple, Spotify or your favorite podcast platform, and stay with us. Coming up, we'll pull back the curtain and take a peek at what's going on behind the scenes of the coronavirus pandemic. This is Bloomberg Opinion. You're listening to the Bloomberg Opinion podcast. Catch us Saturdays at one and seven pm Eastern on Bloomberg dot Com, the I Heart Radio app, and the Bloomberg Business App, or listen on demand wherever you get your podcast. This is Bloomberg Opinion. I'm Amy Morris. Let's turn our attention now to the coronavirus pandemic. And you might recall that COVID nineteen was already spreading widely across the world in February and in early March of twenty twenty, well before many Americans had gotten the message that the disease was something to take seriously. Last fall, CDC director Rochelle Willinski told ABC News she had been trying to get more Americans vaccinated as a self critical CDC report about the agency's messaging issues was public. I don't give up. My job is to give people the information that they need to have in order to make the safest, smartest decisions for their own personal health, and I will continue to do that whatever possession I hold. Now we're learning through a report by The New York Times that staffers at the CDC's Disease Intelligence Service were pressured by the Trump administration to keep quiet about what they knew that COVID was spreading asymptomatically joining us now to talk about it. Bloomberg opinion columnist Faye flam and faith an allegation that a federal agency, particularly a science based agency, is succumbing to pressure from the White House. That's a serious allegation, and it's also a risky one. It asks the question if federal agencies can be trusted. It does, and there was just a survey showing that a lot of people don't trust CDC. This was actually known. I wrote about this in March of twenty twenty, that the Trump administration was blatant and said Mike Pence was going to be vetting statements coming out of CDC from that point on, and I wrote that it should be the other way around. CDC should be helping make Mike Pence not make scientific errors. So how can the CDC then rebuild that trust? Well, I think we have to look beyond this particular allegation, because, first of all, it's a little misleading, since most of us knew about the asymptomatic spread of the disease through other scientific sources. I was writing about it. Lots of science writers were discussing this because there were non CDC scientists doing studies and openly talking about it, so it was no secret. It was nothing that was successfully covered up. But I think the problem was that people weren't hearing the bottom line from CDC, and CDC had brand name trust, and we all would have done so much better in the pandemic if they had been able to give unbiased, a political information from this sort of central, known, trusted source, rather than having people pick up bits and pieces from Twitter or from television or from their favorite podcast or whatever. I think that's a really important point. Like you said, the CDC did have this brand name trust and they managed to lose it. But what I want to get down to is was this the result of maybe the Trump administration narrative? Was it a series of unforced errors bungles that the CDC made, It helped erode the public's trust in their own agency. It was a combination. I think it was both. I think it was incredibly damaging to have the Trump administrations say we're gon we're gonna muzzle people at CDC. But the CDC had already done a lot of things wrong, including things back in February when there were scientists who were warning everybody that COVID was already spreading widely around the world, and we were being given a lot of false reassurance, and we were just not getting what other countries were getting. The other countries were getting widespread testing in February twenty twenty, they were getting contact tracing, they were getting the people were getting a lot of help, and we were getting nothing. You made a really good point there that we were getting a lot of false reassurance. I also wonder if some of this isn't the need to not say I don't know, you know, because there were a lot of things they didn't know we did. No, they had no way of knowing. And it's not it's not exactly in the federal agency's per view. Any agency to stand up and go, you know what, we just don't have an answer to that right now. It doesn't do a lot of good. Is that what they were trying to avoid? I don't know. I think with science communication there's always a way to talk about things that might be a problem. So early on, I think, you know, it was pretty clear, very early that this thing was highly transmissible, and that colds and flu are often spread by people before they get symptoms. So I think it wouldn't have been difficult to say, this might be spreading from people who aren't sick or aren't visibly sick. And you can always use language to say we're not sure of this, but we think this might be happening. We think this might be spreading pretty widely. This is a possibility, This is a you know, things that are lower risk. Still you might need to work about it. So there are ways to communicate science that get the uncertainty across now. I was reading your column on the Bloomberg Terminal about this. It's a terrific column. I recommend to everybody check it out. And one of the things you say was really profound. It struck me the US government was trying to reassure the public rather than help us prepare. That's an important statement. How could they have done that better? Well, I think it would have been. Think about the lockdowns. I mean, think how much less disruptive it would have been if we had had information coming to us all through February and March about the possibility of working from a home, getting people sort of ready to think about how they deal with childcare. We were sort of whiplashed into it. So and businesses could have had time to prepare. Clearly hospitals didn't have time to prepare adequately. They should have been working on this from the beginning, even if it didn't turn out to be as bad as it was it ended up being, so I think that using that time it was could have been incredibly helpful. Hey, how does the lack of trust in the CDC manifest itself? How do you get the notion beyond the polling that we know people have lost trust in that federal agency and perhaps have lost trust in other science agencies, science based agencies as well. How does that manifest itself? What do we do about it? Yeah, I mean, you know, I've I got a lot of outraged emails from people after that piece ran, because they were particularly outraged that Rochelle Wilensky, the CDC director said on the Rachel Maddow Show sometime in twenty twenty one that you couldn't transmit the virus if you had been vaccinated. And that was the scientific community walk back right away. So it wasn't like that that was left to stand. But I think it just you know, there's a lot of polite it is size tension. Those people were coming more from the right side of the political spectrum who are concerned more about the overselling of vaccines, and you know, the bi valent boosters have not been taken up even by people who are at high risk end would probably benefit from them. Well, we know about the shutdowns, and we know about the economic impact of the pandemic itself. But let's look at the cost of the loss of trust. How has that cost the US? Well, I think we had if you look at the US and compare US with other countries, similarly wealthy countries, we lost a lot more people and there are a bunch of reasons for that, but I think that has to play into it. I mean, there is no reason the US should have been so much worse than European countries in terms of the loss of life from the pandemic. Now that the CDC is going through some sweeping organizational change is and now we are hearing from Republicans in the House of Representatives that they want to see even more change. Is that going to be enough? What else does this agency have to do to I don't want to say make amends, but to sort of heal that rift. Yeah, I mean, I think that there has to be some agreement between the you know, the the White House and CDC that they should have freedom to talk to the public without being out shut shut up by that whoever is in office. But also I think Lenski said something that was a spot on that she said, you know, we were not we we are good at certain things research and writing scientific papers, and there's sort of a long time scale for that, but that they weren't particularly nimble at jumping in and dealing with a completely novel health emergency, and so they want to restructure in a way that they would be better at at dealing with something that comes out of the blue and hits us fast. People can learn from what went wrong, and we just had we hadn't really had a situation like this. You know. People always they talk about, you know, trying to fight the last battle, and so being prepared specifically for another emergency exactly like this one could be sending them down the wrong track, but being better prepared to handle something that hits us suddenly, you know, Looking more broadly, I think that's that's the direction that I hope they're going. Bloomberg Opinion columnist Faye flam Now, in pretty much all societies, one of the big perks that comes with wealth is the richer you are, the less you have to work. But in the US there's a twist. We tend to take great pride in working a lot. A defining mark of corporate life is obsession with overwork. And the higher up the ladder you climb, the more hours you're expected to contribute, you get paid more, but you work a whole lot more too. Oh It is a Bloomberg opinion columnist covering corporate America, and she has a terrific column on the Bloomberg Terminal about this very thing, but she takes a bit of a different angle how workaholic men are actually starting to slow down now and that makes more room for workaholic women. Beth tell us where the men are going, So this is really interesting. We saw the highest paid men who logged the most hours put back the most on their work between twenty twenty two and twenty nineteen. So seventy seven hours less, fewer hours worked in twenty twenty two compared to twenty nineteen. They still worked the most, let's be clear here, but they actually cut back the most. And I think that's just really interesting trend to see here because I think, you know, it's always more and more and more and more, and there was finally a little bit of a reversion back to the mean. Has this been because of the pandemic, as the pandemic changed this narrative and shifted how we see work aholism. I think it has. I think for a lot of people, you know, I think with this this demographic, we're seeing the same thing we've seen with so many people really reevaluating what work means to them. Maybe they were traveling less during the pandemic and said I can't go back to that kind of crazy schedule. So I do think that that's a huge part of it. And I do also think it's worth noting that this is a really privileged group, right. Not everybody has the power of the social capital to say, hey, I want to work less, and you know my boss will comply with that, because I have that power and authority to do that. In addition to closing that overwork gap, I wonder if it could also help close the wage gap between men and women. Absolutely, and that's one of the things I argue in the piece. So there's there's two components, right. And in the ideal world, these the men who cut back at work shift all those powers to childcare so women can work more and increase their compensation. Right, That was going to be the ideal scenario. We didn't quite see that happen. So we did see men pick up more household work, but they also spent more time on leisure activities. There was a really amusing i'll call it the Stanford study that also showed that there was a serious increase in people playing golf in the middle of the week. So you can take take from that way you will, okay, But I do think that I do think that even if all these hours are not being shifted to household work on the part of men, it does reset the bar, right, It sort of resets the standard of what the ideal worker looks like, and maybe that is not one that is so tied to this notion of overwork. You mentioned how this might change the bar or change the expectation for what the ideal worker is or what the ideal work situation is. Is that something that's still evolving. Have we found it yet? Because we seem to be in it for a long time and then the pandemic sort of through the whole chessboard on the floor, So is that still something in progress? I think it is. I think this is a start. We've definitely still seen in other countries. The level of the average howers worked is still significantly lower than in the US, so I think there is still decline, but I think it's also we're doing This has not always been the case where overwork led to higher pay. This is something that sort of flipped in the nineties just of course, as educated women were really entering the workforce on that so you know, this has just not always been the way. So I do think that suggests that maybe we could revert back a little bit to how things used to be, and we're gonna watch it with you. Thank you, Beth, Thank you. Bethco It is a Bloomberg Opinion columnist. She covers corporate America and that does it for this week's Bloomberg Opinion. We are produced by Eric Moullow, and you can find all of these columns on the Bloomberg Terminal. We're also available as a podcast on Apple, Spotify or your favorite podcast platform. Stay with us. Today's top stories and global business headlines are coming up. I'm Amy Morris. This is Bloomberg.

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