The oil wars rocking the economy.
The oil wars rocking the economy.
Plus, a question about Joe Biden and coronavirus hope.
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Today’s read: 8 minutes.
Insightful reader comments, the oil wars rocking the economy, a question about Joe Biden, an important story about unemployment and some hope for coronavirus coming to an end.
Russian president Vladimir Putin and minister of defense of Saudi Arabia Mohammed bin Salman meet on the sidelines of the 19th St Petersburg Economic Forum, 18 June 2015. Photo: Kremlin RU
#1 on Substack.
Yesterday, I asked some of you to punch the like button at the top of this email. It was just an experiment to see what happened, as I’d never directed readers there before. The result was incredible: Tangle was #1 on Substack for 20 hours straight, even living above the announcement made by Rolling Stone’s Matt Taibbi that he was going full-time on the platform. Taibbi is a writing idol of mine and I was both thrilled and shocked to climb past his announcement on the Substack charts. I am continuously floored by all of your support and enthusiasm for Tangle. I even screenshotted it when it had been #1 for 19 hours, my lucky number. Thank you.
Reader follow-ups.
Yesterday’s post about hydroxychloroquine drew a number of reader responses. I wanted to share a few with you here.
Several readers wrote in to note that one unintended consequence of the hydroxychloroquine hype is that there is now a shortage of the drug for people who need it on a daily basis. Caitlin from Portland, Oregon, and Chelsea from Pittsburgh both wrote in to say that many folks who use the drug to treat lupus and rheumatoid arthritis to survive are now facing shortages — or fear those shortages are coming. The New York Times also noted this concern as well.
Dr. Doug, from Maplewood, New Jersey, who works as a pulmonary specialist, left a comment on the story emphasizing that the Chinese study examining hydroxychloroquine was “a tiny one” and the entry criteria for patients was that they did not have a fever (i.e. they were asymptomatic or minimally symptomatic). “The idea that these statistics provide even tiny support for opening the floodgates to its general use is ludicrous,” he said. He also described the French study as “non-clinical research.”
“And what is there to lose?” Doug asked rhetorically. “For one thing, despite the federal government encouraging an increase in the drug's production, there are already patients with rheumatologic disease who have worsened because they can't get the HC [hydroxychloroquine] that had kept them well. More than that, while its side effects can be fairly well monitored in the relatively small number of outpatients who had been using it, monitoring outpatients is a very different situation when it's being given out like it's Vitamin C. In the ICU patient, blood chemistry is complicated under the best of circumstances, with imbalances that can promote life-threatening heart rhythm disturbances. Hydroxychloroquine makes the situation even more complex and therefore more dangerous.”
BREAKING:
Stephanie Grisham is out as press secretary for the White House and Kayleigh McEnany is in. Grisham will go back to the East Wing where she served as first lady Melania Trump’s chief of staff. President Trump’s new chief of Staff Mark Meadows is shaking up the communications team. Grisham served in the role since June and never once held an actual press briefing, instead regularly appearing on Fox News. McEnany is a frequent defender of the president on national television and is the first major move by Meadows since taking over as chief of staff. Click.
What D.C. is talking about.
The oil wars. It’s a complex situation but I’ll try to make it simple. There are three major players: the United States, Russia and Saudi Arabia. For about three years, Saudi Arabia and Russia have had an agreement to prop up the prices of the global oil supply. They do this by adjusting supply to match the demand, so when demand wanes they cut production together. The coordination happens through the Organization of the Petroleum Exporting Countries (OPEC) and OPEC+, which includes Russia. When coronavirus began spreading, oil demand plummeted across Asia. Saudi Arabia asked Russia to cut its production to ensure profits remained for the 15 OPEC countries and Russia. Russia rebuffed them — either because it wanted to keep oil prices low to hurt the booming American shale industry or because it has a long-term plan to make a play for a larger share of the world’s oil demand. Either way, the oil markets tanked, and the stock market came with it. You might have noticed this by seeing gas prices plummet in your area, a great thing for consumers. But it’s not good for the oil companies that employ millions of people globally and it’s hardly relevant for Americans on lockdown orders. Last week, Trump announced that he was planning to broker a deal between Saudi Arabia and Russia — prices soared at the news. Over the weekend those negotiations fell through as Russia and Saudi Arabia’s bickering continued. Now there’s a debate here about what to do and how to handle it.
What the left is saying.
For many on the left, this reinforces the idea that Saudi Arabia and Russia are no friend of the U.S. — no matter how much lavish praise Trump will throw on their authoritarian leaders. With the world spinning out over coronavirus, Vladimir Putin made the conscious decision to send oil markets into free fall and make a play for more power and more control down the road. The U.S. is the largest producer and consumer of crude oil, an accomplishment that many on the right have cheered. Now where has it gotten us? Texas and Pennsylvania producers who are destroying the environment via drilling and fracking need oil to trade around $50 a barrel to make a profit. It’s around $20 a barrel right now. They don’t have much more room to store the excess oil and the price will plummet further if they run out of that room. Despite that, it’s still corporate oil vs. the little guys. Major oil companies in the U.S. have the profits and revenue to wait this out; smaller producers are hoping for government action like tariffs or gas taxes or carbon prices, but the U.S. has conflicting interests because it plays ball on both sides (consumer and producer). In The Hill, David M. Hart made the case that this is a moment for environmentalists to seize: cheap gas means more travel for Americans whenever coronavirus passes. That means more emissions. Environmentalists and red-state oil producers both want prices up, and oil tariffs or carbon taxes — which would reduce emissions here in the long run — are one way to get there. “Climate advocates should welcome this as a golden opportunity to make common cause with an administration they firmly oppose,” Hill wrote.
What the right is saying.
They seem unsure about the role the government can and should play here. Sukhayl Niyazov wrote it’s the “OPEC+ cartel” manipulating prices to hurt American workers. “Government interference is necessary and justified, therefore, to balance the damage wrought by the cartel.” He called the price dumping a move by Russia and Saudi Arabia “to gain a larger share of the market and drive out weaker competitors,” adding that this is “not how free markets are supposed to function.” One prevailing sentiment is that the U.S. is inching closer to energy independence, but we have no hope of bringing out troops home from the Middle East if an industry that employs half a million people in the U.S. can be brought to its knees overnight. The Wall Street Journal editorial board took a different tack, noting “Tariffs and quotas won’t solve a price shock caused by a pandemic and a Saudi Arabia-Russia feud.” Despite the threat that American shale producers will go bankrupt, WSJ tore up any arguments for quotas or tariffs. Instead, the board argued that both Saudi Arabia and Russia would suffer from low prices as well and each leader is already being begged by its oil executives to settle the standoff. Saudi Arabia needs the U.S. for many of its foreign policy goals and Russia is bankrupting itself, too, so the WSJ board sees openings for negotiation. “U.S. diplomacy is a better response to the double-barreled oil shock than are tariffs or quotas.”
My take.
This problem isn’t going away. Our “energy independence” that is often touted by the pro-fracking crowd and many on the right suddenly doesn’t seem so independent. And U.S. environmentalists who want to slow or stop fracking here better have a plan for the transitional period when we are less energy independent than we are now and firmly in the palm of countries like Saudi Arabia and Russia. The speed with which this has threatened one of the largest job sectors in the U.S. is truly shocking, and the 1-2 punch combination of this and coronavirus has been jarring. Paradoxically, this crisis reveals both the weakness of U.S. isolationism and U.S. globalism. For all the critics of “globalism” and federal bureaucracy abroad, what might actually solve this problem would be a functioning state department and diplomatic arm that could successfully (and promptly) broker negotiations between Saudi Arabia and Russia. I’m not sure we have that. At the same time, the U.S. may be better off if our fate weren’t so closely tied to OPEC. Does that mean we need more fracking and oil production or a green energy wave that brings electric cars and renewable energy to every corner of the country? The conflict between those two competing interests will likely leave us in a holding pattern for years to come until one wins out. But for the foreseeable future, we seem tethered to the countries moving this market. That realization couldn’t come at a worse time for the economic prospects of Americans, almost all of whom can’t even leave their houses and take advantage of low gas prices.
Boris.
The United Kingdom’s Prime Minister Boris Johnson was moved to the Intensive Care Unit (ICU) yesterday after his condition worsened while battling coronavirus. News reports indicate Johnson does not have pneumonia, is not on a ventilator, remains “stable” but it is taking oxygen. Johnson had been criticized heavily for floating a “herd immunity” idea in Britain where citizens intentionally contracted the virus and also bragged to reporters about how he had not stopped shaking hands as late as March 3rd. He was one of the first major world leaders to contract the virus.
Boris Johnson, Secretary of State for Foreign and Commonwealth Affairs, Foreign & Commonwealth Office, United Kingdom. Photo: Arno Mikkor (EU2017EE)
Your questions, answered.
Reminder: Reader questions are a big part of Tangle. To ask a question, all you have to do is reply to this email and write in. Give it a try!
Q: Where is Joe Biden? It seems like he has gone totally M.I.A. during this crisis and I’m wondering why he isn’t speaking up more bluntly about Trump’s failures?
- Jason, Kansas City, MO
Tangle: I’ve been interested to see this dynamic play out over the last few weeks. There have been a lot of people talking about Joe Biden like he is hiding underground somewhere. Kevin D. Williamson wrote about Joe Biden’s “disappearing act” in The National Review, asking incredulously “Has anyone seen Joe Biden?” His supporting evidence for the rhetorical question was basically that Biden had not appeared on the front pages of any newspapers and notes one of Biden’s only prominent appearances was a New York Times column asking where the hell he was.
I’m not sure where Williamson and others have been, but I’ve seen Biden everywhere. He’s been on MSNBC and CNN regularly, and his team keeps releasing videos of Biden from “the bunker” in whatever house he’s holed up in while waiting out the coronavirus storm. Even Donald Trump said that he and Biden had a cordial phone call this week.
At the same time, Biden’s team has been pumping Trump-critical content on Twitter regularly, and even got a damning op-ed in The Washington Post published that lines up Biden’s response to the coronavirus right next to Trump’s.
Where Williamson strikes gold, and where Biden deserves actual criticism, is the fact that he’s offered little more than platitudes and optimism when it comes to how he would actually handle the virus differently. His interviews on television have been laughably soft and he’s essentially stumbled through nonsensical explanations of what he’d do without ever being challenged or pressed. One could easily imagine a candidate like Elizabeth Warren having already blasted a coronavirus response plan out to the public and allowing them to compare it to what Trump’s administration is actually doing. In fact, one doesn’t have to imagine: Warren actually did that and received high praise from Biden’s former boss Barack Obama. Even Bernie Sanders has seized the moment, re-energizing calls for Medicare-for-All.
This moment exposes some of the weaknesses of Biden the candidate. I don’t doubt, given his decades of experience in the Senate and the White House, that Biden could successfully pull the levers and steer a functioning federal government in a time like this. Where he fails, though, is on messaging. Whether it’s his lifelong battle with a stutter or simply his age, he’s just not a very compelling or articulate messenger on television anymore (at least not to me). His social media presence and digital savviness could also be fairly called into question, especially given some of the awkward virtual town halls or rallies he’s attempted. And surely, the “Trump-obsessed” cable television writers deserve some credit (or blame) for making it seem as if Biden has been holed up and done nothing the last few months.
On the other hand, if Biden were to attempt to take a commanding lead in the coronavirus response, there’s a good chance the same people shaming him for being quiet would be shaming him for trying to run a pseudo, shadow government. A Joe Biden out in front of this pandemic could easily be framed as a candidate sowing chaos out of pure spite or hatred for Trump by the very same people who are now mocking him for his fumbling television performances or relatively quiet approach. There’s always an opportunity to politically attack the other side in moments like this.
From a purely political analysis standpoint, I think he’s doing fine. He hasn’t been on television every day, which you could reasonably argue is an appropriate avenue for him to take. But he hasn’t been silent, either. He’s spoken up about the failures of the current administration and continued to try to be a calming voice for the country. Regardless of what I think, millions of voters clearly find refuge in Biden as a leader, and he’s been consistent in his tone throughout his campaign and throughout this pandemic. His words and his brand of leadership are about rallying the American spirit and coming out of challenges stronger than we entered them. For us cynics, those may seem like empty platitudes, but millions of people just chose the messenger behind those platitudes as their candidate to take on Trump.
A story that matters.
The promises of the CARES Act may already be falling through before they leave the station. As millions of unemployed Americans apply for benefits this week, many are realizing that the help they expected could be harder to get than they thought. New provisions are supposed to give Americans who qualify for unemployment an extra $600 per week. Those benefits are also meant to include gig workers like Uber drivers who make up a huge chunk of today’s economy. But new guidance issued by the U.S. Labor Department on how states should hand out those benefits appears to leave out the very workers it’s designed to help, according to unemployment policy expert Andrew Stettner. Stettner said “the rules released Sunday night are criminally narrow and will greatly undermine the effectiveness of the system.” For instance, the guidance says a ride-hailing app driver is eligible “if he or she has been forced to suspend operations as a direct result of the COVID-19 public health emergency, such as if an emergency state or municipal order restricting movement makes continued operations unsustainable.” But many states in the south haven’t issued stay-at-home orders or only did this week. That means an immunocompromised Uber driver who followed national guidance to stay home if they are at-risk would not be eligible for the benefits if they were living in a municipality that didn’t have a direct order to stay home. HuffPost has the details of the policy failure here.
Numbers.
2.6 million. The number of meals provided to New Yorkers in need over the last three weeks.
46-40. Joe Biden’s lead over Donald Trump in a head-to-head Florida poll, according to a University of North Florida poll.
500,000. The number of Americans Trump’s top trade advisor Peter Navarro said would die in a January 29th memo to the president aimed at pressuring him into swift action to prepare America for coronavirus.
14%. The percentage of Americans who know someone that has tested positive for coronavirus, according to a new Ipsos poll.
43.8%. The percentage of Tangle readers who said they or someone they knew had been infected with the coronavirus, according to last week’s poll.
1.79 million. The number of coronavirus tests that have been completed, according to Donald Trump.
1 in 185. Per population, the number of Americans tested for coronavirus.
1 in 90. Per population, the number of Germans tested for coronavirus.
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Have a nice day.
I hesitate to write this and create a false sense of security, but I think we’re all due for some good news: preliminary data shows that the social distancing practices across the U.S. are working. While many Americans will suffer in the coming weeks, cities like New York City have successfully begun to flatten the curve and slow the spread of coronavirus. Numbers gurus like Nate Silver are pointing to strong data points that show both deaths and the spread of the virus may have peaked. New York Gov. Andrew Cuomo believes we hit the “apex” in cases and perhaps deaths this week. The city is on track to need fewer ventilators than it expected. All of this, if it holds, is tremendous news. I know so many of you are struggling financially or simply overwhelmed by being isolated or caring for your family, but please stay the course. The last few days have produced more data that we can beat this thing than any days before it. Stay strong.
