It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Wednesday, July 27, 2022
Shallow Recession Calls Are ‘Totally Delusional,’ Roubini Warns
Isabelle Lee, Bloomberg News
Nouriel Roubini, chief executive officer of Roubini Macro Associates Inc., during a Bloomberg Television/Radio interview at the Greenwich Economic Forum (GEF) in Greenwich, Connecticut, U.S., on Tuesday, Sept. 21, 2021. The GEF brings together leaders in global finance, business, media and government for global investment forums to discuss the economic implications of the defining issues of our times. Photographer: Jeenah Moon/Bloomberg , Bloomberg
(Bloomberg) -- Economist Nouriel Roubini said the US is facing a deep recession as interest rates rise and the economy is burdened by high debt loads, calling those expecting a shallow downturn “delusional.”
“There are many reasons why we are going to have a severe recession and a severe debt and financial crisis,” the chairman and chief executive officer of Roubini Macro Associates said on Bloomberg TV Monday. “The idea that this is going to be short and shallow is totally delusional.”
Among the reasons Roubini cited was historically high debt ratios in the wake of the pandemic. He specifically mentioned the burden for advance economies, which he said continues to rise, as well as in some sub-sectors.
That differs from the 1970s, he said, when the debt ratio was low despite the combination of stagnant growth and high inflation known as stagflation. But the nation’s debt has ballooned since the financial crisis of 2008, which was followed by low inflation or deflation due to a credit crunch and demand shock, he added.
“This time, we have stagflationary negative aggregate supply shocks and debt ratios that are historically high,” said Roubini, who is nicknamed Dr. Doom for some of his dire predictions. “In previous recessions, like the last two, we had massive monetary and fiscal easing. This time around we are going into a recession by tightening monetary policy. We have no fiscal space.”
Concern that rising interest rates will drive the economy into a recession has been escalating as the Fed tightens monetary policy aggressively to bring down the steepest inflation in four decades. Fed Chair Jerome Powell has said that failing to restore price stability would be a “bigger mistake” than pushing the US into a recession, which he has continued to maintain the nation can avoid.
Powell and his colleagues are expected to approve another 75-basis-point hike this week after raising rates in June by the most since 1994. Policy makers are also expected to signal their intention to keep moving higher in the months ahead.
“This time around, we have a confluence of stagflation and of a severe debt crisis,” Roubini said. “So it could be worse than ‘70s and post-GFC.”
Credit unions battle big banks to attract younger Canadians
Leah Golob, The Canadian Press
Kayla Rourke's first banking experience was with Conexus Credit Union but left to try the Bank of Nova Scotia in her teens, hoping to take advantage of the Scene points program to earn free movie tickets.
She later tried another bank or two but eventually, the 29-year-old Regina-based teacher returned to Conexus five years ago because of its no-fee chequing account, customer service and focus on helping local communities. In 2021, for example, the credit union reinvested more than $1.9 million back into Saskatchewan communities through their Community Investment Program.
“I feel really happy staying with a credit union because I want to make life better where I live,” Rourke said.
“It feels like at a bank I’m always trying to be sold something,” she added. “I feel like at a credit union, I’ve had such good discussions on how to build wealth or save for particular goals while keeping it realistic. I love how they’ve checked in with me to see how it’s going … I feel like at a bank I was a customer and at a credit union, I feel like a client.”
Disha Soni, a 32-year-old self-employed financial adviser, said in her case it made more sense to go with a bank rather than a credit union because they’re well known around the globe and have many physical branches.
“They are well established and I had more confidence giving them my money,” she said. Soni, who immigrated to Ottawa in November 2021, was also attracted by the offers that banks have for newcomers.
In recent years, the Canadian Credit Union Association has been promoting credit unions to millennials and Generation Z. According to a report entitled “Credit unions and millennials” published by MNP, attracting and retaining millennials and Generation Z is vital to sustaining the Canadian credit union system, especially as it faces an aging member base.
Ipsos’s Customer Service Index Survey conducted over 2021 revealed that 59.2 per cent of credit union members are over the age of 55. Only 12 per cent of credit union members, on the other hand, were 18 to 34 years old.
With banks, the survey showed that 17.5 per cent of customers are 18 to 34 and 45.6 per cent of customers are 55 and over.
Annette Bester, national leader of credit union services at MNP, said there’s a lot of education that needs to be done around credit unions to spread awareness on what they are and what they do. This awareness can vary by geography, she said.
For example, while credit unions are more known in parts of the country such as Saskatchewan, there may be less awareness in Ontario, where most of the country's major banks are headquartered.
There are some misconceptions about credit unions, such as if you join a credit union that operates in one province, you won’t be able to access funds elsewhere if you’re travelling, Bester said.
“Credit unions have access to ATM networks across the world and they’ve got mobile banking apps. They’ve got all the same things that the big banks do but maybe it’s not known,” she explained.
Credit union members can use any ATMs that belong to the Exchange Network free of charge but will have to pay a surcharge using ATMs that are not part of the network.
Pamela George, a financial literacy counsellor at Sand Dollar Financial Literacy, said the biggest downfall for credit unions is that they don’t have a big budget for marketing like banks do.
Otherwise, both George and Bester believe that the financial co-operative, community-focused nature of credit unions would be appealing to young people if they understood more about how they worked.
For example, customers of credit unions are called members, and profits go back to the credit union to help set up better interest rates and lower fees for members, George said.
Where banks have the upper hand is with better technology on their apps and websites. They lead the way in this area, George said.
When deciding the right fit for them, young people will have to weigh digital technology and the availability of physical locations Canada-wide against whether they’d want to bank with a financial co-operative with a community focus.
Stellantis laying off employees at two Ontario plants
BNN Bloomberg
A Stellantis sign is seen outside the Chrysler Technology Center, in Auburn Hills, Mich., on Jan. 19, 2021. Stellantis says it will be laying off an undislosed number of employees at its Windsor and Brampton auto assembly plants in Ontario as part of a push for operational efficiencies in its transition to become a "mobility tech company." , THE CANADIAN PRESS/AP-Carlos Osorio
Stellantis NV says it will be laying off an undisclosed number of employees at its Windsor and Brampton auto assembly plants in Ontario as part of a push for operational efficiencies in its transition to become a "mobility tech company."
Spokeswoman LouAnn Gosselin says the company, who's brands include Chrysler, Jeep, Dodge and Ram, will offer a retirement incentive program to eligible employees to minimize the impact on the workforce, and will try to place laid-off hourly employees into open full-time positions as they become available.
She says eligible employees will have until mid-August to make a decision on the buyout, while the workforce reductions will take place over the next several months.
The unspecified cuts come as the company prepares to make major investments in electric vehicle production, including a $3.6 billion commitment to upgrade the Brampton and Windsor plants.
Stellantis and LG Energy Solution are also building a $5 billion battery plant in Windsor as part of the company's plans to invest $45 billion globally by 2025 on electrification and software.
Gosselin says the funding commitments show the company is "firmly committed to the future of its Canadian operations."
Tom Mulcair: The stakes couldn't be higher as Canada's top court decides whether to hear climate class action lawsuit
People mark Earth Day with a march, Friday, April 22, 2022 in Montreal.
Canadians will learn on Thursday whether the Supreme Court is willing to step up to the plate and hear a case concerning the rights of future generations in the fight against climate change and global warming.
The stakes couldn’t be higher and the case deserves to be heard.
That case against the federal government is a class action brought by a Quebec-based environmental group called ENJEU (short for Environnement Jeunesse, meaning environment and youth). They have thus far been heard in the Quebec Superior Court and Court of Appeal, and they have fallen short in both instances. The sums involved ($100 for every person under 35 in the province) are not earth-shattering and the money would go to projects to fight climate change and adapt to its effects.
Far more importantly, what is at stake in the Supreme Court decision is the role of the courts in our society. Since the Quebec courts have sidestepped the issue, the Supreme Court is the only remaining institution in our democracy that can help force the Canadian government to meet its international obligations.
There have been precedents, particularly in the Netherlands, where the courts have indeed forced the government to meet specific greenhouse gases (GHG) reduction goals. This is an existential question for future generations and when one of the branches of government completely fails in its role, the courts can be quite creative in moving into the breach.
Over the weekend, Environment Minister Steven Guilbeault once again illustrated why Canada has become an international laggard in the fight against climate change and why, as a result, this Supreme Court decision has suddenly become much more important.
In a radio interview, Guilbeault had this to say: "[We] recognize that some of the measures that will be needed to achieve those deep emission reductions might require more time than what we have between now and 2030…I'm not saying today it's necessarily going to be 2032, but the companies have said it could be 10 years, which would bring us to 2032."
Those 2030 targets were the same ones Guilbeault used to justify the approval of a major new offshore fossil fuel project just a few months ago. The announcement of the Bay du Nord project came the same week that the Secretary General of the United Nations released a startling new IPCC report and pleaded with world leaders not to approve any new fossil fuel projects. Guilbeault and Trudeau rationalized that after 30 years as an international outlier, Canada was just about to get it right so…we could approve the project.
By Monday, Guilbeault was in full damage control and produced this pearl: "Basically, these companies would be able to use carbon credits to meet some of the regulatory emissions reductions requirements. But again, it would be for a short amount of time, for a short period, two years, and it would be in limited quantity."
When the Trudeau Liberals approved the Bay du Nord project, they turned a deaf ear to the international consensus and took a decision that would be politically popular in a province where the Liberals hold almost all of the seats. Short-term gain for long-term pain.
That’s where the ENJEU legal challenge hopes to make a difference.
When the Liberals signed the Kyoto Protocol, they had no plan. Jean Chrétien’s former chief of staff Eddie Goldenberg famously admitted that it was about “galvanizing public opinion”. In other words, it was a political communications exercise, not an environmental decision. That might help explain why Canada went on to have one of the worst records in the world for greenhouse gases emission increases after signing Kyoto.
Canada also went on to become the first country in the world to withdraw from the Kyoto Protocol, the only others being Australia and Russia.
You don’t have to be a climate scientist to understand what you’re seeing around the world this summer. The extreme heat and record temperatures in Europe and the uncontrolled wildfires in California have been modelled and predicted for years now. We knew this was coming, yet successive Canadian governments dithered, denied and delayed.
What’s left other than the courts to force them to act? Even a once respected environmentalist like Guilbeault tries to justify the unjustifiable. Let’s put his arguments to the test in court with real rules of proof and evidence, not political and bureaucratic rationalization.
The Wagner Court is graced with some of the best legal minds to have ever sat on the Supreme Court. That perhaps explains why it has been unable to have any consistent philosophy or approach: too many first class people digging in to show how they can parse, distinguish and, far too often, dissent.
The Lamer Court gave life to the Canadian Charter of Rights and Freedoms and, in particular, to minority language rights. The McLachlin Court will be remembered for its groundbreaking decisions on indigenous rights.
This case, about the environment, sustainable development and the rights of future generations, could become one that also begins to define this court…for the future.
A 13-year-old girl has been accepted to a medical school program only a year after graduating high school.
Alena Analeigh Wicker shared the news on Instagram with her more than 20,000 followers recently.
"I've worked so hard to reach my goals and live my dreams. Mama I made it," the teenager posted below a picture of her program acceptance letter.
She was accepted into the Burroughs Wellcome Scholars Early Assurance Program at the University of Alabama at Birmingham's Heersink School of Medicine, the school confirmed in a statement to CNN.
The program is a partnership between the medical school and HBCU's across Alabama, and it provides early acceptance to the students who meet the requirements for acceptance and matriculation, according to their website.
Alena posted to Instagram that she graduated high school last year at the age of 12, and she has already accumulated a list of impressive accomplishments.
In an interview with the Washington Post, she said, "I'm still a normal 13-year-old."
But not quite. She's currently a student at both Arizona State University and Oakwood University earning two separate undergraduate degrees in biological sciences, according to the Washington Post.
And yet, how does she do it all at such a young age?
"I just have extremely good time management skills and I'm very disciplined," she told the Washington Post.
She also created "The Brown STEM Girl," to engage, empower and educate girls of color in STEM -- science, technology, engineering and mathematics, according to its website.
The Brown STEM Girl Foundation honors the legacy of Katherine Johnson, a trailblazer for African-American mathematicians at NASA.
Alena keeps the public updated on her journey, posting on her Instagram and Facebook page, where she expresses her love and passion for STEM, NASA and Legos.
Alena's mother told the Washington Post that she noticed her daughter's intellect since the science buff was a toddler.
"Alena was gifted," her mother, Daphne McQuarter, said. "It was just how she did things and how advanced she was. She was reading chapter books."
Western media shows ‘sour grapes’ mentality to keep hyping Chinese rocket re-entry, despite flawless safety record
By GT staff reporters
Published: Jul 26, 2022
China launches Wentian lab module for space station on July 24, 2022.
Photo: Fan Wei/GT
Right after China's successful launch of the Wentian lab module for the construction of the China Space Station, the Western media rapidly followed with a new round of smear campaign, hyping the "uncontrolled fall" of the Long March-5B Y3 carrier rocket's first stage.
Mission insiders at the rocket's developer and space analysts reached by the Global Times on Tuesday said that they were not surprised by such ignorant manipulation of facts, which projected once again the "sour grapes" mentality of some in the West toward the robust development of China's aerospace sector.
Media such as space.com claimed in its coverage of the Wentian mission that it was the third time that China "has opted not to control the disposal of the first stage of the Long March 5B rocket, once again putting China under scrutiny from space debris trackers after similar uncontrolled falls in 2020 and 2021."
Jonathan McDowell, an experienced tracker of these events at the Harvard-Smithsonian Center for Astrophysics, was quoted in these reports as saying that US Space Command orbital data is showing the 21-ton stage floating on its own.
"The inert ... core stage remains in orbit and was not actively deorbited," McDowell wrote on Twitter. McDowell added that Americans "do a rather better job of upper stage disposal, and China on average a worse one.
"So, I congratulate China on the successful launch of Wentian but deplore their failure to redesign the Long March 5B that sets us up for another major uncontrolled re-entry," the US astronomer told spacenews.com, further emphasizing his theory.
Commenting on these almost routine accusations, a mission insider at the rocket developer China Academy of Launch Vehicle Technology (CALT) told the Global Times on Tuesday that "There is no specific adjustment made to the rocket used in the Wentian launch in terms of the re-entry issues. And the mission was executed strictly in line with international practice, as the country always did in previous space launches."
The so-called Western experts should come back to reality, where the truth has proven to be the opposite of their accusations again and again, and they'd better do so, as we still have the Mengtian launch coming next, the insider said on condition of anonymity.
It was not the first time that the West has picked on the Long March-5B, a shorter variant of the country's strongest Long March-5 rocket type that has been deployed for China Space Station module launches.
The US made quite a fuss over the Long March-5B Y2 debris' re-entry in May 2021, when the rocket was commissioned to deliver the Tianhe core module.
CALT rocket designer Zhang Borong told the Global Times in May 2021 that the rocket adopted passivation technology that would not cause any explosion in orbit or create debris in space, and that rocket debris would be burned up by friction with the atmosphere, rather than smashing into Earth as in sci-fi movies.
Turning a deaf ear to repeated statements by China's space industry insiders and the Foreign Ministry that the probability of the rocket remnants causing harm was extremely low, a number of Western media outlets, including CNN and The New York Times, as well as the Pentagon and NASA, claimed during the Tianhe mission that the debris was heading back to Earth in an "uncontrolled" manner and criticized China for being "irresponsible" for the ocean landing.
The last round of the US-led smear campaign against Long March-5B was met with "slaps in the face," as the facts proved that the re-entry of the rocket remnants was harmless.
In fact, the China Manned Space Agency (CMSA) has regularly updated orbit data for debris re-entry of any rockets or spacecraft used for the China Space Station's construction, such as that for the Long March-2F rocket as well as the Tianzhou cargo spacecraft, which fully conforms to international norms in a rather responsible fashion, analysts said.
The CALT source told the Global Times that it saddened them that the Western world has adopted such obscurantism that it uses twisted facts to fool its people, citing another hyped report that said Tiangong Classroom sessions were filmed on Earth rather than in space.
"China ruled out the possibility of causing ground damage at the design stage, and its capability to ensure the re-entry safety has proven itself reliable again and again. What is behind such smears is total jealousy of us," Song Zhongping, a TV commentator who closely follows China's space program, told the Global Times on Tuesday.
The US is running out of ways to stop China's development in the aerospace sector, so smears and defamation became the only things left for it, Song noted. "But those efforts would be useless to affect the development of the China space program."
Scientists calculate the risk of someone being killed by space junk
The chance of someone being killed by space junk falling from the sky may seem ridiculously tiny. After all, nobody has yet died from such an accident, though there have been instances of injury and damage to property. But given that we are launching an increasing number of satellites, rockets and probes into space, do we need to start taking the risk more seriously?
A new study, published in Nature Astronomy, has estimated the chance of causalities from falling rocket parts over the next ten years.
Every minute of every day, debris rains down on us from space—a hazard we are almost completely unaware of. The microscopic particles from asteroids and comets patter down through the atmosphere to settle unnoticed on the Earth's surface—adding up to around 40,000 metric tons of dust each year.
While this is not a problem for us, such debris can do damage to spacecraft—as was recently reported for the James Webb space telescope. Occasionally, a larger sample arrives as a meteorite, and maybe once every 100 years or so, a body tens of meters across manages to drive through the atmosphere to excavate a crater.
And—fortunately very rarely—kilometer-sized objects can make it to the surface, causing death and destruction—as shown by the lack of dinosaurs roaming the Earth today. These are examples of natural space debris, the uncontrolled arrival of which is unpredictable and spread more or less evenly across the globe.
The new study, however, investigated the uncontrolled arrival of artificial space debris, such as spent rocket stages, associated with rocket launches and satellites. Using mathematical modeling of the inclinations and orbits of rocket parts in space and population density below them, as well as 30 years' worth of past satellite data, the authors estimated where rocket debris and other pieces of space junk land when they fall back to Earth.
They found that there is a small, but significant, risk of parts re-entering in the coming decade. But this is more likely to happen over southern latitudes than northern ones. In fact, the study estimated that rocket bodies are approximately three times more likely to land at the latitudes of Jakarta in Indonesia, Dhaka in Bangladesh or Lagos in Nigeria than those of New York in t
The authors also calculated a "casualty expectation"—the risk to human life—over the next decade as a result of uncontrolled rocket re-entries. Assuming that each re-entry spreads lethal debris over an area of ten square meters, they found that there is a 10% chance of one or more casualties over the next decade, on average.
To date, the potential for debris from satellites and rockets to cause harm at the Earth's surface (or in the atmosphere to air traffic) has been regarded as negligible. Most studies of such space debris have focused on the risk generated in orbit by defunct satellites which might obstruct the safe operation of functioning satellites. Unused fuel and batteries also lead to explosions in orbit which generate additional waste.
But as the number of entries into the rocket launch business increases—and moves from government to private enterprise—it is highly likely that the number of accidents, both in space and on Earth, such as that which followed the launch of the Chinese Long March 5b, will also increase. The new study warns that the 10% figure is therefore a conservative estimate.
Saudi officials inspect a crashed module in January 2001. Credit: Wikipedia
What can be done
There are a range of technologies that make it entirely possible to control the re-entry of debris, but they are expensive to implement. For example, spacecraft can be "passivated," whereby unused energy (such as fuel or batteries) is expended rather than stored once the lifetime of the spacecraft has ended.
The choice of orbit for a satellite can also reduce the chance of producing debris. A defunct satellite can be programmed to move into low Earth orbit, where it will burn up.
There are also attempts to launch re-usable rockets which, for example, SpaceX has demonstrated and Blue Origin is developing. These create a lot less debris, though there will be some from paint and metal shavings, as they return to Earth in a controlled way.
Many agencies do take the risks seriously. The European Space Agency is planning a mission to attempt the capture and removal of space debris with a four-armed robot. The UN, through its Office of Outer Space Affairs, issued a set of Space Debris Mitigation Guidelines in 2010, which was reinforced in 2018. However, as the authors behind the new study point out, these are guidelines, not international law, and do not give specifics as to how mitigation activities should be implemented or controlled.
The study argues that advancing technologies and more thoughtful mission design would reduce the rate of uncontrolled re-entry of spacecraft debris, decreasing the hazard risk across the globe. It states that "uncontrolled rocket body reentries constitute a collective action problem; solutions exist, but every launching state must adopt them."
A requirement for governments to act together is not unprecedented, as shown by the agreement to ban ozone layer-destroying chlorofluorcarbon chemicals. But, rather sadly, this kind of action usually requires a major event with significant consequences for the northern hemisphere before action is taken. And changes to international protocols and conventions take time.
More information:Michael Byers et al, Unnecessary risks created by uncontrolled rocket reentries,Nature Astronomy(2022).DOI: 10.1038/s41550-022-01718-8
Russia is set to pull out of the International Space Station (ISS) after 2024 and build its own orbiting outpost.
Yuri Borisov, the country’s new space chief announced the move on Tuesday during a meeting with Russian President Vladimir Putin, reported the Associated Press.
“Of course, we will fulfill all our obligations to our partners, but the decision about withdrawing from the station after 2024 has been made,” said Borisov. “I think by that time we will start forming a Russian orbiting station.”
However, AP also reports that NASA hasn’t received anything official from its Russian counterparts.
“Nothing official yet,” said Robyn Gatens, NASA’s ISS director in an interview at a conference in Washington. “We literally just saw that as well. We haven’t gotten anything official.”
While the tension between the US and Russia persists over the war on Ukraine, the announcement came as a surprise.
About two weeks ago, NASA and Russia’s space agency, Roscosmos, signed an agreement allowing US astronauts and Russian cosmonauts to hitch rides on each other’s spacecrafts to and from the ISS.
Since its launch in 1998, the station has been led by an American-Russian partnership, and has been home to 14 Canadian astronauts including Chris Hadfield, who famously recorded his own version of David Bowie’s “Space Oddity” from space in 2013.
NASA announced a retirement plan for the ISS in February, which involves crashing it into the Pacific Ocean.
Big Oil set for record profit as world reels from high fuel cost
Kevin Crowley, Laura Hurst and Francois de Beaupuy, Bloomberg News
Jul 26, 2022
Big Oil is poised for a record-breaking US$50 billion profit in the second quarter, but the industry’s stellar performance could contain the seeds of its own decline.
The soaring earnings are direct result of the high energy prices that have stoked inflation, piled pressure on consumers, raised the risk of recession and prompted calls for windfall taxes. Amid this political and economic turbulence, shareholders may have to temper their expectations for rising returns.
“There’s a strong chance that earnings will peak in the second or third quarter, with a small decline thereafter,” said Ahmed Ben Salem, an analyst at Oddo BHF. “This looming recession is calming things down.”
Exxon Mobil Corp., Chevron Corp., Shell Plc, TotalEnergies SE and BP Plc -- collectively known as the supermajors -- are set to make even more money than they did in 2008, when international oil prices jumped as high as US$147 a barrel. That’s because it’s not just crude that has soared during the crisis created by Russia’s invasion of Ukraine, natural gas prices and refining margins have also broken records. Exxon leads the pack with a 46 per cent rise this year, while TotalEnergies is the worst performer, though still up 11 per cent while the S&P 500 Index has dropped 17 per cent .
Many major markets have found themselves critically short of refining capacity due to a combination of shutdowns, investments that were stalled by the pandemic, sanctions on Russia and a decision by China to limit petroleum exports.
The US Gulf Coast’s 3-2-1 crack spread, a rough measure of profit margins from refining a barrel of crude, exploded to average US$48.84 in the second quarter, more than double the level a year-earlier. A similar measure for Europe -- TotalEnergies’ variable cost margin -- rose threefold to US$145.70.
Refining now makes up 26 per cent of the cost of a gallon of gasoline in the US, up from an average of 14 per cent in the previous decade, according to the Energy Information Administration.
Shell is expecting to post a US$1 billion gain in refining results. Exxon, which has the largest downstream footprint of the supermajors, is expected to make more in the second quarter than the previous nine combined, according to estimates collected by Bloomberg.
These “eye-watering” refining margins probably won’t last, said Matt Murphy, a Calgary-based analyst at Tudor Pickering Holt & Co. High fuel prices, combined with a broader surge in the cost of living, are hurting consumers. “Gasoline demand is underperforming forecasts, we’re seeing a degree of demand destruction.”
As a result, companies are seen being conservative despite soaring earnings. Exxon will probably use its excess cash to lower debt, according to Citigroup Inc. analysts led by Alastair Syme. Chevron may increase the bottom end of its buyback range to US$10 billion for the year, they said.
Sky-high profits aren’t solely the result of the broad-based upswing in commodity prices. The supermajors are also spending much less than they did the last time oil was above US$100 a barrel. Capital expenditures is creeping to a forecast of US$80 billion this year, but that’s half the level of 2013.
“Costs have been on a long, downward trend since 2014,” said Paul Cheng, a New York-based analyst at Scotiabank. “With commodity prices this good, it’s the perfect combination.”
That’s not necessarily the view of political leaders, such as US President Joe Biden, who are battling to contain rampant inflation and crippling consumer energy costs. Their pleas for the oil and gas industry to boost domestic production have gained little traction. Executives are cautious about how long high prices will persist and wary of committing to large fossil fuel projects that may become redundant as the world transitions to cleaner energy.
The supermajors may not be able to keep capital expenditure this low for long, due to their need to ramp up spending in an inflationary cost environment. Schlumberger NV, the world’s biggest oilfield service company, last week said sales increased nearly 20 per cent from a year earlier, and sees a “multiyear upcycle” in demand for its services.
This situation risks a political backlash. The UK imposed a windfall tax on oil and gas profits earlier this month. Italy has passed a levy on the energy industry, while in France some lawmakers are backing the idea of a special tax of as much as 3 billion euros (US$3.1 billion) a year. President Emmanuel Macron has so far resisted such calls, instead urging companies including TotalEnergies to extend rebates on fuel purchases.
In the US, Biden has criticized Exxon for making “more money than God” and accused other oil firms of exploiting high gasoline prices, but so far there has been no serious political pressure for a windfall tax.
Against this turbulent backdrop, the most profitable quarter in the supermajors’ history may not be cause for overt celebration.
“Most of the companies in this quarter are going to report record earnings no question” said Scotiabank’s Cheng. “But with the potential for a severe recession and memories of 2020, I expect management teams to be conservati
Key Algoma Steel union meets tomorrow, as strike pressure builds
Powerful Local 2251 demands wage hikes totalling 16 per cent wage over three years
Salaried workers at Algoma Steel Inc. have averted a strike, but 2,000 members of the powerful United Steelworkers Local 2251 will gather Wednesday at GFL Memorial Gardens, prepared to take a strike vote if no agreement is reached by 9:30 a.m.
"The union is always ready to negotiate," Local 2251 president Mike Da Prat told SooToday early Tuesday evening.
"Discussions are ongoing between the company and the hourly employees represented by USW Local 2251, and the company continues to work toward reaching an agreement before the contract expires," the company said in a news release.
Da Prat's Local 2251 represents hourly workers at Algoma Steel, Sault Ste. Marie's largest employer.
"USW Local 2251 is presently in negotiations with Algoma Steel," the local's leadership said in a news release.
"The collective agreement terminates on July 31, 2022," the release states.
"Algoma Steel has announced unprecedented revenue. The local union proposed wage increases of six per cent, six per cent and four per cent."
The release says the steelmaker responded "with an offer of COLA (cost of living announcement) roll-in plus 0.5 per cent increase the first year and $1.35 increase in Years 2 and 3 reduced by any COLA amount generated."
Local 2251 members will receive updates on negotiations at information meetings scheduled for 9:30 a.m., 3:30 p.m. and 7:30 p.m. Wednesday at GFL Memorial Gardens.
"Strike voting will take place after the first meeting until the end of the 7:30 p.m. meeting," the union release states.
"Voting will continue on Thursday, July 28 and Friday, July 29 at 68 Dennis St. from 8:30 to 4:30 p.m.; and all-day Saturday from 5:30 a.m. to 9:30 p.m."
As SooToday reported on Monday, Algoma's Steel's 500 salaried workers, represented by United Steelworkers Local 2724, have voted 59.9 per cent to approve a new collective agreement.
Local 2724 represents salaried office and technical professionals, front-line supervisors, shift coordinators and planners.
Although its membership is smaller than Local 2251, its settlements often set the tone for the larger bargaining group.
"It's back to work with no concerns about labour disruptions for Local 2724 membership....We have a renewed contract," Local 2724 president Rebecca McCracken announced Tuesday.
In recent communications to her membership, McCracken has said her local's agreement with the company contained no concessions.
McCracken said salaried staff will get a 2022 cost-of-living increase of approximately 3.2 per cent as of July 31, 2022.
She referred to a salary increase of 0.5 per cent on Aug. 1, 2022, a three per cent increase in base salary effective Aug. 1, 2023, followed by another three per cent hike on Aug. 4, 2024.
McCracken has recently expressed concern about "incorrect information" circulating about the Local 2724 agreement and has asked members to contact her office with any questions.
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