Biden Will Tap Into U.S. Oil Reserves in Concert With Other Nations
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WASHINGTON — Working in concert with five other countries, President Biden on Tuesday ordered the release of oil from the nation’s emergency stockpile as Americans face rising gas prices amid a jump in inflation ahead of the holiday season, according to senior administration officials.
The administration will tap into 50 million barrels of crude in the Strategic Petroleum Reserve. Britain, China, India, Japan and Korea will also open up their oil reserves in an effort to combat soaring global prices on oil.
The Department of Energy’s release of the reserves, which is set to be detailed in remarks by Mr. Biden on Tuesday afternoon, is meant to address fluctuations in supply and demand for oil, administration officials said.
The move by Mr. Biden is a shot across the bow of OPEC Plus, the name for the Organization of the Petroleum Exporting Countries along with Russia and other countries. Mr. Biden has pushed OPEC Plus to increase production, but has been rebuffed.
The decision to tap the U.S. stockpile of crude, the largest in the world with 620 million barrels, was a way for the president to show the administration’s focus on rising gas prices, which have stoked anxiety among Americans amid declining approval numbers for the administration.
But it remains unclear if it will have much impact on the price of oil. Traders had been expecting a larger release of as much as 100 million barrels, said Richard Bronze, head of geopolitics at Energy Aspects, a market research firm in London.
Mr. Bronze estimated that India would contribute up to five million barrels, with Japan and South Korea adding another four million to five million barrels each. China, he said, is holding off announcing on Tuesday. Britain said it would authorize the release of up to 1.5 million barrels.
The price of oil has fallen since late October partly in anticipation that countries would take action to try to tame energy costs. The U.S. benchmark, West Texas Intermediate, immediately jumped after the administration’s announcement, and was trading 1.3 percent higher for the day. So far this month, the price had dropped 4.75 percent.
Demand for oil fell precipitously in the early months of the pandemic, so oil-producing nations cut output. 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.
The U.S. stockpile, stored in underground caverns in Texas and Louisiana, was established after the 1973-74 oil embargo by Arab members of the Organization of the Petroleum Exporting Countries, and has only been tapped in this manner in emergencies like the buildup to the Persian Gulf war in 1991 and the aftermath of Hurricane Katrina in 2005, when much of the Gulf of Mexico oil infrastructure was damaged. The reserve is also used to exchange or lend oil to refineries when accidents or storms block shipping channels.
Biden administration officials said the move announced on Tuesday would not be an emergency release. It will rather come in two parts: a loan of 32 million barrels over several months to refineries and the accelerated sale of 18 million barrels, which has already been congressionally authorized.
Britain will be voluntarily allowing companies to release their oil reserves. If every company takes advantage of the option, it would amount to the release of 1.5 million barrels of oil, a British government representative said.
A coordinated release would probably be considered a challenge by members of OPEC Plus, and could prompt a response next week when the group holds its next monthly meeting.
In recent monthly meetings, the group has stuck with plans to increase production by a relatively modest 400,000 barrels a day each month. Asked about a potential response from OPEC Plus, U.S. officials said on Tuesday that the administration had worked for weeks to rally other oil-producing countries to agree to tap into their stockpiles to ensure a parallel release, which was a preference of Mr. Biden’s.
At its last meeting, on Nov. 4, the group said it was committed to ensuring “a stable and balanced oil market,” and that bigger increases could exceed demand as economies struggled to emerge from the pandemic, as supply-chain disruptions cause slowdowns and surges in coronavirus cases fill hospitals in some regions.
On Monday, an official of the International Energy Forum, an organization based in Riyadh, said he expected that OPEC Plus would continue with its current plans to raise production each month by 400,000 barrels a day.
“However, certain unforeseen external factors such as a release of strategic reserves or new lockdowns in Europe may prompt a reassessment of market conditions,” Joseph McMonigle, secretary-general of the organization, said in a statement.
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Helima Croft, head of global commodities at RBC Capital Markets, an investment bank, agreed that OPEC Plus could choose to respond at its next meeting, on Dec. 2.
“If OPEC wants to be obstructionist, they can blunt the impact” of the oil release, she said, by not approving the next monthly 400,000 barrels-a-day production increase at the meeting.
On the other hand, she added, doing that would “expose them to a lot of problems in Washington,” including, potentially, an antitrust bill in Congress aimed at OPEC, known as NOPEC, that could call for going after the financial reserves of countries like Saudi Arabia and the United Arab Emirates. “I think it would be a nuclear option and OPEC won’t want to go down that path,” she said.
Biden administration officials on Tuesday sought to frame the move as an indication of the president’s focus on the rising gas prices challenging Americans. The officials also pointed to Mr. Biden’s request to the Federal Trade Commission to investigate whether oil and gas companies were engaging in “illegal conduct” that was driving up prices at the pump.
The surge in inflation, as well as concerns about the persistent pandemic, haphazard withdrawal from Afghanistan and soaring crossings at the border have contributed to declining approval numbers during the politically troubling time for the administration.
Democrats in Congress have recently called for Mr. Biden to take action to provide immediate relief for Americans, including the Senate majority leader, Chuck Schumer, who said earlier his month that the administration should tap into the stockpile.
Robert McNally, president of Rapidan Energy Group, a market research firm and a former energy adviser in the George W. Bush White House, said the announcement “may be politically smart, but I don’t think it is smart in terms of policy and will likely backfire.”
“There are good odds that OPEC Plus will offset this and they have a bigger fire hose than we do,” he said. “Using strategic stocks to defend an oil price level set in a global market is pure folly.”
Most experts believe a release would lower prices modestly, but only for a short time because oil prices are set globally and world consumption averages roughly 100 million barrels a day. The average price for a gallon of regular gasoline in the United States had risen to $3.40 on Tuesday from $2.11 a year ago, according to AAA, the travel services organization. But gas prices have started to level off in the past week.
The most recent coordinated release of oil reserves came in June 2011, when the United States and 27 other nations released 60 million barrels of reserves to replace lost production from Libya that was halted by political turmoil in the North African country. Of the total amount of oil released, about half came from reserves in the United States, with the rest from the other 27 industrialized nations that belonged to the International Energy Agency. Negotiations for the coordinated response were held in secret for weeks, American officials said.
Eshe Nelson and Clifford Krauss contributed reporting.
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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.
Consumers are seeing a steady rise in the prices of many goods and services, but the cost of gas is especially visible.
Steeper gas prices are pushing people to rejigger household budgets, sometimes by forgoing leisure activities and in other cases by cutting back spending on essentials. Many are trying to save by spending less time on the road, a difficult proposition as the holiday season approaches, and with it the temptation to make up for the lost celebrations of last year. Just 32 percent of Americans plan to drive for Thanksgiving, down from 35 percent last year, at the height of the pandemic, and 65 percent in 2019, according to a survey from the fuel savings platform GasBuddy.
Louise Tomitz, 74, who is retired and lives on Social Security in Toms River, N.J., said the price of gas was making it difficult to cover the costs of visits to her daughter nearly an hour away in Middletown, N.J.
“I don’t work now, and then you have to pay all this extra money for gas and it’s affecting my budget,” Ms. Tomitz said. “It’s getting rough.”
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After months of behind-the-scenes discussions and public assurances that clarity was on the way, federal bank regulators unveiled a “road map” on Tuesday for overseeing cryptocurrencies and other digital assets in ways that would finally let banks hold, trade and lend against them.
The two-page document had one major problem: It contained no details about how to do any of that.
The statement — a product of the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation — identified broad areas where regulators had agreed they needed to make new rules, but said little else.
“Throughout 2022, the agencies plan to provide greater clarity on whether certain activities related to crypto-assets conducted by banking organizations are legally permissible, and expectations for safety and soundness, consumer protection, and compliance with existing laws and regulations,” the regulators said in the statement.
The regulators pledged to detail how banks could hold digital assets on their balance sheets, issue and trade in stablecoins, accept cryptocurrencies as collateral for loans and appropriately incorporate the asset class into their regulatory capital requirements. It’s a to-do list that closely resembled one that Randal K. Quarles, then the Fed’s vice chair for supervision, rattled off during a Senate Banking Committee hearing on May 25.
At the hearing, in response to a question from Senator Mark Warner, Democrat of Virginia, on where the Fed and other U.S. regulators stood on cryptocurrencies, Mr. Quarles assured lawmakers that a similar list was the subject of a three-agency “sprint.” The regulators were pulling together views on “a common regulatory framework,” Mr. Quarles told lawmakers, and were working to identify gaps.
The statement on Tuesday suggested that the Fed and the other agencies needed more time to reach the finish line. Another impending change could drag out the process: Mr. Quarles, whose term as vice chair ended in October, plans to leave his post as the Fed’s top bank regulator at the end of next month. President Biden has yet to nominate his replacement.
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Many retail giants have opted to close on Thanksgiving Day during the coronavirus pandemic, citing safety concerns and gratitude for their employees.
Retailers also have expanded their online offerings, as well as their pickup and delivery services, to meet customer demand amid lockdowns and pandemic restrictions.
For the second year in a row, Walmart and Target will close on Thanksgiving, repeating the move as retailers across the country scramble to hire or retain employees, with millions fewer Americans working than before the pandemic and more people quitting their jobs than ever before.
Here are some retailers’ plans for Thursday and Friday hours:
Closed
Walmart
Walmart will spread out its Black Friday discounts to three events throughout November.
Target
Target stores will close for Thanksgiving every year from now on. Most will reopen at 7 a.m. local time on Friday.
Nordstrom
On Friday, hours may vary by store, and Nordstrom encouraged customers to search for holiday hours in its store locator online.
Costco
Most Costco stores will reopen as early as 9 a.m. on Friday.
Apple
On Friday, store hours vary, with some stores opening earlier than usual. Customers can view their local store’s hours on Apple’s website.
Best Buy
Friday hours may vary from normal operation, with some stores opening as early as 5 a.m. Customers can view their local store’s hours with Best Buy’s store locator.
TJX Companies
T.J. Maxx, Marshalls, HomeGoods, Sierra and HomeSense stores will be closed on Thanksgiving. Most stores are scheduled to reopen at 7 a.m. on Friday.
Kohl’s
Stores will reopen at 5 a.m. on Friday and close at midnight.
Lowe’s
Stores will operate regular business hours on Friday and throughout the weekend.
Home Depot
On Friday, stores will open earlier than usual. Most are set to open at 6 a.m.; Home Depot recommends using its store locator to verify hours.
Macy’s
Stores will reopen at 6 a.m. on Friday and stay open till midnight.
Pandora
Pandora will close its stores on Thanksgiving Day for the second year in a row.
Open
Kroger
Most locations will close by 5 p.m. On Friday, most will open an hour later than usual.
Starbucks
Hours may vary by location, with some closing as early as 5 p.m.
Walgreens
Most stores will have adjusted hours from 9 a.m. to 6 p.m.; 24-hour locations and 24-hour pharmacies will remain open.
CVS
Most locations, including 24-hour locations, will have regular hours on Thanksgiving and Friday. The company recommends calling ahead or visiting cvs.com to confirm local hours, as some locations will reduce hours or close for the holiday.
Dollar General
Stores will open an hour earlier than usual, at 7 a.m., and close an hour later, at 10 p.m. Regular hours resume on Friday.
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Over the weekend, the International Olympic Committee drew criticism for saying it was reassured about the safety of the Chinese tennis star Peng Shuai, whose whereabouts have been a mystery since she accused a former government official of sexual assault.
The I.O.C.’s statement, which didn’t mention the accusations, did little to quell the controversy — and now, a little more than two months before the Winter Olympics in Beijing, the event’s sponsors face tough questions of their own, the DealBook newsletter reports.
The Olympic organizers said they had held a 30-minute video call with Ms. Peng, the latest in a string of seemingly managed appearances by the tennis star that have done little to assuage critics. On Tuesday, China’s foreign ministry denounced the coverage of Ms. Peng’s case as “malicious hype.”
The Women’s Tennis Association, which has threatened to withdraw its tournaments from China, repeated a call to investigate Ms. Peng’s allegations. And Global Athlete, an advocacy group for athletes, said the I.O.C. had demonstrated “an abhorrent indifference to sexual violence and the well-being of female athletes.”
The I.O.C. told DealBook in a statement that in its conversation with Ms. Peng, “she was very clear in confirming that she is safe and well.” The group added, “Safeguarding the well-being of athletes is paramount to the I.O.C. and the Olympic movement.”
Olympic sponsors have stayed quiet. Of the 15 companies listed as “partners,” representatives for Airbnb and Coke declined to comment, while others did not respond to requests for comment. (Despite being described as partners, General Electric and Dow ended their ties to the Olympics this year.)
Consumers and athletes now demand more of sponsors:
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Some top sponsors of U.S.A. Gymnastics abandoned the organization when it became embroiled in a sexual abuse scandal.
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Simone Biles left Nike for a brand that she said was better aligned with her values.
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Top tennis stars like Naomi Osaka, Roger Federer and Serena Williams have expressed concern about Ms. Peng, raising the prospect that they might pressure their brand sponsors to also speak out.
But businesses fear riling Beijing and losing access to the huge Chinese market. Questioning the government’s line could put tens of billions of dollars in sales at risk. Pointedly, this week the Chinese government said it would punish companies that it deemed supporters of Taiwan’s independence.
Experts are split on the reputational risk for sponsors. If the Peng situation remains in the spotlight during the Olympics, “I can certainly see some brands becoming more wary of their association,” said Brayden King, a management professor at Northwestern University.
Others downplayed the risk: “It doesn’t matter where the games are; there’s controversy that something is not right,” said Rick Burton, the chief marketing officer for the U.S. Olympic Committee for the 2008 Beijing Games. If you’re a top I.O.C. sponsor, he added, “you know what you’re getting into.”
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After Clearview AI scraped billions of photos from the public web — from websites including Instagram, Venmo and LinkedIn — to create a facial recognition tool for law enforcement authorities, many concerns were raised about the company and its norm-breaking tool. Beyond the privacy implications and legality of what Clearview AI had done, there were questions about whether the tool worked as advertised: Could the company actually find one particular person’s face out of a database of billions?
Clearview AI’s app was in the hands of law enforcement agencies for years before its accuracy was tested by an impartial third party. Now, after two rounds of federal testing in the last month, the accuracy of the tool is no longer a prime concern.
In results announced on Monday, Clearview, which is based in New York, placed among the top 10 out of nearly 100 facial recognition vendors in a federal test intended to reveal which tools are best at finding the right face while looking through photos of millions of people. Clearview performed less well in another version of the test, which simulates using facial recognition for providing access to buildings, such as verifying that someone is an employee.
“We’re pleased,” said Clearview’s chief executive, Hoan Ton-That. “It reflects our actual-use case.”
The company also performed well last month in a test — called a one-to-one test — of its ability to match two different photos of the same person, simulating the facial verification that people use to unlock their smartphones.
The positive results have “been a shot in the arm for the sales team,” Mr. Ton-That said.
The National Institute of Standards and Technology has been administering Face Recognition Vendor Tests for two decades. Since those tests began, the report notes, “face recognition has undergone an industrial revolution, with algorithms increasingly tolerant of poorly illuminated and other low-quality images, and poorly posed subjects.”
Clearview made an impressive debut on the charts for investigative, or one-to-many, searches, but the top performers were SenseTime, a Chinese company, and Cubox, from South Korea. In 2019, the Commerce Department blacklisted SenseTime and 27 other Chinese entities because their products were implicated in China’s campaign against Uyghurs and other Muslim minorities. Axios has reported that the designation was later changed to “Beijing SenseTime,” limiting the effects of the blacklisting.
Accuracy aside, questions remain about the legality of Clearview’s tool. The authorities in Canada and in Australia have said Clearview broke their laws by failing to get the consent of citizens whose photos are included in the database, and the company is fighting lawsuits over privacy in Illinois and Vermont.
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After weathering months of accusations that she lied to get money for her blood testing start-up, Theranos, Elizabeth Holmes, the embattled Silicon Valley entrepreneur who is on trial for fraud, sharpened her defense on Monday.
In just under two hours of testimony, which is expected to continue on Tuesday, Ms. Holmes pushed back against accusations that she had lied about Theranos’s work with drug companies. She also pointed the blame at the scientists and doctors who had worked at her start-up, saying she believed what they had told her about Theranos’s technology.
And throughout it all, Ms. Holmes’s defense bolstered the idea it has been pushing since the start of the trial: She may have made mistakes, but failure is not a crime.
“We thought this was a really big idea,” Ms. Holmes said about Theranos’s machines, which she once promised could run a long list of medical tests from just a few drops of their blood.
It was her second day of testimony in a trial that has gripped Silicon Valley and become a referendum on start-up culture and just how far entrepreneurs will take their hubristic claims of changing the world. For her lawyers, the idea on Monday was to show the kernel of truth that may have existed in some of the most blatant misrepresentations that prosecutors attributed to her.
Ms. Holmes, 37, has been charged with 11 counts of fraud and conspiracy to commit fraud. She has pleaded not guilty. If convicted, she faces up to 20 years in prison.
Stocks on Wall Street drifted lower in midday trading Tuesday, while oil prices were volatile after the Biden administration said it would release 50 million barrels of crude oil from the nation’s emergency stockpile as Americans face rising gas prices.
West Texas Intermediate, the U.S. crude benchmark, jumped more than 2 percent to $78.66 a barrel soon after the announcement. The release of oil reserves is being coordinated with Britain, China, India, Japan and Korea in an effort to combat soaring global prices, but some strategists said oil traders had been expecting a larger release.
In the stock market, investors were reacting to the latest earnings reports from big retailers.
Shares of Best Buy fell about 13 percent after the electronics retailer issued a weaker-than-expected sales forecast for the end of the year. Urban Outfitters fell 9.5 percent after it reported on Monday that cost pressures stemming from the pandemic were affecting its performance.
Zoom shares fell 17 percent in midday trading Tuesday after the company reported on Monday a slowdown in revenue growth during the three months ending in October.
In Europe, stock indexes slid as a fourth wave of the coronavirus cases is prompting lockdowns and health restrictions across the continent, which could reduce travel and foot traffic at shopping centers. The Stoxx Europe 600 closed 1.3 percent lower.
The Financial Stability Board has raised capital requirements for three banks considered systemically important — BNP Paribas, Goldman Sachs and JPMorgan Chase — as part of a yearly review of the safeguards it sets to try to prevent another global financial crisis.
The board, a body steered by central bankers and other government officials from around the world, published its latest list of “globally systemic banks,” known as G-SIBs, on Tuesday, keeping the total count steady at 30 institutions but changing its categorization of BNP, Goldman and JPMorgan. All three were already on the list, but now they each will have to meet a standard for absorbing losses on their balance sheets that is 0.5 percent higher than last year’s.
JPMorgan and Goldman both already meet the board’s requirement. The so-called G-SIB surcharge that the Federal Reserve imposes on each bank under its own capital requirements exceeds the stability board’s updated number. The Fed does not apply its own G-SIB surcharge to foreign banks, so it does not hold Paris-based BNP to the same standard.
A spokeswoman for JPMorgan noted that the bank exceeds the stability board’s requirement. Spokesmen for Goldman Sachs and BNP declined to comment.
The stability board said in a statement posted on its website that the change reflected a shift in each of the banks’ activities, but it did not elaborate. The pandemic caused cash to flood onto the balance sheets of banks all over the world as governments engaged in stimulus efforts to keep their economies from tanking during lockdowns and other safety measures that dampened normal economic activity.
Source: https://www.nytimes.com/live/2021/11/23/business/news-business-stock-market
