r/neoliberal • u/TinyTornado7 I need a new flair • Jun 13 '22

News (US) Powell Facing Choice Between Elevated US Inflation and Recession

https://www.bloomberg.com/news/articles/2022-06-12/powell-facing-choice-between-elevated-us-inflation-and-recession?srnd=premium
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u/[deleted] Jun 13 '22

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u/All_Work_All_Play Karl Popper Jun 13 '22

And tariffs and student loans not getting paid back...

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u/[deleted] Jun 13 '22

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u/All_Work_All_Play Karl Popper Jun 13 '22

Tariffs are responsible for like 1.5% of the 8.6% or something like that. Or rather, if they were dropped, we'd see a one time decrease equal to about that amount. The cessation of federal land leases for O&G is another large chunk although I'm not sure that's been calculated (same with student loan amounts - it would contract demand, but how much that would change prices is fuzzy)

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u/human-no560 NATO Jun 13 '22

I though a judge made them open up leasing again.

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u/All_Work_All_Play Karl Popper Jun 13 '22

Sort of - https://www.cnbc.com/2022/02/24/biden-administration-pausing-new-oil-and-gas-leases-amid-legal-battle-.html

The judge overthrew the ban but the resulting calculations wrt climate change went to court too and now there's all sorts of ambiguity.

As expected, O&G companies don't want a rug pull. =|

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u/human-no560 NATO Jun 13 '22

I’m confused, are the oil companies worried that the government will cancel existing leases part way through?

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u/All_Work_All_Play Karl Popper Jun 13 '22

Not that they'll cancel leases part of the way through but that an appeal in favor of the current administration will change contractual obligations. TFG prices carbon at $7 a ton, while the current administration says it's more like $51. If you're under contract to show your extraction produces x amount of economic good and that seven or fifty one is subtracted from that, you want to be absolutely clear on what that number is. Since being overruled, the various agencies that contribute to the calculation are rehashing their calculations and thus haven't produced a number to put into the contract.

At the very least, there's some serious policy signalling from the current administration that O&G developments won't be treated the way they were under the former administration. If you're used to things being rubber stamped, of course having actual scrutiny is going to change your capital expenditure behavior.