Chevron's big bet

Today on the show, we'll talk oil and gas, we'll talk jobs, we'll talk about how American consumers are getting by, think of it as an economic sampler platter of sorts. From American public media, this is Marketplace. In New York, I'm Kristen Schwab and for Kyra's Doll, it's Thursday, September 3rd, and it's good to be here with you. As the war in Iran revs up again, and a small number of ships barely eak their way through the Strait of Hormuz, we turn our focus today on another source of oil, Venezuela. U.S. oil giant Chevron says it'll expand operations there. The company announced a $7 billion investment in Venezuela over the next five years. The goal for Chevron is to double its oil production in the country to 600,000 barrels a day. Marketplace's Elizabeth Troval has more. In its announcement, Chevron called this a turning point for energy in Venezuela. Bob Frickland with S&P Global Energy put it this way. So it's a pretty significant investment for Chevron, but also, importantly, it's the largest investment so far by an individual company in Venezuela. He says Chevron will build on the company's existing operations in the country. This makes a lot of sense for them to continue to grow an asset that they already had and have had for decades. But other supermajors, like Exxon Mobile, maybe hesitant to follow. It makes less sense for some of the other companies because they would be starting from scratch almost. Chevron has more security than a new entrant into the country, says David Goldwyn with Goldwyn Global Strategies. My guess is that we will see a lot of those companies look at potential opportunities in Venezuela, maybe identify fields that they might in the future be interested in operating. But they will slow roll those decisions. Venezuela remains politically risky. On the other hand, he says the world is going to need oil for decades. In a market where we are looking at long-term risk to the straight-of-or-mose, probably never returning to the flows that we saw before the president started this war, we may need to replace that supply from other countries. Having more of that oil come from the Western Hemisphere is a good thing. He says it could come from Venezuela, but it doesn't have to. I'm Elizabeth Troval from Marketplace. Fed Governor Christopher Waller gave an interview today saying he could see an interest rate to hold in the Fed's future and Wall Street clung to it. We'll have the details when we do the numbers. This morning, we got the weekly numbers on how many people filed for unemployment benefits last week. Jobless claims rose a little bit to 206,000, that's 2,000 more claims than the week before. The big job news, though, comes tomorrow with the August Jobs report. The Fed is hoping for some healthy numbers to make up for the previous month's 23,000 job decline. If the numbers come in flat or even a bit down, the economy could be just fine. Marketplace's Mitchell Hartman explains. After the last dismal jobs report came out showing negative job creation in July, Treasury Secretary Scott Besen had this to say on CNBC. The jobs that we're seeing are going to Americans after the deportations that we've seen during President Trump's administration and the closing of the border that this unfettered migration, we don't need to produce as many jobs. Is he right? Can we actually have lost jobs in July and added only 20,000 jobs a month on average over the last three months and still call this a healthy labor market? Here's economist Jobless Swella sit consulting firm RSM. We're likely to have months where we see negative job growth, but the unemployment rate will not increase, which is sure to confuse the American public. As well it might, says Justin Blash at the Cornell School of Industrial and Labor Relations. If you tuned into reports in the past, you'd be used to 100,000 jobs, 200,000 jobs being a good number. Now if you're used to seeing big numbers and think zero jobs is bad news, that's just no longer the case. And here's why immigration has gotten declined, the baby boomers are retiring and so you would expect the economy on average actually will not add jobs because the labor force is not growing. So there's this concept in economics of break even job growth, how many jobs you need to actually just keep the unemployment rate steady. Heidi Sheerholz is former chief economist at the Labor Department. She says after immigration's surge during the Biden years, it virtually ground to a halt starting in 2025 and deportations ramped up and break even monthly job growth. When Trump took office, it was likely around 120,000. Now highest estimates are around 50,000 and many are much lower, like zero. However you slice it, we now need way fewer jobs. And that's exactly what we've seen, she says, jobs added each month has really tanked and we haven't seen too much of an increase in unemployment. So that's positive. The drawback is reduced job growth really reduces labor market dynamism. Dynamism is when workers are changing jobs a lot and getting raises. But with no new jobs to get, or move to, says labor economist Nicole Besho at Zippercrooter. Somebody who doesn't have as much work experience, especially new entrance, new grads starting out their career, that's who's really facing the most challenges. Plus she says, even if the unemployment rate isn't getting worse. People are still being laid off businesses close. It's very difficult right now to get back into full-time employment because the opportunities are so limited. There's also an economic cost to removing immigrant workers, says Cornell's Justin Blasch. Immigrants in the U.S. form a lot of businesses and are often involved in front of your industry's high-tech stuff. Fewer immigrants definitely hurts. Now remember Treasury Secretary Bescent said it also helps by opening up more jobs for U.S. born workers. But that doesn't appear to be happening, says Jed Kolko at the Peterson Institute for International Economics. Often native and foreign-born workers are working together, but in different jobs. And if that business can't find the foreign-born workers they traditionally had, they might need to cut back. And therefore not hire as many native-born workers. And Kolko points out unemployment has actually declined for foreign-born workers in Trump's second term, but risen significantly for native-born workers. I'm Mitchell Hartman for Marketplace. Another number to look for in tomorrow's jobs report is the Labor Force Participation Rate. The sheriff's people who could be working, people who have jobs or are looking for them. That number has been dropping gradually over the last two decades, and more sharply over the past few months. It's a reason why we're launching a new series today about people who've left the Labor Force. The series is called Clocked Out. My name is Sarah Berger and I live in Buffalo, New York. For 2024, I was a director of sustainability at a local nonprofit, and then we found out that we were pregnant with twins, so everything changed. I went to the doctor and everything was going normally like it did with my first kid, and then at the very end of the appointment she was like, "Oh, there's a second one in there." And so I cursed at her. And then as I got in the car, I started thinking about what it looks like for life. I was doing the math on how much we paid for my son's daycare, and I was just like, "Well, we don't make that much money." I was like, "Oh my gosh, I'm going to have to put my job." It was hard being the woman and saying, "I will step out." And saying it so easily, but I know our budget really well. My husband, he works for a for-profit company who does regular pay increases. There was really only one answer, and the answer is that I would say home, and my husband would continue to work. I feel really split about being the one. Having a job is really ingrained in our culture. When you're making small talk with people, the first question is, "What do you do?" And I say, "I'm a stay-at-home parent," and they're like, "Oh." And there's not really a lot of follow-up. This whole thing has been a really interesting exercise in figuring out my identity without a job, but in some ways I feel like I interact with the economy more because I do all of the household administration and I make all of the money decisions. It's so weird, I don't know. It's just still so weird not collecting a paycheck, well, feeling like I'm participating more intentionally than I ever had before. That was Sarah Berger in Buffalo, New York. You can hear more stories from this series across our shows next week, including on the Market Place Morning Report and Marketplace Tech, and you can tell us about your own leaving the labor force story at Marketplace.org/ClockedOut. It isn't new news that fuel is expensive these days for $14 a gallon for regular gas today, $5.78 a gallon for diesel, according to AAA. What is new news though is that these prices have been high long enough to change how businesses get things from point A to point B. In the latest version of the beige book that came out this week, that's the Fed's compilation of anecdotes from businesses across the country. The latest version said high fuel costs are encouraging some companies to ship by rail instead of by freight. Marketplace's Stephanie Hughes has more. If you can fit your freight into a 40-foot long shipping container, Philip Evers teaches supply chain management at the University of Maryland. This is called Intermodal Transportation, and while both trucks and trains require fuel, the amount of freight that a train can pull on a gallon of diesel is just phenomenal, relative to trucking. Shippers and receivers of goods have noticed, according to the Association of American Railroads a trade group, the volume of goods shipped over Intermodal Rail so far this year has reached a record high. Shipping by rail is generally slower, but Suzanne Holland of the Richmond Fed says she's heard from companies who are okay with that. I don't need this within X period of time. I am willing to wait a little bit longer and save a lot of money by shipping by rail. Another forest pushing companies away from trucks is a shortage of qualified drivers. Chris Barkin, a professor emeritus of railway engineering at the University of Illinois, says while each truck needs its own driver to move a container, a train can move 400 containers and typically only has two workers. A locomotive engineer who operates the train and the conductor who is responsible for all the paperwork. These efficiencies mean more companies are willing to try Intermodal Rail, and supply chain professor Phil Evers says once they get a taste of it, they're more likely to use it again. I'm Stephanie Hughes from Marketplace. Coming up, aside from getting hit with a baseball, a window doesn't just break. Footballs, basketballs, volleyballs, I could think of some other ways. But first, let's do the numbers. The Dow Jones Industrial Average rose 624 points, 1 in 2.10% to finish at 53,686. The NASDAQ added 366 points, 1 in 4.10% to close at 26,584, and the S&P 500 found 81 points just shy of 1 in 1.10% to end at 77.47. Campbell's reported that its sales and profits for the year are going to fall short of Wall Streets expectations. The packaged food maker's salty snacks business is taking some of the blame. Campbell's cooled 7%. Tyson Foods says its profit margin in the beef market is getting squeezed. Tyson dropped 7.25%, bonds rose, the yield on the 10-year T-note fell to 4.77%, you're listening to Marketplace. This is Marketplace, I'm Kristen Schwab. By now, pay later, seems innocent enough. Maybe it's a way to spread out the pain of paying for a concert ticket or a Christmas gift. But increasingly, how people are using pay later services is changing and maybe not for good. Nearly half of BNPL users say they've made late payments in the last year, according to Lending Tree. And more people are using these loans to cover rent and utilities. Stacey Cowley wrote about this for The New York Times. Stacey, it's good to have you on. Thanks for having me. So by now, pay later, I think started as this thing people used to pay for a new pair of shoes or something. It seems like it's come a long way. Catch me up on what it's being used for now. Yeah, it really has. And these models have been out there in the market for a decade or more in the United States. And what's really started to change in the last year or two is we're seeing a lot of vendors move into the more essential spend area of things to help people pay rent, utilities, electric bills, things like that. And that is sort of a shift in the model, seeing it go after that more everyday daily needs. How fast is usage in general in this space growing? And then how much is it growing in those essential service spaces? Definitely continuing to grow very fast. Right now, Americans are spending about 160 billions. That's what they spent last year through pay later loans, which is about twice what they spent two years earlier. So this does really continue to grow quite fast. The essential spend area is harder to model because there isn't a lot of broken out data around that. But in talking anecdotally to the vendors, they are saying they're seeing pickup. For example, cash-opt just recently integrated after pay into its debit card and people can use after pay on pretty much any purchase now. And they said they are in particular seeing utilities cash and groceries being pretty heavy usage areas there. And do we know how much of the spending is happening out of preference or necessity? And that is one of the big chicken and egg questions that everyone in the space is trying to understand. There is certainly some segment of consumers that find that they prefer these loans to credit cards. Some people say that they appreciate the clarity and the transparency on the fees. About half the people who use pay later loans say that they could not purchase any other way. These are often people who have maxed out the credit cards or get credit cards. So this is particularly prevalent among households with some of the most brittle finances. Even if you do have access to a credit card, why might someone pick Clarna or Affirm or one of these other services? It goes across all demographics, but I have heard particular interest in these among some of the younger folks who are understandably leery of credit cards. There is a certain opaqueness to them. And with these loans, it's often quite transparent. Those can also translate into much higher APRs than you would be paying for credit cards. So sometimes that's a trade off between price versus transparency for some people. I mean, it seems like these services are starting to mimic credit cards a little bit more but I mean, some of them do impact your credit score now, no? It's a little nebulous. Most do not report to credit bureaus. And the credit bureaus have really been unable to sort of get modeling and scoring going this in this area because there is so little reporting. That can also be one of the attractive things is you're not going to, if you default on one of these loans, the consequences are barely as punitive as they are with credit cards. But they do exist. In your story, you referred a buy now pay later as phantom debt, which is sort of a scary sounding term to me. What does that mean and what kind of trouble are people getting themselves into? Yeah. In particular, a lot of these loans are being backed by private credit money, not by banks. With this, it's a lot more opaque both how much is out there. And that is an area where economists have some concern about this concept of phantom debt that can be really hard to track in the official metrics that we tend to keep an eye on to indicate how indebted households are. Do you think there's a point where the federal government steps in and creates more rules in this industry to protect consumers? That probably depends a lot on which party is in charge. There was certainly a movement in that direction during the Biden administration. The consumer financial protection bureau was starting to really push to get more regulation or at least data and oversight in here, along with a lot of regulation in the financial industry. That's really gone the other direction right now. So we are starting to see some states try to more aggressively regulate it because of that because they see that there isn't a lot of federal oversight right now. I'm curious, have you ever used one of these programs? I'm about to start experimenting with it just to kind of see how it works. I did go as I was reporting the story and apply for a couple of them. I mean, I set up an account with a firm and it was like five minutes to start to finish and suddenly I had a $6,000 credit line. [BLANK_AUDIO] This is a much quicker to access credit product than like a credit card would be, which certainly has its pros and has its cons. Stacey Cowley is a reporter at the New York Times writing about consumer finance. Thanks, Stacey. Thank you. This summer has been hot. In fact, July was the hottest month ever recorded across the lower 48. And maybe I don't have to tell you that maybe your electricity bill already rudely let you know, while homeowners are looking for solutions to rising utility bills, solar panels, insulation, they cost a lot of money. But something that doesn't usually cost at least tens of thousands of dollars are new windows. The EPA estimates energy efficient windows alone can trim a building's energy bill by up to 13%. Marketplaces Kaylee Wells has more. Anthony Russell moved into his new apartment in Queens earlier this year. So far, he's a big fan. I mean, I never had peace right this in my life. Literal piece. This apartment is really quiet. I know it's left so much in my life. You know, sometimes I have to open my one due because sometimes I feel like it's too quiet. Russell lives in a supportive housing building. He moved here from a shelter in Brooklyn where he shared a room with seven people. Now it's just him. So of course it's quieter. But as soon as you shut the window, I mean, especially in New York City, it's a noticeable difference. The supportive housing company that owns this building, breaking ground cares about Russell's peace and quiet, but it also cares about cutting its energy costs. If Russell turns on the heat in January, it puts the bill. So the designers went for these super airtight windows, which serves really at the end of the day. All of us tenants, the local community, the city and ultimately the planet. If enough people engage in green building practices. Mark Harari is the director of design instruction for breaking ground. He says the high efficiency stuff, the windows, the insulation, the extra fancy ventilation system that recovers heat might have tacked on 3 to 5% to the total build price. This building so new that Harari doesn't know how much energy it's saving yet. But if it's anything like the other one, the organization built to a similar standard. The site EUI, which is the energy usage index number was 61.7% lower than the average of the rest of all of our other breaking ground buildings, which is like kind of mind blowing. And the windows are a big part of that. The Department of Energy says windows make up about 8% of the outside surface of the average home. But nearly half of the heat that's lost from that average home goes out through those windows. If you were to look at a standard American window, they slide up and down or they crank out. They're inefficient by design. Darren Macri is co CEO of White windows. That's the company that worked on this building. Our windows have multiple locking points. So you have an even compressive seal against the frame and sash to make it air tight. Macri estimates one of their three by five foot windows costs roughly $600. It's more than most of the options at my local home depot, but not by much. Michelle Shism works for the independent organization that rates the energy efficiency of windows and doors, the national fenestration rating council. If you buy a very pretty window. That's a pretty decent performer and you buy a more basic window that is a great performer. You might pay the same price. Problem is the window alone isn't the whole cost. Darren Macri of White windows estimates labor will run you several hundred dollars per window give or take depending on where you are in the country. And it's about the same even if you buy a cheaper window. Meanwhile the one that's already in your house costs nothing upfront, which is why roughly 93 million homes have inefficient windows according to the Department of Energy. People sometimes are like I can just keep living with it and they put it off and they don't see the advantage. Shism says a typical window has about a 15 to 25 year lifespan. Many of us have windows two or three or four times that old. Aside from getting hit with a baseball window doesn't just break you know your refrigerator breaks you must buy a new one. So more efficient windows get put off in existing homes in new buildings there and easier sell Darren Macri of white windows says he's put the same model in luxury homes and affordable housing projects. I'm Kayleigh Wells for marketplace. This final note on the way out today saw this in Axios. It's official people 65 and older outnumber children ages five and younger worldwide for the first time ever. That's according to a new report by the U.S. Census. Of course this kind of imbalance comes with lots of questions about the economy. How will the workforce change? How will we maintain programs like social security? How will we take care of an aging population? And it's not just happening here in the U.S. or in places with notoriously low birth rates like South Korea and Japan. It's becoming more common across the globe than India, Bangladesh and Mexico. Our daily production team includes Andy Corbin, Mika Ellison, Maria Hollenhorst, Sarah Leeson, Sean McKenry and Sophia Torenzio. Will story is the supervising senior producer and I'm Kristen Schwab. We'll see you back here tomorrow. This is APM.