What's the new normal for global oil?

today on the show the abnormal new normal of oil from american public media this is marketplace in new york i'm sabree bennishore in for kai rizdahl it is thursday september 10th we are glad to have you with us usually the u.s oil market for oil produced here is a lot more chill than international oil markets we drill a lot here our market's a little insulated prices are lower well today american oil lost its chill west texas intermediate that's u.s oil went over a hundred dollars a barrel it's almost 104 now not a good sign brent crude that's oil in the rest of the world basically is at 107 all of the oils have been going up for a month now because escalation in the middle east oil shipments out of the middle east are now down 65 from one year ago and it looks like this is gonna be just how it is for a while marketplaces mitchell hartman reports before all the disruptions from the iran war the persian gulf accounted for about 20 of global oil supply and the price of crude hovered around 70 a barrel says analyst bush and bahri at s&p global energy we're projecting prices at about 80 to 100 range through next year the basic rationale says bahri there's no longer an expectation the u.s iran war will end anytime soon sometimes it's a hot conflict sometimes it's cooler some ships are getting through sometimes in the dark sometimes they're not they're being bombed the u.s and iran can both restrict or entirely cut off oil coming through the strait of hormuz neither alone can fully reopen it the flows of oil are going to be very uneven but overall they're going to be less and you can't count on it if anything s&p global energy's year-ahead projection for crude oil is on the conservative side columbia business school climate economist garnard wagner's model predicts the price per barrel going forward around 100 never below 90 it's not that the new normal is a stable higher price it is essentially pricing in volatility pricing in uncertainty samantha gross at the brookings institution also calls this a new normal for the world oil market we're not going back she says after repeated announcements from the white house that the strait of hormuz was opening soon or the war was about to end which would temporarily drive crude prices lower i don't think the market's believing those proclamations anymore because they haven't held true the strait of hormuz won't be what it was before now we understand that iran can and will block it because it turns out it's neither very difficult nor very expensive for them to do so i'm mitchell hartman for marketplace wall street today moody we'll have the details when we do the numbers those new normal higher oil prices showed right on up this morning in the latest measure of inflation the producer price index it was up four tenths of a percent in august most of that energy and that in turn is fueling inflation and the price index is up four tenths of a percent in in transportation and warehousing you know the things that literally everything we buy ever depend on marketplaces justin ho has that the cost of trucking is up more than 14 percent from the same time a year ago according to the labor department jason miller is a professor of supply chain management at michigan state university the price the trucking companies receive which is what the ppi is picking up that is going to rise it really is almost a linear function of how those diesel prices are changing you miller says the trucking industry is also losing workers the trump administration has been cracking down on drivers who aren't proficient in english as a result there are fewer trucks on the road that drop has been so much that it's given carriers a little bit more pricing power and so we've seen freight rates increase beyond just the price of the diesel fuel some companies have been waiting until the last minute to ship things in case rates come down says zach rogers a professor of supply chain management at colorado state university but so far they haven't and now we're getting close to what would be the last second at least ahead of q4 peak season so companies can't wait anymore they have to pay for trucking regardless of how expensive it is the calculation they're doing is well we would rather pay a little bit more and maybe we can pass some of that extra cost down to consumers than to be out of stock and miss out on the sales altogether but passing along those extra costs isn't always that easy sometimes you can't sometimes you can't that's peter firth he's the ceo of fff associates which imports fig paste sometimes you lose business because the total cost to deliver a product to the customer is just too high and they just can't absorb it firth says even though he's been paying more to truck in products a lot of his customers which make fig bars using fig paste they buy from him have been pushing back against price hikes in large part because grocery shoppers might not buy fig bars if they're too expensive so our customers who make the fig bars are very very expensive and they're not going to be very careful to try to hold their costs down because they don't want to lose sales so firth says that means his company has to eat the cost instead i'm justin howe for marketplace quilst the u.s and canada fight an all-out trade war it might be easy to forget we still have tariffs on pretty much everybody else in the world the average tax u.s companies and importers are now paying on goods they bring in is 11 according to the yale budget lab and it's kind of crazy all the nooks and crannies of this economy those tariffs find their way into example death by audio it's a business in queens new york that makes equipment for adding special effects to musical instruments heather bickford is the operating officer and joins us heather hi so nice to talk to you thank you for having me yeah so the last time we talked which was like a year ago yeah it's been a minute yeah you were so stressed out you know you had the tariffs coming you were going to possibly take out a loan you were thinking about not launching a new product how how are you doing right now um i'm actually i'm doing a lot better i think i've just had to like really not focus on tariffs as much which has really helped i think i was like checked out last time but i'm more just kind of just not paying attention as much um but can you do that i mean not totally but you know i just try not to focus as much time on it because there's nothing i can really do about it you know how is business itself how is business this summer it's actually been doing really well we just um released a new product and it sold way more than we anticipated and it sold out so we have yeah we're taking pre-orders for more of them now and yeah it's surprisingly going really well and usually summer is dead so oh well that's great have you gotten any um are you getting any tariff refunds oh my gosh um we have gotten two and those were from dhl but i still cannot even log in to the ace portal i don't know if you've ever tried to log in it's diabolical um yeah i've been trying since even before the tariffs were repealed um to like get our account situated with that website and it's still like i sit on hold for hours and finally talk to someone they'll tell me to do something i'll do that and then you have to usually wait like 45 to 60 days to hear back from them oh my god oh yeah and then you'll hear back and they'll say no that wasn't what you were supposed to do you need to do this so then i'm like okay so i'll do that and then i'll have to wait again and then they'll tell me oh no that's not right so basically you're just running in circles you have no idea what's going on and then it's like by the time you hear back you don't even remember what had happened so you have to like so i have to take all these extensive notes it's just it's crazy how much do you have any idea how much you're owed theoretically speaking it's a little less than a hundred thousand oh that is so much yeah yeah it's a lot uh but i'm honestly i'm kind of just like i don't even know if i'll ever see that money i really don't wow yeah right now the the labor market in general is is it's kind of like okay but not great and it's not a good time for anyone looking for a job so we have you a business owner how are you thinking about hiring right now i mean probably not hiring um yeah we just have everyone just kind of doing a lot of different roles you know if i were to get that money back from the refunds that would be pool i could probably hire like two part-time employees um but yeah i'm not looking i'm not looking like that's gonna happen yeah well you and a lot of other business owners yeah um obviously everyone is in a whirlwind about ai right now uh is that uh how do you how are you thinking about that for your business i mean that is definitely a concern um you know in general too like are people going to stop using like effects in general like something they can use like with their hands and you know create something it's a little it's hard to say everything is very kind of scary and i just try to stay positive yeah as much as you can yeah yeah yeah being a business owner is no joke heather bickford is the chief operating officer of death by audio thank you so much for joining us today and we'll see you next time on death by audio thank you so much it was good to catch up yes for sure thank you so much as much as blanket tariffs hurt consumers and businesses like we literally just talked about with heather bickford to death by audio targeted tariffs can protect some businesses now history shows protected industries usually stagnate and fall further behind but occasionally they get stronger and that is the hope for the u.s solar industry the trump administration plans to impose new tariffs on polysilicon that's a key ingredient in solar panels beginning later this year the idea is to bring that part of the solar supply chain here and help solar equipment manufacturers here that includes q cells a korea-based company that recently expanded production at its two giant factories in georgia emily jones of grist and wabe reports inside the vast q cells factory in cartersville georgia northwest of atlanta workers and a bevy of robots move ultra thin slices of blue gray crystal through machines and chemical baths to turn what are known as wafers into cells they're rinsing and etching the cells and they're rinsing and etching the cells and they're rinsing and etching and etching going just all the way down this line to create you know the absolutely perfect surface scott bell with q cells says the perfect surface is one that's really good at soaking up sunlight it's just a giant chemistry class where we're trying to create this unique circumstance where an electron pops off of light bell says making it here in georgia is a big deal beginning in 2023 korea-based q cells are going to be the first to be created in georgia and they're going to a huge investment to bring this whole supply chain to the u.s the two and a half billion dollars the three and a half million gallons of water the 90 megawatts of power the 60 tons of chemicals on site and all of the football fields worth of infrastructure you've seen is to arrive at this it's the basic building block of a solar panel for years solar manufacturing in the u.s has mostly been assembling panels using cells made overseas but as of this june this factory has moved the whole process under one roof having the full supply chain is critical ben damiani is a solar manufacturing expert with solar developer cherry street energy he says china has dominated solar panel manufacturing since the 2010s flooding the global market with far cheaper panels than anyone else can make for a host of reasons national security labor pressure and a lot of other practices job creation the u.s is trying to bring back domestic production but damiani says that hasn't been a smooth road probably the biggest hindrance has been the constant change of our own policies the biden administration took a carrot approach with tax credits that favored u.s made panels q cells has said those incentives were a major reason they started building their cartersville plant the trump administration is taking a stick approach imposing new tariffs and blocking chinese solar panels from what tax credits remain coco zhang of ing says the goal is the same but it's been whiplash for companies for any business including the clean energy industry they like consistency they like predictability q cells is likely able to comply with the new rules zhang says because it has vertically integrated its supply chain within the u.s instead of relying on partners and suppliers with ties to the energy industry and i think um that could actually be a good model for other companies to replicate as well but that model required a multi-billion dollar investment in a brand new facility that took more than three years to come online that can be a tough sell when solar policy could completely change yet again in cartersville georgia i'm emily jones for marketplace and i'm jimmy bach for marketplace and i'll see you next time on the doug jones industrial average sank 316 points at six-tenths of a percent to finish at 52 064 the nasdaq dropped a little more than six-tenths percent the s&p 500 dropped a little less than six-tenths percent macy's reported earnings that beat estimates and its sales were up 2.7 percent in the quarter and yet macy's shares disrobed 4.7 percent it's not a macy's thing though rival kohl's also went down a size by four percent we just heard from justin ho about rising transportation and warehousing costs let's check in with some of those guys trucking and rail shipping company jb hunt based in lowell arkansas was flat ish old dominion freight line headquartered in thomasville north carolina lost seven-tenths of a percent bond prices fell the yield on the 10-year t-note rose to 4.95 percent you're listening to marketplace this is marketplace i'm sabree benishore in june ai company anthropic maker of clod launched a new tool for scientific research and research and research and research and research and research and can help uncover and develop new drugs much more quickly it could mark a major leap for science but there are some catches wendy netter epstein is a professor of law at depaul university she wrote about the challenge of using ai in new drug development professor epstein welcome thanks for having me on can i ask just how exactly does ai discover new drugs exactly like what is it doing well it could be doing a variety of things so it helps researchers identify promising biological targets it can design molecules it can sift through possibilities just in general much faster than humans traditionally could if we start getting a bunch of ai generated drug ideas is that not going to create kind of like a a bottleneck of of processing right if we have all these ideas and we're not going to be able to do a lot of the work that we're doing right now then we still have to go this through this clinical trials and approval that takes forever well that's the concern right is that um you know if you have a lot of additional candidates that we're discovering at the front end but we have this relatively long process to actually get to fda approval does fda become a bottleneck and you know i think the truth is that it could um so that's you know one of the things that we want to think about is how do we make sure that we have a this great speed up in drug development at the front ends that we don't have a bottleneck that's created by um the testing and the fda approval it needs to come later yeah so what does that look like like is there a way to use ai to make the testing go faster or what do we do well that's a good question um i don't think that there's just a yes or no answer on that it really depends and you know this is one of the things that the fda is starting to look at and that we think is really um is is to better cater the fda approval process to what evidence we actually need to resolve uncertainty so in some circumstances we're still going to need those those sort of long and expensive clinical trials because we can't get the information that we need just from the ai models but in other situations we could be using ai more strategically so it's really just about differentiating between when do we still need the trials and when can we move faster well when can we move faster like if we're in a situation where we're in a situation where we're in a situation like what's an example of something where we could like hurry the trial along or like skip it or one that comes to mind is is biosimilars so i think most people are probably familiar with with generic drugs so for a traditional small molecule drug something like you know aspirin or lipitor a generic manufacturer can essentially just make the same chemical molecule as the drug and the fda doesn't require that you you know do entirely new clinical trials because chemically they're they're the same right the generics are the same as the brand name biologics are this different category of drugs they're they're much larger, they're more complex, they're made using living cells, things like Humira or many modern cancer drugs. And because they're so complex, the follow-on isn't called a generic, it's called a biosimilar. So in this case, FDA used to require new trials for biosimilars because they weren't chemically identical. But what we have found, and to give credit to my co-author, Dr. Niazi, who's done a lot of work in this area, is that we do know with very high confidence based on modeling that biosimilars are going to behave like the original. And so we don't need those clinical trials. And so that's an instance where FDA has actually been modernizing and adapting and is requiring those trials less frequently. Overall, AI and new drugs, optimistic or concerned? Optimistic, but with a note of caution and with that optimism. So for all of the optimism about how quickly we're going to be able to identify new drug candidates, we still have to think about the risk that folks are going to face without sufficient testing. So faster discovery is enormously exciting, but finding a drug and proving that it works are still not the same thing. Wendy Netter-Epstein, Professor of Law at DePaul University. Thank you so much. Thank you. Existing home sales, that is sales of used homes, homes that are already built. They fell in August. Sales are the lowest they have been this whole year. That's according to data out today from the National Association of Realtors. There's plenty of homes out there on the market. It's just they're expensive. And mortgage rates are expensive, back above 6.7 percent. And just the actual buying of a house itself can be a full-time job. Here's the next installment of our series, Clocked Out. My name is Brennan Waldron. I live in Dayton, Ohio, with my family of five, and we are currently renovating a 100-year-old house that we hope to move into here at the end of this year. I've been working in construction for quite a while. I worked as a carpenter in the field. And over the past five years after COVID, moved into construction management. Very good work, very steady income. But I honestly kind of got burnt out on it. And the house that we currently live in, we just, quite frankly, outgrew. We're a family of five. So we were on the lookout for our next place. I think it was going to be a full-on gut renovation, but a house came up online. Perfect location, perfect spot that we've always wanted to see ourselves living in. And based on the photos, we knew it was going to be a project house. Once I started getting quotes put together from contractors, I was kind of looking at the numbers and I was like, I kind of feel like I'm going to be missing out on this. Like, why am I going to pay somebody to have all the fun? We saved up all this money. We're very diligent about the types of renovation that we want to do, the types of materials. So why do I want to pay somebody to do it? I want to do it myself. Ultimately, I decided that I was going to leave my full-time job so I could just focus on renovating this house at least for the summer, at least for as long as it would take. I do foresee myself going back into the workforce. I just love getting to see a project from start to finish. But I also see and know that I have a lot of value in construction management. So I'm kind of open to whatever the job market gives me at that point in time. The goal is to be in here by Christmas time. Being able to eat breakfast in the morning, out in the sunroom, and just be able to see nature is something we are really excited about. That was Brennan Waldron in Dayton, Ohio. If you have quit your 9-to-5, maybe to build something else, or just to take a break, you can tell us about it at marketplace.org slash clocked out. This final note on the way out today, you've heard of shrinkflation. Now get ready for refundflation. The percentage of retailers who now charge a fee for returns is 68%, up from 43% five years ago. This is in the Wall Street Journal. And return windows, getting shorter. Our daily production team includes Andy Corbin, Mika Ellison, Maria Hollenhorst, Sarah Leeson, Sean McHenry, and Sophia Terenzio. Will Story is the supervising senior producer. And I'm Subri. We will see you tomorrow, everybody. This is APM.