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At another time, the blocking of the Suez Canal by a container ship might have sent oil prices soaring. But the reaction has been muted on this occasion because the market was in the midst of pulling back after hitting its highest levels in more than a year in mid-March.
So far, the oil market has largely shrugged off the interruption of traffic through the canal, which has been blocked since Tuesday when the massive vessel, the Ever Given, became stuck.
Analysts say the problem is unlikely to alter more important fundamentals, including worries that an economic recovery from the pandemic may be slower than expected, and a realization that huge volumes of additional oil supplies could eventually come on the market from the Organization of the Petroleum Exporting Nations and other producers.
Prices for Brent crude, the international benchmark, fell by 2.65 percent on Thursday to $62.70 a barrel after rising on Wednesday. Essentially, analysts say, the Suez situation is providing a short-term cushion for a weak market.
“The oil market is aware that the Suez incident is a one-off boost and will be resolved sooner or later,” said Bjornar Tonhaugen, head of oil market research at Rystad Energy, a consulting firm. Of course, if the bottleneck persists, shipowners and their clients will need to ponder whether to continue waiting at the entrances to the canal or turn around and head for the Cape of Good Hope at the tip of Africa, adding weeks to the trip.
Nevertheless, the blocked canal is a major inconvenience with around 30 fuel-carrying ships either waiting to cross the canal or approaching it. According to Kpler, a market research firm, the tankers include a vessel bringing crude from Basrah in Iraq to Spain for Repsol, the Spanish oil company; and another chartered by Chevron, the American giant, headed toward China with crude from Kazakhstan.
“There will be refineries and product consumers who will experience some short-term problems,” said Alex Booth, head of research at Kpler.
On Thursday, tugboats and dredgers were trying to dislodge the vessel, which ran aground during a sandstorm on Tuesday. The company working on the operation said it could take days or even weeks to remove it.
According to Kpler, the tankers that are likely to be delayed hold 8.8 million barrels of crude oil, a little less than one-tenth of a day’s global consumption and worth about $550 million at current prices. There also 15 vessels carrying various petroleum products like jet fuel and gasoline and five giant carriers of liquefied natural gas.
Credit…Stephen Speranza for The New York Times
Congress gave final approval on Thursday to a two-month extension of the Paycheck Protection Program, a popular federal loan program for small businesses, as well as giving the Small Business Administration an additional 30 days to process loans submitted before the new May 31 deadline.
The House approved the extension on a 415-to-3 vote earlier this month, and the Senate on Thursday cleared the legislation on a 92-7 margin. The program was set to expire on March 31 without congressional action.
“It’s clear that the most vulnerable small businesses will need help beyond March 31, so we must pass this extension as quickly as possible,” said Senator Ben Cardin, Democrat of Maryland and one of the lawmakers who introduced the legislation. “This common sense, bipartisan bill will meet the continued demand for P.P.P. loans.”
By extending the program, which was first established in the $2.2 trillion stimulus law passed last March, through May 31, lawmakers gave both lenders and small businesses additional time to adjust to an abrupt overhaul to the program announced by the Biden administration in late February. The changes led to gridlock and uncertainty as self-employed people and the smallest of businesses raced to take advantage of more generous aid freed up by the overhaul.
“The Paycheck Protection Program has been instrumental in helping small businesses keep their doors open and continue paying their employees during the pandemic, but many small businesses need additional time to access this lifeline and have their loans processed,” Senator Susan Collins, Republican of Maine, said in a statement urging her colleagues to support the legislation earlier this week. “The nearly 100 groups that support our legislation agree that we need to extend this vital program. I urge our colleagues to support this bipartisan bill.”
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President Biden used the opening remarks of his first formal news conference on Thursday to celebrate what he cast as encouraging signs for the American economy since the passage of his $1.9 trillion economic rescue bill, citing new forecasts that show economic growth for the year could reach 6 percent.
“Since we passed the American Rescue Plan, we have started to see new signs of hope in our economy,” Mr. Biden said. He pointed to economic forecasters raising their estimates for growth this year after the passage of the bill.
Mr. Biden also told reporters that his administration had now delivered 100 million direct payments of $1,400 per individual to low- and middle-income Americans, which were funded by the relief bill that he signed into law this month. The bill also included extended and expanded unemployment benefits, new tax credits for parents that are meant to fight poverty and money for vaccine deployment, school reopenings and Covid testing, among other provisions.
He cited news from the Labor Department on Thursday that initial claims for state unemployment benefits fell last week to 657,000, a decline of 100,000 from the previous week.
“That’s the first time in a year the number’s fallen below the prepandemic high,” he said.
The president stressed that the economy still had a long road of recovery ahead of it, and that there were “still too many Americans out of work, too many families hurting.”
But, he said, “I can say to you, the American people: Help is here and hope is on the way.”
Mr. Biden is set to travel to Pittsburgh next week to unveil the next phase of his economic agenda, a pair of infrastructure packages that could cost between $3 trillion and $4 trillion. Its details have not been finalized, but administration officials have settled on a strategy that breaks the effort into two proposals.
Mr. Biden said near the end of the news conference that his next major effort would be “to rebuild the infrastructure, both physical and technological infrastructure in this country, so that we can compete and create good-paying jobs.” He mentioned capping oil wells, repairing roads and bridges, replacing aging pipes that leach lead into water and helping the United States close an infrastructure-spending gap with China.
The planned first package will spend as much as $2 trillion on physical infrastructure development, according to documents and people familiar with the plans. It will center on the construction of roads, bridges, rail lines, ports, electric vehicle charging stations, and improvements to the electric grid and other parts of the power sector. It will also boost the development of clean-energy projects and projects in other “high-growth industries of the future” like 5G telecommunications, and it includes money for rural broadband, advanced training for millions of workers, and one million affordable and energy-efficient housing units.
The second package includes investments in what progressive groups call the nation’s human infrastructure, including education and caregiving. It would make community college free, create universal prekindergarten, seek to reduce the cost of child care, establish a national paid leave program and include home-based care assistance for older adults.
Mr. Biden’s aides have drawn up plans to offset the first package, at least in part, with corporate tax increases, including raising the corporate income tax rates and pursuing a variety of efforts to increase taxes on the income that multinational companies earn and book outside the United States. The plans to offset the second package include Mr. Biden’s proposals to raise the top marginal federal income tax rate from 37 percent to 39.6 percent, and other measures meant to increase taxes on people and households earning more than $400,000 a year.
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After more than a decade running the Sundance Institute, Keri Putnam will step down as chief executive in August. A search committee will be formed to find her replacement.
Ms. Putnam joined Sundance in 2010 after years working in the indie film world for companies like HBO and Miramax.
She expanded Sundance’s global footprint, bringing the organization’s film festival — held each year in Park City, Utah — to audiences in London and Hong Kong and offering its lab programs across the United States, Mexico, East Africa and the Middle East. She also spearheaded new programs for artists seeking production, financing and distribution of their work and prioritized the institute’s commitment to underrepresented voices.
“After an incredibly rewarding decade, and following the success of our first-ever online festival, I have decided it’s the right time for me to step down as C.E.O. of Sundance Institute,” Ms. Putnam said in a statement. “Leading Sundance through this volatile era in media together with such an impassioned team has been one of my greatest joys.”
Credit…Sebastian Hidalgo for The New York Times
Airlines are adding new flight routes and reviving old ones, the latest sign that demand for leisure travel is picking up as the national vaccination rate moves higher.
United Airlines said Thursday that it plans to add more than two dozen new flights starting Memorial Day weekend. Most will connect cities in the Midwest to tourist destinations, such as Charleston, Hilton Head and Myrtle Beach in South Carolina; Portland, Maine; Savannah, Ga.; and Pensacola, Fla. United also said it planned to offer more flights to Mexico, the Caribbean, Central America and South America in May than it did in May 2019.
The airline has seen ticket sales rise in recent weeks, said Ankit Gupta, United’s vice president of domestic network planning and scheduling. Customers are booking tickets further out, too, he said, suggesting growing confidence in travel.
“Over the past 12 months, this is the first time we are really feeling more bullish,” Mr. Gupta said.
Southwest Airlines also revealed plans on Thursday to expand service in the coming months. Between late May and early June, the airline plans to add flights to Myrtle Beach from Baltimore, Chicago, Nashville, Dallas, Pittsburgh, Atlanta, Columbus and Indianapolis. It also said it would add flights out of Austin, Texas, to a handful of cities this summer.
Airports have been consistently busier in recent weeks than at any point since the coronavirus pandemic brought travel to a standstill a year ago. Well over one million people were screened at airport security checkpoints each day over the past two weeks, according to the Transportation Security Administration, although the number of screenings is still down more than 40 percent compared with the same period in 2019.
Most of the new United flights will be offered between Memorial Day weekend and Labor Day weekend aboard the airline’s regional jets, which have 50 seats. The airline said it would also add new flights between Houston and Kalispell, Mont.; Washington and Bozeman, Mont.; Chicago and Nantucket, Mass.; and Orange County, Calif., and Honolulu.
All told, United said it planned to operate about 58 percent as many domestic flights this May as it did in May 2019 and 46 percent as many international flights. Most of the demand for international travel has been focused on warm beach destinations that have less-stringent travel restrictions.
“That is one of the strongest demand regions in the world right now,” Mr. Gupta said. “A lot of the leisure traffic has sort of shifted to those places and it’s actually seen a boom in bookings.”
Delta Air Lines issued a similar update last week, announcing more than 20 nonstop summer flights to mountain, beach and vacation destinations. Both Delta and United have said in recent weeks that they have made substantial progress toward reducing how much money they are losing every day.
The Federal Reserve’s vice chair, Richard H. Clarida, pushed back on concerns raised by two prominent economists — Lawrence H. Summers, the former Treasury secretary, and Olivier J. Blanchard, former chief economist at the International Monetary Fund — that big government spending risks of out-of-control inflation.
“They have both correctly pointed out that the U.S. has a lot of fiscal support this year,” Mr. Clarida said, speaking on an Institute of International Finance webcast. “Where I would disagree is whether or not that is primarily going to represent a long-term, persistent upward risk to inflation, and I don’t think so.”
Mr. Clarida said that there’s a lot of room for the economy to recover — some 9.5 million jobs are missing compared to before the pandemic — and that the effect of the government’s relief spending will diminish over time. He also pointed out that while there is pent-up demand on the part of spenders, there is also pent-up supply, because the service sector has been shut for months on end.
“At the Fed we get paid to be attentive and attuned to inflation risks, and we will be,” he said. But he noted that forecasters don’t see “undesirable upward pressure” on inflation over time.
Mr. Clarida did acknowledge that price gains are likely to move up over the next few months, but said that he expects most of that “to be transitory” and for inflation to return to “or perhaps run somewhat above” 2 percent in 2022 and 2023. But he emphasized that the Fed is now aiming for 2 percent annual price gains on average, so such a result would be welcome.
“This outcome would be entirely consistent with the new framework we adopted in August 2020,” he said.
The administration has ushered a $1.9 trillion relief package through Congress and into law, adding to a $900 billion relief package enacted in December 2020, prompting many economists to project faster growth this year. Mr. Clarida spoke positively about the outlook for the economy.
“This year the U.S. looks like it’s going to be a locomotive for the global economy,” Mr. Clarida said.
Now, the Biden administration is pulling together an up-to-$3 trillion infrastructure package. While Mr. Clarida declined to comment on specific legislation or proposals, he did say broadly that “infrastructure is needed, and the supply-side of the economy will be boosted if that money is well spent and targeted.”
Credit…The New Republic
The New Republic named a new editor on Thursday and announced that it was moving back to Washington, its home city for most of its 107-year existence.
Michael Tomasky, who has edited the policy journal Democracy: A Journal of Ideas since 2009 and writes a regular column for The Daily Beast, will take over as The New Republic’s top editor. Mr. Tomasky, 60, will continue his role at Democracy, a quarterly publication. He said joining The New Republic would be “the crowning achievement of my career.”
“This is such a critical moment, with a new administration signaling a fresh era of American politics — but with clear and present threats emanating from an opposition party that has basically become anti-democratic,” he said in a statement. “There is much important work to do.”
He will start his new job on April 19, replacing Chris Lehmann, who will become an editor at large for the magazine.
The New Republic, founded in 1914, went through years of tumult after it was bought in 2012 by Chris Hughes, a co-founder of Facebook. In 2014, most of the staff quit after the top editor, Franklin Foer, departed. Mr. Hughes also moved the magazine to New York from Washington, where it was based for most of its existence.
In 2016, Mr. Hughes sold the magazine to Win McCormack, a publisher and the co-founder of Mother Jones, as well as the founder and editor in chief of the literary magazine Tin House. The New Republic said in a statement that its business operations would remain in New York, while the majority of its editorial staff would move to Washington.
“We are grateful to our outgoing editor Chris Lehmann, who was able to restore stability to The New Republic after a decade of incessant turmoil,” Mr. McCormack said. “He built an excellent staff and inspired them to first-class work.”
Mr. Tomasky was the first U.S. editor of The Guardian when it expanded in America and has contributed to The New York Review of Books and The New York Times.
Credit…Brandon Thibodeaux for The New York Times
The oil industry’s largest trade group on Thursday came out in favor of a price on carbon for the first time as part of a broader strategy to combat climate change.
The move by the group, the American Petroleum Institute, signals that the oil industry is eager to be taken seriously by the Biden administration, which is working on a large infrastructure and climate change proposal. The administration’s plan is expected to promote greater use of renewable energy and electric vehicles and reducing planet-warming emissions from the burning of fossil fuels like oil and natural gas.
Economists have long argued that taxing each ton of carbon dioxide and other greenhouse gases generated by businesses and individuals is the most efficient and fastest way to fight climate change. But proposals to put a price on carbon through taxes or by other means have failed to gain political traction in large part because of opposition from oil and gas companies and their lobbyists.
Exxon Mobil and a few other large oil and gas companies have voiced support for carbon taxes for years, partly because they believed it would encourage utilities to switch from coal to cleaner-burning natural gas. But environmental groups have said that those oil companies never aggressively lobbied Congress to enact a carbon tax.
Most Republican lawmakers oppose carbon taxes and Democrats like President Biden have seemingly given up on the idea, too, after an effort to pass a cap-and-trade bill failed during the Obama administration when Democrats had large majorities in both houses of Congress. A cap-and-trade system also imposes a cost on polluters but it works differently. The government puts a cap on overall emissions that drops over time and businesses have to purchase permits to emit greenhouse gases.
A.P.I. said in a statement that it wants lawmakers to couple a carbon price, which could be in the form of a tax or a cap-and-trade system, with federal incentives for capturing and storing carbon emitted from power plants and the development and use of hydrogen as a source of energy. The group also committed to work to reduce the flaring of methane — a powerful greenhouse gas — from oil fields.
“Confronting the challenge of climate change and building a lower-carbon future will require a combination of government policies, industry initiatives and continuous innovation,” Mike Sommers, the institute’s president, said in a statement. “We urge lawmakers to support market-based policies that foster innovation, including carbon pricing.”
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Stocks on Wall Street was mixed on Thursday even as the latest weekly data showed that state unemployment claims fell to the lowest level since the start of the pandemic.
The S&P 500 index recovered early losses and was up 0.2 percent by midday. The Nasdaq composite was down slightly.
Stock trading has grown choppy lately as investors weigh news of rising Covid-19 cases and new lockdowns, or the rollback of efforts to reopen economies, against mounting signs of economic recovery as more people are vaccinated and the effects of the $1.9 trillion stimulus package emerge.
On Thursday, the Labor Department reported that initial claims for unemployment benefits fell last week to 657,000, a decrease of 100,000 from the previous week. On a seasonally adjusted basis, new state claims totaled 684,000.
German lockdown U-turn
As Europe grapples with an emerging third wave of the pandemic, Germany has canceled a strict five-day lockdown that was set to start at the beginning of April. Chancellor Angela Merkel said she took “ultimate responsibility” for the reversal, which came after a large backlash to the plan, even from within her own party, and anger from retailers and restaurants.
“In the near term, this avoids the negative economic consequences of a lockdown,” Paul Donovan, an economist at UBS Global Wealth Management, wrote in a note. But over a longer a period of time, markets will question whether this will just delay Germany’s ability to restrain the virus and slow down the recovery, he added.
European stocks were lower Thursday. The Stoxx Europe 600 index lost 0.1 percent and the FTSE 100 in Britain fell 0.6 percent.
Oil prices dropped. Futures of Brent crude, the European benchmark, fell more than 4 percent to $61.62 a barrel and futures of West Texas Intermediate, the U.S. benchmark, fell more than 5 percent to about $58 a barrel.
On Wednesday, oil prices jumped more than 5 percent after a container ship got stuck in the Suez Canal, blocking one of the world’s key shipping routes, which is also an important artery for the flow of oil. On Thursday, efforts to dislodge the ship were ongoing as some 150 other ships were waiting on either side.
The company trying to move the ship warned it could take weeks. Shipping has already been heavily disrupted by the pandemic, sending freight prices soaring.
Elsewhere in markets
Nike shares dropped more than 3 percent and H&M shares fell close to 2 percent in Stockholm after Chinese social media users called for a boycott of the companies. The two fashion retailers published statements expressing concern over reports of forced labor in Xinjiang. Nike’s statement said the company didn’t source cotton from the region, but the online attacks have called it a boycott of the region’s cotton farmers.
Yields on 10-year Treasury notes rose slightly to about 1.63 percent.
VideoCreditCredit…By Sean Dong
In the On Tech newsletter today, Shira Ovide explains that the Section 230 debate reflects our discomfort with the power of Big Tech and our desire to hold someone accountable.
Mark Zuckerberg of Facebook, Jack Dorsey of Twitter and Sundar Pichai of Google are appearing at a hearing about how disinformation spreads across their platforms. The hearing is being held by two subcommittees of the larger House Energy and Commerce Committee that focus on technology issues.