Morning Wire XX
[0] The U .S. bans imports of Russian oil and gas and a direct hit to Putin's revenue stream.
[1] Which nations have joined the embargo, and will it be enough?
[2] So we need a ban on Russian oil and gas now.
[3] And remember, it's Germany who is against it, and history will judge you again.
[4] I'm John Bickley with Georgia Howe.
[5] It's Wednesday, March 9th, and this is Morning Wire.
[6] How will energy sanctions and the ongoing war impact Americans?
[7] We speak to an expert who warns there will be a significant toll on the U .S. economy.
[8] And electric grids across America are aging, with 70 % approaching obsolescence within 25 years.
[9] What are the implications of an aging grid?
[10] And why are more Americans prepping for widespread outages?
[11] Thanks for waking up with Morning Wire.
[12] Stay tuned.
[13] We have the news you need to know.
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[25] On Tuesday, the U .S. and U .K. moved to tighten the economic squeeze on Russia over its continued aggression in Ukraine.
[26] Here with the latest, his daily wires Ian Howarth.
[27] So, Ian, tell us about this most recent announcement.
[28] Well, pressure from lawmakers and citizens has been growing in recent days for the U .S. to stop importing Russian oil.
[29] And it looks like the Biden administration has given into this pressure.
[30] On Tuesday morning, President Biden announced a ban on Russian oil effective immediately.
[31] That means Russian oil will no longer be acceptable at U .S. ports, and the American people will deal another powerful blow to Putin's war machine.
[32] It was also reported that the U .K. would be joining the U .S. and banning Russian energy.
[33] On Monday, Ukraine's President Zelensky openly called for boycotts of Russian oil imports to the U .S. and European countries.
[34] The problem here is that Germany, the biggest purchaser of Russian energy in Europe, made it clear that they'd reject this.
[35] So while Secretary of State Anthony Blinken said that the administration was working with partners and allies, it was fairly obvious that the U .S. and the U .K. would have to go it alone, at least initially, when it comes to an oil ban.
[36] And how is this ban going to impact Russia, especially if Germany doesn't join it?
[37] Well, the U .S. does import a fairly large amount of crude oil and other petroleum products from Russia, but at least 80 % of Russia's energy exports go elsewhere.
[38] In 2021, an average of 209 ,000 barrels per day of crude oil were imported from Russia, and another 500 ,000 barrels per day of other petroleum products.
[39] So in one year, that amounted to a total of just over 76 million barrels of crude oil, which sounds like a lot, but it's only about 8 % of U .S. imports.
[40] The U .S. gets the majority of crude oil from Canada, Mexico, and Saudi Arabia.
[41] Europe, however, is a much bigger customer for Russia.
[42] Russia is the third biggest producer of petroleum in the world, second to the U .S. and Saudi Arabia, and 60 % of their energy exports go directly to Europe.
[43] But one more note on this.
[44] We can't discount China's role here.
[45] Russia exports a massive amount.
[46] crude oil to China, over $23 billion worth in 2020 alone, which is around 20 % of Russia's energy exports.
[47] And with China making it clear that they're looking to strengthen their partnership with Russia, an energy ban will likely solidify this alliance even further.
[48] So one of the biggest concerns expressed by the Biden administration was the impact an oil ban could have on domestic and international markets.
[49] So now that that decision has been made, what do we know about the fallout?
[50] According to CBS, we're looking at sky -high gas prices, with oil prices likely to go above the all -time record of $147 a barrel reached in the summer of 2008.
[51] It's also been speculated that the average gas price across the country could reach or exceed $5 a gallon.
[52] There's the obvious call to ramp up domestic production, which would involve things like working to fund drilling projects and distribution efforts.
[53] But this would be politically difficult for the Biden administration due to their promise to pursue green energy here in the US.
[54] And given that Biden began his tenure by shutting down the Keystone XL pipeline, looming international energy crisis presents a serious political challenge.
[55] Right.
[56] Rising energy costs are something voters really don't like.
[57] Ian, thanks for reporting.
[58] Absolutely.
[59] Thanks, Georgia.
[60] That's Daily Wires.
[61] Ian Howarth.
[62] Coming up, how the conflict in Ukraine will impact the U .S. economy.
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[68] While much of the focus has been on surging gas prices, economists warn that the price of commodities of all kinds will be impacted by the war in Ukraine.
[69] Bringing us his expertise on the issue is Joseph Levornia, former chief economist of the National Economic Council.
[70] Joseph, thanks for joining us.
[71] Thanks for having me. So this war is sending ripple effects across the world.
[72] Let's start with the most immediate concern, energy.
[73] Oil and gas prices are already high and continue rising.
[74] How will these high prices affect consumers?
[75] I've done some analysis that translates it very simply for people, which is a one -penny increase in the price of gasoline, translates into 100 ,000.
[76] billion dollars of extra energy spending per annum because we know when oil goes up gas goes up natural gas goes up and of course that takes money out of people's pockets it's the tax they can't spend money elsewhere they lose discretionary spending power so this is a really bad sign unfortunately for us consumers what about food both russia and ukraine are major suppliers of wheat together they export something like 25 percent of the world's wheat supply we've already seen the increase in wheat prices, what else can we expect?
[77] Analysts who look at charts like to say parabolic moves, it basically a parabolic moves looks like a right angle for those that remember their geometry.
[78] Vagely.
[79] Vagely.
[80] And that's what we've seen, unfortunately, in wheat, but it's not just been limited to wheat.
[81] We're also seeing it in soybeans.
[82] We're seeing it in corn.
[83] And unfortunately, households spend more, generally speaking, on food than they do energy.
[84] So all of a sudden you've got a double whammy where they're paying higher gas price.
[85] They're paying more to heat their homes or cool their homes.
[86] At the same time, they're paying more for food.
[87] And as you could imagine, food and energy are essential items.
[88] Food energy and shelter are really the building blocks to just sort of modern living.
[89] And those costs are higher.
[90] So food really worries me. And the movement in food hasn't attracted a whole lot of attention yet.
[91] And the scary thing is this move and food really has just taken place in the past few days, the past week.
[92] And this may continue, which just, again, means higher.
[93] inflation, negative real wages, and more paying for U .S. consumers, especially at the lower and middle income levels.
[94] And those are the people that have the least ability to sort of change their spending behaviors compared to, say, the well -to -do.
[95] What other commodities might be impacted that maybe aren't on people's radars?
[96] Nickel prices have soared.
[97] So it's very possible that the dislocations, the supply side disruptions we've seen because of COVID and China's zero COVID policy.
[98] are now extending to many other commodities, metals in particular, which are used in the fabrication and production process of semiconductors, among other items.
[99] I believe nickel, if I'm not mistaken, is used in catalytic converters, which go into cars.
[100] We know cars have already suffered from a lack of chips.
[101] So this really has the potential for an extended disruption in supply, which bows very ill for U .S. GDP growth.
[102] And if that's the case, it's only a matter of time before it comes back and hits the U .S. labor market, and you'll have a slowing economy with rising inflation.
[103] And this is definitely what I've been telling people are the winds of stagflation.
[104] All right, so let's focus on Russia.
[105] The rubles plunged in value, and the Russian bank raised its key interest rate 20 % in response.
[106] Are we witnessing a collapse in that country?
[107] The short answer is nobody exactly knows.
[108] What I can tell you is that the Russian economy is largely energy self -sufficient.
[109] It is largely agriculturally efficient.
[110] It's internal.
[111] The rule may not be worth much in external markets and daily traded foreign exchange markets.
[112] But intra -Russia, life may go on pretty much as it was a few weeks ago with less disruption potential than people think because of Russia's general energy and agricultural independence, if you will.
[113] Well, there's a lot of interconnected forces at work here, so thank you so much for unpacking that.
[114] Good to be here.
[115] That was Joseph Lovorna, former chief economist of the National Economic Council.
[116] As energy becomes an increasing focus, problems with the U .S. power grid are coming under greater scrutiny.
[117] The grid is becoming less and less reliable at the same time that consumers are becoming more dependent on electricity, to power phones, computers, and electric vehicles.
[118] Here to give us the details is Daily Wire's Charlotte Pince Bond.
[119] It seems Charlotte we're hearing a lot about deficiencies within the power grid lately.
[120] What's going on here?
[121] Well, the short answer is things have gotten worse.
[122] The U .S. power grid has become less dependable over the past 20 years.
[123] A report by the Wall Street Journal found there were 180 major disruptions of power in 2020, and that's up from just over 20 in 2000.
[124] We all remember the Texas freeze that left 4 .5 million people without power last winter, and the wildfires in California that forced PG and E to turn off power to nearly 50 ,000 residents.
[125] Right, that was massively disruptive.
[126] Yeah, so what are some of the reasons this is happening?
[127] One is the system is aging out.
[128] Another is changing weather patterns.
[129] Some 70 % of transmission and distribution lines are far into the second half of their lifespan of 50 years.
[130] And that's according to a report last year by the American Society of Civil Engineers.
[131] Another issue, most of these power lines were built above ground, unlike Europe where they're underground.
[132] That makes them more susceptible to weather problems, including storms.
[133] Another factor is the push for green energy.
[134] When customers opt for electric appliances and electric vehicles, they'll need access to power even more, and that would likely put a strain on the energy system.
[135] In 2020, renewable energy sources like wind and solar made up about 20 % of utility -scale electricity generation in the U .S. Nuclear power accounted for 20%, and fossil fuels made up the majority at about 60%.
[136] Wind and solar obviously rely on weather conditions and the time of day to be effective, so they aren't as dependable as traditional sources like coal and natural gas.
[137] Okay, so wind and solar, about 20 % of the total electricity production.
[138] Why is this a problem?
[139] Well, wind and solar rely on weather conditions and the time of day to be effective, so they're not as dependable as those traditional sources like coal and natural gas.
[140] I spoke to Katie Tubb about this issue.
[141] She's a senior policy analyst for energy and environmental issues at the Heritage Foundation.
[142] I'll say right off the bat that there is no perfect energy resource, or at least we haven't invented it yet.
[143] So every energy technology or fuel has costs and benefits.
[144] Power from the wind is free.
[145] Power from the sun is free, but they have also a lot of liabilities to them.
[146] You know, they're intermittent, which is not great when you want, to know that power is available 24 -7 with zero interruption.
[147] Are we seeing people behave any differently because of this?
[148] Like you mentioned, we've seen some pretty bad situations based on power outages over the last few years.
[149] Is that changing people's behavior?
[150] Yeah, consumers are definitely responding to the instability of the grid.
[151] According to a backup power provider, Generac Holdings, just 0 .57 % of homes in the country worth at least $150 ,000 had put in backup generators 20 years ago.
[152] Now that figure is 5 .75%, which is an increase of 10, and that's according to the Wall Street Journal.
[153] Microgrids have also become more popular.
[154] They make little areas of power for places like businesses, campuses, and neighborhoods.
[155] Those microgrids expanded over sevenfold between 2010 and 2019, according to the industry group Edison Electric Institute.
[156] Solar is becoming more intriguing to people as well.
[157] After last year's bad winter storm in Texas, where much of the state was out of power, Sun Run, a residential solar company, said that activity to its website went up 350%.
[158] The company said that in California, orders for solar coupled with battery storage went up after wildfires and utility company PG &E turned off electricity in locations experiencing high winds.
[159] They were worried that a downed power line could start a fire.
[160] We're seeing that in not just going out and buying generators, but in actually moving.
[161] One of the reasons, many people are leaving California is because of their energy and environment policies.
[162] They're extremely expensive and they're not seeing commensurate benefits.
[163] And we have to mention the national security implications of this.
[164] Some are concerned about an attack on our grid by a foreign agent.
[165] So the reliability and security of the grid is increasingly becoming more important to average Americans than ever before.
[166] Well, it seems clear there needs to be a sense of urgency in addressing this issue.
[167] Definitely.
[168] Thanks for the reporting, Charlotte.
[169] That's DailyWire's Charlotte Pence -Bahn.
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