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U.S. economy could shrug off oil prices if disruption is brief

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A gallon of regular in the U.S. stood at $2.59 on Tuesday, up 3 cents from the previous day, according to the AAA auto club. Analysts warned that pump prices could rise as much as 25 cents in the coming weeks, but it all depends on how quickly Saudi Arabia returns to normal production. (©2019 FOTOSEARCH)

DALLAS  — The price of gasoline crept higher after a weekend attack devastated Saudi Arabian oil output, but if the disruption to global supplies is short-lived, the impact on the U.S. economy will probably be modest.

Prices spiked Monday by more than 14%, their biggest single-day jump in years, but retreated Tuesday, reversing some of the increase. U.S. oil fell nearly 5% to $59.96 a barrel, while Brent, the international benchmark, dropped 5.3% to $65.34.

A gallon of regular in the U.S. stood at $2.59 on Tuesday, up 3 cents from the previous day, according to the AAA auto club. Analysts warned that pump prices could rise as much as 25 cents in the coming weeks, but it all depends on how quickly Saudi Arabia returns to normal production.

Tuesday’s reversal in prices came as Saudi Arabia’s energy minister reported that 50% of the production cut by the attack had been restored. Prince Abdulaziz bin Salman said full production would resume by the end of the month.

Even before Tuesday’s reversal in prices, economists downplayed the prospect that the price spike could send the economy reeling. After all, Monday’s surge only put prices back where they had been in May.

The attack knocked about 5% of the world crude supply offline. Oil prices have been trending mostly lower since spring because of concern about weak demand due to slowing economic growth.

Analysts say oil prices did not fully account for the risk posed by tension in the Middle East, but they will now. Iranian-backed Houthi rebels in Yemen claimed credit for the strike on Saudi oil facilities, but the Trump administration blamed Iran itself. The attack exposed the vulnerability of Saudi Arabia’s oil infrastructure.

Higher oil prices mean more costly gasoline, and that will sap consumers’ ability to spend on clothes, travel and restaurant meals. It will hit people who drive for a living.

Brian Alectine, a New York-based driver for the ride-hailing apps Lyft and Juno, said a 5- or 10-cent bump in the price of gasoline wouldn’t be too bad, but an increase of 25 cents a gallon would make it hard to earn a profit after expenses, including the monthly rent on the car he drives for work.

“The more you drive, the more gas you use,” Alectine said. “It will have a big impact.”

AAA said the nationwide average price of gasoline could rise 25 cents this month. Patrick DeHaan, an analyst for price-tracking app GasBuddy, predicted an increase of 10 to 20 cents a gallon. He saw reports of price spikes and people rushing to top off their tanks.

“I’m not sure where this panic is coming from,” DeHaan said. “There will be an increase, but prices will still remain over a dollar cheaper than they were earlier this decade.”

Any drag on the economy from lower consumer spending would be at least partially offset by increased investment in oil and gas production, according to several leading economists.

Gregory Daco, chief economist at Oxford Economics, estimated that the net effect could be a decline of about one-tenth of a percentage point in U.S. economic growth, which was 2.0% in the second quarter.

“An oil price shock will weigh on consumer spending and will add a further strain on the global economy, but we’re not talking about a major price shock at this level,” he said, while acknowledging that the situation could escalate if tension increases between the U.S. and Iran — a major producer whose output has been greatly squeezed by Trump administration sanctions.

U.S. crude poked above $100 a barrel in stretches between 2011 and mid-2014, yet the economy did not fall into recession. Brent peaked above $140 a barrel in July 2008, which some economists believe was an overlooked contributor to the Great Recession, which is more often linked to a financial crisis and, in the U.S., a housing-market bubble. Brent more than doubled in a few months after Iraq invaded Kuwait, another large oil producer, in 1990.

The United States was far more dependent on imported oil in 1990. Saudi Arabia remains the world’s biggest oil exporter, but the United States recently eclipsed both Saudi Arabia and Russia to become the world’s largest producer.

That makes the impact of higher oil prices on the U.S. economy much more mixed. Even as consumers and certain industries pay more for fuel, higher oil prices will be good for the U.S. energy industry and states where oil is produced, including Texas, New Mexico and North Dakota.

The stock market has highlighted which sectors will be helped or hurt by higher oil prices. On Monday, shares of oil producers surged, naturally, while stocks in airline, cruise and retail companies generally fell. Delivery giants UPS and FedEx dipped. They consume lots of fuel, and their business will suffer if higher energy prices cause consumers to reduce their online shopping.

For airlines, fuel is their second biggest cost behind only labor. Airlines were surprisingly adept at adapting to the last big run-up in fuel prices, but it takes them time to raise fares high enough to cover the extra cost.

American Airlines burned more than 4.4 billion gallons of fuel last year at a cost of nearly $10 billion, including taxes. On Monday, its shares fell 7.3%, more sharply than other carriers. Unlike most others, American doesn’t buy derivative investments as a hedge against fuel spikes, and its relatively heavy debt load leaves it vulnerable if the economy slows for any reason, including a jump in energy prices.

American estimates that over a full year, each penny increase in the price of fuel costs it $45 million. The price went up about 15 cents a gallon over the weekend.

If the fuel price increase persists for even a few weeks, analysts said, it could cause airlines to rethink their aggressive growth plans for 2020.

Ryan Sweet, an economist at Moody’s Analytics, said U.S. consumers are in good shape to handle a temporary increase in gasoline prices — with some savings, a tight job market and accelerating wage growth. Consumer psychology, however, can be difficult to predict.

“I don’t think this increase in oil prices … would be enough to single-handedly tip us into a recession,” he said. “The one cause for concern is that the consumer is carrying the economy. If the consumer starts to pack it in, the recession odds increase quite significantly.”

 

 

 

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The Nation

39 people found dead in truck container in southeast England

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Police officers attend the scene after a truck, in rear, was found to contain a large number of dead bodies, in Thurrock, South England, early Wednesday October 23, 2019. Police in southeastern England said that 39 people were found dead Wednesday inside a truck container believed to have come from Bulgaria. (Associated Press: ALASTAIR GRANT)

LONDON — Investigators were trying to piece together the movements of a large cargo truck found Wednesday containing the bodies of 39 people in one of Britain’s worst people smuggling tragedies.

Details about the victims, including where they were from, were scarce. Police in southeast England said they have not been identified — a process they warned would be slow.

The truck’s driver — a 25-year-old man from Northern Ireland — was arrested on suspicion of murder. He has not been charged and his name has not been released.

He and other drivers who may have been at the wheel before him would have taken advantage of the European Union’s generally open borders to travel in several countries without border checks. Britain remains an attractive destination for immigrants, even as the U.K. is negotiating its divorce from the EU.

In Parliament, Prime Minister Boris Johnson put aside the Brexit crisis, at least for a few minutes, and vowed that the people traffickers would be found and prosecuted to the full extent of the law.

“All such traders in human beings should be hunted down and brought to justice,” he said.

Ambulance workers discovered the bodies after being called at 1:40 a.m. to a truck on the grounds of the Waterglade Industrial Park in Grays, 25 miles (40 kilometers) east of London on the River Thames. It was unclear who called the ambulance service.

No cause of death has been made public. Police said one victim appeared to be a teenager but gave no further details.

Police initially said the cargo truck had traveled through Ireland and then to Wales via ferry. But Essex police later said they believe the container with the people inside went from the port of Zeebrugge in Belgium to Purfleet, England, where it arrived early Wednesday. Police said they believe the tractor unit traveled from Northern Ireland and picked up the container unit.

“This is a tragic incident where a large number of people have lost their lives. Our inquiries are ongoing to establish what has happened,” Essex Police Chief Superintendent Andrew Mariner told reporters.

The cargo truck had a Bulgaria registration, Bulgaria’s Foreign Ministry said in a news release. But Bulgarian authorities said they could not yet confirm that the truck had started its journey there. The Foreign Ministry said the Swedish-made “Scania” truck was registered in the Bulgarian Black Sea port city of Varna to a company owned by a woman from Ireland.

“We are in contact with our embassy in London and with British authorities,” Foreign Ministry spokeswoman Tsvetana Krasteva said.

The number of victims was shocking, although it has become sadly common in recent years for small numbers of migrants to occasionally be found dead in sealed vehicles after having been abandoned by traffickers.

The tragedy recalls the death of 58 migrants in 2000 in a truck in Dover, England, and the deaths in 2015 of 71 migrants from Syria, Iraq and Afghanistan who were found suffocated in the back of a refrigerated truck that was abandoned on an Austrian highway close to the Hungarian border.

It seems likely the traffickers shunned the most popular English Channel route from Calais, France, to Dover, England because of increased surveillance at those ports and instead chose a more circuitous route.

Dover and Calais, which have been under pressure from human traffickers for years, have sniffer dogs, monitors and more advanced technological surveillance due to the fact that they are the endpoints for the Channel Tunnel between France and Britain.

Groups of migrants have repeatedly landed on English shores using small boats for the risky Channel crossing, and migrants are sometimes found in the trunks of cars that disembark from the massive ferries that link France and England, but Wednesday’s macabre find in an industrial park was a reminder that trafficking gangs are still profiting from the human trade.

“To put 39 people into a locked metal container shows a contempt for human life that is evil,” lawmaker Jackie Doyle-Price, who represents the region in parliament, told Parliament.

The National Crime Agency said its specialists were working to “urgently identify and take action against any organized crime groups who have played a role in causing these deaths.”

It said in May that the number of people being smuggled into Britain via cargo trucks was on the rise.

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CDL Meals forms partnership with American Association of Owner-Operators

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CDL Meals offers a variety of organic chef-prepared meals that help drivers make healthy eating choices while on the road. (Courtesy: CDL MEALS)

ANAHEIM, Calif. — CDL Meals, the division of Fresh n’ Lean focusing on healthful meal options for professional truck and bus drivers, has formed a partnership with the American Association of Owner Operators (AAOO).

CDL Meals offers a variety of organic chef-prepared meals that help drivers make healthy eating choices while on the road.

“We could not be more excited to launch our first healthy-eating alliance with AAOO,” said Bob Perry, director of CDL Meals. “We believe that people working in all industries deserve to live a healthy lifestyle and have access to the tools they need to ensure overall wellbeing, despite industry standards and limitations. CDL Meals has already made a positive impact on drivers and through this partnership, more operators can benefit from the quality meal plans.”

The American Association of Owner Operators is a nationwide organization dedicated to providing professional truckers and small fleet owners with the latest technology, benefits and assistance to advance in today’s trucking industry.

Perry said through the partnership, members of the AAOO will have access to CDL’s seasonal menus, free nationwide delivery and the promise of fresh, affordable meals on the road.

“We are so thankful the team at Fresh n’ Lean saw an opening to help improve the wellbeing of those in the trucking industry,” said David Huff, CEO of AAOO. “We are committed to helping drivers stay safe while out on the road so they can get back home to their family and friends. “Good nutrition is the most important part of staying healthy and staying healthy is a huge factor in staying safe. That’s why we are so excited to partner with CDL Meals and provide great tasting meals at an affordable price to our members.”

Perry said CDL Meals is a service formulated especially for commercially licensed drivers to deliver chef-prepared food items anywhere within the U.S. using organic ingredients to create balanced, wholesome meals. Each menu option consists of a combination of protein, healthy carbohydrates, and vegetables. All meals are delivered fresh and can be refrigerated for up to seven days. The vacuum-sealed trays can be heated quickly and enjoyed at any time.

Along with the meals, each purchase comes with a 14-page driver wellness education booklet that includes dietary tips, an exercise plan, and suggestions to improve overall health through simple lifestyle changes.

For more information on CDL Meals, visit www.cdlmeals.com.

For more information on AAOO, visit https://aaofoo.com

 

 

 

 

 

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NHTSA: Overall traffic fatalities in 2018 decline 2.4%, 2019 drop likely

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NHTSA said the fatality rate per 100 million vehicle miles traveled decreased by 3.4 percent (from 1.17 in 2017 to 1.13 in 2018), the lowest fatality rate since 2014. (Associated Press)

WASHINGTON — The National Highway Traffic Safety Administration Tuesday released highway crash fatality data for 2018, showing a 2.4% decline in overall fatalities, the second consecutive year of reduced crash fatalities.

“This is encouraging news, but still far too many perished or were injured, and nearly all crashes are preventable, so much more work remains to be done to make America’s roads safer for everyone,” said U.S. Transportation Secretary Elaine L. Chao said.

The data, compiled by NHTSA’s Fatality Analysis Reporting System (FARS), shows that highway fatalities decreased in 2018 with 913 fewer fatalities, down to 36,560 people from 37,473 people in 2017. The fatality rate per 100 million vehicle miles traveled also decreased by 3.4 percent (from 1.17 in 2017 to 1.13 in 2018), the lowest fatality rate since 2014.

The 2018 FARS release also clarifies previously released data on large trucks involved in fatal crashes. NHTSA reexamined supporting material and reclassified several light pickup trucks to an appropriate large truck category (10,000 lbs. gross vehicle weight ratings (GVWR). As a result, the 9% increase in large-truck-related fatalities reported for 2017 has been revised to 4.9%. For 2018, large-truck related fatalities increased by 0.9 percent. The details of the scope of the changes are documented in the 2018 fatal motor vehicle crashes overview research note.

No data was available on Class 8 tractor-trailer combinations.

Other findings from the 2018 FARS data include:

  • Fatalities among children (14 and younger) declined 10.3%
  • Alcohol-impaired-driving fatalities declined 3.6%
  • Speeding-related fatalities declined 5.7%
  • Motorcyclist fatalities declined 4.7 percent.

“New vehicles are safer than older ones and when crashes occur, more new vehicles are equipped with advanced technologies that prevent or reduce the severity of crashes,” said NHTSA Acting Administrator James Owens said. “NHTSA has spent recent years partnering with state and local governments and safety advocates to urge the public to never drive impaired or distracted, to avoid excessive speed, and to always buckle up.”

Jonathan Adkins, executive director of the Governor Highway Safety Association (GHSA) said the organization was pleased to see the 2018 decline and the estimated 3.4% dip thus far in 2019.

“A decline in 2019 would mark three straight years of fewer fatalities despite a strong economy, which typically correlates with increased traffic deaths,” he said. “However, the only acceptable level of deaths is zero, and we will not rest until that is achieved.”

Adkins said GHSA was glad to note progress in reducing alcohol-related, speeding-related and motorcyclist fatalities in 2018.

“The tremendous investments made today in highway safety have been beneficial, but clearly not commensurate with the need,” Adkins said. “GHSA is committed to working with our partners in the federal government, advocacy community and at the state and local level to accelerate the momentum toward zero deaths on our nation’s roadways.”

NHTSA said the projected 2019 decline translates to an estimated first-half 2019 fatality rate of 1.06, the lowest first-half level since 2015. The estimates for the second quarter of 2019 represent the seventh-consecutive year-over-year quarterly decline in fatalities, starting in the last quarter of 2017.

NHTSA is identifying opportunities to leverage its resources and collaborate with modal partners within USDOT to reduce fatalities among pedestrians and pedalcyclists (bicyclists and riders of two-wheel, nonmotorized vehicles, tricycles, and unicycles powered solely by pedals), among whom 2018 fatalities unfortunately increased by 3.4% (to 6,283) and 6.3% (to 857), respectively.

With the release of the 2018 and 2019 data, NHTSA also introduced its new Fatality and Injury Reporting System Tool (FIRST), a modernized crash query tool that lets users not only query fatal crash data but also generate estimates of crashes and people injured in crashes. The upgraded functionalities in the new tool include generating multi-year trends, estimates of alcohol involvement, and charting/tabulation/mapping of query results. The tool, along with instructions on its usage, can be accessed here.

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