OPEC Unlikely To Entertain White House's Output Request: Ellen Wald

Fellow at Atlantic Council and a Bloomberg Opinion contributor. So, Ellen, thanks so much for joining us here again. A President Biden asking or suggesting to OPEC plus UH to maybe pump some more oil to bring the price down. What's going on there? And what do you think OPEC plus

is going to do? Yeah, honestly, I don't think that OPEC plus is going to take this request all that seriously at this point, because there's so much else at play here other than OPEC plus is production, and in fact, ope plus just increased production by four thousand barrels a day in August and their ending to increase by another four hundred thousand barrels a day in September and increases of four hundred thousand barrels a day every month through

December and even beyond. So I don't think OPEC is going to be particularly receptive to this. I think that that you know, they're going to say, well, look if gasoline prices are up in the US, where the other factors demand is up. Um, there's also been issues with supply chains. Some of there aren't enough truckers and to some areas have seen um problems with gasoline prices because

they just can't get enough gasoline. But the US as a whole has plenty of gasoline well on those kind of supply and demand balances, which is the end of the day, is basically what the oil market comes down to. You why do we expect that everything, all the adjustment has to come from the supply side, especially considering the

delta variant that could in theory way on demand. I mean, could we get a correction of oil prices to a lower rate not because we need to pump more, but because people aren't gonna want as much oil well exactly. And also you have to look at things seasonally as well. Summertime is at the time of highest gasoline demand in the US. And after labor Day it typically drops off

quite a bit. So we're already almost through the summer. UM, You've already got schools going back in session throughout the South, so gasoline demand will probably be down there, and then one school gets back in session in the North, we're generally see gasoline consumption drop. So it's you know, there's also other issues that play, Like the United States were

down about two million barrels a day of our own production. UM. Part of that is due to oil companies not wanting to produce, wanting to be more conservative and pay down debt. But other issues include the fact that the Biden administration itself has this moratorium on issuing new leases to drill on federal land, and that attitude is making a lot of producers very hesitant to expand production that could help

alleviate higher gas prices. ELM. When we talk to you, I always like to get your opinion on Russia because that, to me, from a supply perspective, is, you know, one of the wild cards out there. What are we hearing

from the Russians these days? You know, it's interesting that you say that because UM, last week the e I A numbers showed that the US imported a lot of Russian oil and more Russian oil than they generally generally import, and so um we haven't had, you know, a formal statement come out of Russia yet, but there was a report on the I think he came from from spot mcnews saying that UM OPEC members haven't discussed US proposal

for alliance to increased production, but consultations are not ruled out. In other words, well, maybe the US wants to join OPEC if they think they should have a say so. I think we're still waiting to see what Putin has to say about this. Well, speaking of Russia, they obviously we hald a great deal of influence in OPEC. Plus and you know, the price war between the Russian zaddies created quite a lot of drama in the oil market last year, and then this year there was some issue

with the UAE in the latest opaque decision. Just talk to us about how the dynamics in the cartel are working right now? Are they as solid as they once were? Exactly? I think the dynamics are a bit more difficult now because the particularly because the u a E has really been asserting itself and also asserting its own uh financial interests.

They want to produce more oil and they see that this would be better better for them, and so they are asserting uh, you know, their leadership within OPEC and from the kind of Saudi perspective, the latest OPEC deal was really hard fought and they're not going to want to do anything to upset that balance that they've finally gotten in the group. Dr Ellen Wall, thank you so much for joining us. You are one of our go to people here on the global energy market, supply and demand.

It's a fascinating story. Dr Ellen Walled, President of Transversal Consulting, also a senior Fellow at the Atlanta Council and a Bloomberg opinion contributor, So she's got her hands full, all right. We hear a lot of companies talk about being carbon neutral or they will be carbon neutral by a certain data talking industries like the energy and industry, the airline industry, and it just really makes me wonder, what does it

really mean to be carbon neutral? Dr Ac Rathi Rocky, climate energy reporter for Bloomberg Green UH knows and based in London, UH action, give us a sense here, what does it mean to be carbon neutral because boy, a lot of companies and industries are thrown out about and this is our big take story of the day. What do,

what do? What do you have? So the scientific definition is rather straightforward, which is an entity if it emits x amount of emissions into the atmosphere, then it needs to remove that much amount of emissions from the atmosphere. So X minor sex equal to zero. That will give you a carbon neutral company, entity, country, what you might whatever you might want, and a shot. You're basically talking about offsetting your carbon emissions. Yet there's some question as

to whether or not carbon offsets actually work. Yes, So the story that we looked at today is a new phenomena in the Island gas industry. And essentially these are shipments of either oil or most of the time liquefied natural gas. And what companies do is sell them as carbon neutral shipment um and the waves do it is they calculate the amount of emissions that would be generated from the production of the fuel to the burning of the fuel, and then they buy offsets from the open

market at really cheap prices. The price that we courte in our story is about three dollars a ton um and then they are able to use this label to say that the said shipment is carbon neutral. But the problem is these offsets, which are really dirt cheap, don't

actually remove carbon dioxide from the air. They do some good things, like in the case of our story, uh, these offsets were protecting trees in Zimbabwe, and in the process of protecting these trees, they were also helping the local population branch out and do things that don't require more land and yet go economically. But they do not remove the carbon dioxide which the liquefied natural gas shipment did produce when it was when it was sold and burned. Yeah,

of shot in your Big Take story. I was fascinated by that, you know, the part of the story we talked about these villagers were you know, protecting for Just tell us about that part of your story there, because that was really interesting. So these are a large programs that were initially started under the United Nations and stramework.

The goal was to create a market where rich countries which produce a lot of the emissions, like the U S or Europe, would find ways to reward developing countries that to cut their emissions faster, protect forests, and this trading system was supposed to exist to enable the transfer of money to help developing countries meet their climate goals, because you didn't want them to be in the same posilus that the rich country used initially to become richer.

The trouble is that market never got created because of squabbling in the United Nations. What ended up happening instead was because these projects were being created. Uh, they created a voluntary market to sell these credits. And so within that the specific project we looked at, it's called the Kariba project UM. And what villages do over there is UM they protect the forest from being lost. So in two thousand Leabin, for example, UM, about half a percent

of the forest was being lost every year. And when these people came through and started funding the projects, that rate felt salty about point two. So there's clearly been some impact, but it doesn't mean that they are planting extract trees and growing the forest and actually called capturing the carbon outside. Well, and how do you how is this decided you have to plan x many trees to offset x amount of carbon? I mean, how do you come up with those values? Yes, very good question and

really tricky because I think about the way carbon travels. Right, Liquefied natural gas is being removed from deep underground where it's been sitting for millions of years. It's being then burned and put into the atmosphere. Trees, at best, they can capture the carbon and only keep it for their lifetime. The longest tree probably lives a thousand years, like most trees die within a few decades, and when they die, they degrade and release the carbon dioxide, so you're not

replacing one to one. The fossil fuel carbon is an additional carbon in the system, whereas the tree carbon really just recycles in the system UM, and that's just tree. There are other solutions you can apply, such as UM using minerals, So you take a type of rock which can then react with carbon excel in the air and then trap that carbonat side forever as zonk rather than any other form, and that would be the equivalent of

UM the fossil fuel. But when it's a nature based solution like the trees, the math is really hard to work. And that's why experts told us that just buying a few dollars worth of credits for your fossil fuels isn't going to make them carbon you so act you know, Kayley is a very cynical reporter, or so I'm gonna ask the question that she's dying to ask, which is basically,

do carbon offsets really help stop climate change? Or is this just kind of a marketing employ And because I am a science reporter, I'll have to give you a nuanced answers. So the nwanswer is they help, but not as much as we think. So when we buy carbon offsets, if we're thinking we're buying one ton of carbon, we are not really buying one ton of carbon. We are buying probably a fraction of that. And so when corporations use carbon off sets to balance their carbon books, that

is actually, in a way a fictitious transaction. That's happening. Carbon offsets or protecting forests is an absolutely key climate solution, But buying them through the offset market to be able to get rid of your carbon since isn't the way to do them. Um, what is the way that system needs to be created? And there's a lot of work going out around that, but the way carbon neutral commodities

are being sold is definitely not the solution. All right, Dr shot Rothy, thanks so much for joining to really appreciate it. The climate and Energy reporter for bloombergreen with our big Take story of the day. And I'll tell you, folks, these big take stories are phenomenal reporting, great graphics, just a great read. And we have them every day here on Bloomberg. So go to Bloomberg dot com check those out. Some great reporting from our good folks at Bloomberg News.

You know, when the pandemic hit, we saw corporate America, the big, big companies kind of rushed at the capital markets, the debt markets, the equity markets, to short up the balance sheets, to prepare them for an uncertain future. The question was and is still how about some of these small and mid size businesses, how do they deal with the pandemic and the following economic disruption. Well, Christiamo has a front row seat there. He's had a commercial banking

at TD Bank located in New York. Chris, thanks so much for joining us. I'd love to get a sense of kind of what your clients, your customers were thinking about in the beginning of the pandemic, how they dealt with the pandemic um in terms of you know, staying afloat, shoring up their businesses ring up their balance sheets. What did you see? Yeah, well, thanks Paul, thanks for having me, and uh, I think as you opened it up, you know, your spot on small businesses had to deal with this

very differently than large corporations. You know, as you know, small business is the backbone of the economy here in the US, and many of these smaller companies don't have the resources that large corporations have, and you know, we saw that they had to really rely on their banks and other accountants and attorneys and those types of vendors to help them, whether it was access to capital or executing on contingency plans as they dealt with this shutdown.

And you know, I know, you know with us here at TD Bank, that's the role we played, um not just with being a top ten player in the Triple P program where we distributed over a hundred and thirty thousand loans with over twelve billion of capital to those clients,

but really active as that trusted advisor. We talk a lot, especially with some of the large banks, about how consumer loan demand growth just hasn't really been there because they had so much cash patting their pockets after all the fiscal stimulus that isn't I know, necessarily the case for some of the small businesses. What has loan demand looked

like post stimulus, post lockdowns? You know, as we recover well, you know, loan demand has been a little bit tepid, and there has been a lot of stimulus with the Triple P program and other programs for businesses too. I would say that there's cautious optimism. Many of the businesses that we've surveyed or spoke to believe that they're going to expand in the near future. They see revenues going up, but that pent up demand. Um, you know, there's some

headwinds there too. You know, there's a shortage on labor. We're seeing rising wages, difficulty for small businesses to hire, there's a supply cha disruption right now. And then with the current delta variant out there, those are some of the unknowns that I would say are the cautious part

of that optimism. I noted. Yeah, you know it's Chris, you know, lunchtimes, I'll walk around Midtown here and you know, you see obviously a lot of empty retail stores that that were there before the pandemic um and that's heartbreaking. But you're also seeing, you know, some signs saying coming soon. Um, so some new businesses starting to form. What are you seeing in terms of that kind of new business formation which I know for a bank is a is a

source of loan growth. Well, you know your observations are accurate because new business formation has increased throughout the pandemic. Obviously there was some disruption, but anytime there's disruption, you know that that creates you know, both challenges but also opportunities. And there's a lot of capital on the sideline and still and we do see some excess liquidity from the stimulus and as people were harvesting cash in preparation, you know,

during this shutdown. So you know, the entrepreneurial spirit I think is still strong and always very resilient. So with that disruption, you are going to see new business formations continue. Does the delta variant change activity? Have you seen any difference over the past couple of weeks as that has become you know, a more prominent force in conversation, Yeah, I think it will have businesses and entrepreneurs kind of pressed the pause button a little bit to see how

this plays out. Um, there's a lot of obvious unknowns there, but there is an effort to deploy the capital that they've had through the stimulus and that they saved to expand their businesses. But I think they're going to be a little bit cautious to see how this plays out. Chris, how's the credit quality of your loan book? Look? Here? I mean, I've been pleasantly surprised that you know the

number of bankruptcies. Although we did see a number of retail ones early in the pandemic, whether it's Brooks, Brothers and others, it seems like the government support has kind of really been important, played a big part. How's your

kind of credit quality and your loan book looked? It's actually outperformed what we thought that downside from what our risk models would say, and I would say when we talked to clients early on in the pandemic when they were doing their projections downside projections, the actual performance has outperformed what their downside was, whether they took a more conservative approach and appropriately so as did h T D and many banks. Um, we are seeing that performance um

be stronger than we anticipated. All right, Chris, thanks so much for joining us. We really appreciate getting your thoughts there, are getting a good look at small and midsize market from a loan perspective. Chris Giammo, head of commercial banking for TD Bank, President and is having some week in the halls of Congress this week. Billion dollar infrastructure bill, three point five trillion dollar budget, uh, kind of winding

its way through the halls of Congress. Let's get an update on kind of how we should be positioning these legislative wins. Genie shanon Zano, Bloomberg Politics contributor and a professor of political science at Iona College, joins us on the phone. Genie, it seems like President Biding can take a victory lab pretty soon if he chooses to. What do you think he did yesterday? We heard him, you know, a little bit upstaged a bit by Governor Cuomo. But besides that, the White House was able to take a

little bit of a victory lap. But they were careful to say this is just the first step. The passage of the biff, the infrastructure bill you mentioned at about one trillion and early this morning, after a long marathon voter rama, the passage just on a Democratic line of the three point five trillion dollar reconciliation bill. Um, those two things they want to take in tandem to the

House and they want to try to move forward. But still at this point he can't quite take that victory lap he wants to because it could be maybe fall, maybe some people even say early winter before these bills get to his desk. So still a ways to go. Yeah, So Jennie, let's focus on the House because Nancy Pelosi might have her work cut out for her here wrangling the different sides of the Democratic Party, the progressive specifically, what do you expect will happen in the other chamber.

That is what we are watching, and as you mentioned, it's all about Nancy Pelosi keeping these Democrats together. So you have the progressive Democrats who are really focused on this reconciliation bill, this big soft infrastructure bill, if you will, that's what they want to see past. Yet you've got the moderates and again all of these people facing re

election a too. They want to move forward on the hardcore infrastructure, that one trillion dollar bill, and Nancy Pelosi so far has been very clear she will not move one without the other. Some people say she may maneuver a little bit on that so far she has not, so that is the big task for Nancy Pelosi. She only has a three vote margin, so with anybody peels off. And just to give you one example, look at the debate over the salt. We have some New Jersey, New

York representatives saying no salt, no deal. Three of those people pull off, and it's dead in the water. You flip over to the Senate. And already this morning we hear Joe Manchin Kristen Cinema saying three point five trillion too big for them and their constituents. So this is something of a tight rope that it's going to be fascinating to watch, but very perilous for both Nancy Pelosi, Chuck Schumer, and of course the White House. No salt,

no deal. For someone who lives in New Jersey, I can I can understand that I'm in New York and I and to pactly. So, Gene, is this I mean, if you step back and you're the White House, how big a win would this be? Or is this something? Or is there still more to do? I mean, and I'm just wondering is the White House going to take this as all right? We really have some strength here and we can maybe get some more things done. How do you think the White House is venus whole process?

They have got to be very, very pleased so far with how this have gone has gone, and they should be applauded. They have not taken a hands off approach. Previous White Houses have tried to do that. Let Congress negotiate, not this White House. They have been intimately involved. But you know, if they are able to do this, this will be the biggest change to social welfare in the United States since the nineteen sixties. I will be j in the Great Society. This would be a monumental shift.

But again I want to underscore if if both of these bills pass in tandem, and again it is a perilous path forward, no room to maneuver in the Senate, and just three votes in the House. So again, this gives any single representative or senator outside voice to say, you know what, no salt, no deal, or whatever you want to fill in on that blank where the salt is, and they can put the brakes on this thing. So

there's a lot of negotiation going forward. So still and if, but if it does indeed all come to fruition, it will be a bipartisan win at least for the bipartisan package billion dollars of new spending for the president. Well, is he likely to get another bipartisan victory or is everything else going to be Democrat only from here on out.

I think it's very, very difficult to imagine that we would see him be able to pass, for instance, police reform, voting reform, you know, immigration reform, all of these other big things he has promised. In the modern presidency, it's usually that first year you go big or you go home.

He's already had COVID if he was able to get this huge win for him, But they are going to then be face to face with a re election for the mid terms, and Republicans feel like they can pick up the House and maybe the Senate, so they feel the wind at their back on this. Even though nineteen voted for this biff, We're gonna see a real fight on reconciliation. Let's not forget the deficit, a huge, huge issue, and of course the debt ceiling is coming to fruition.

We are set to run out of money, as you both know October November, and Republicans are fighting raising the debt ceiling, So they are going to fight because they don't want to give the president any more winds than this. Again, if it passes, all right, Jennie, let's shift from Washington, d C. To Albany UH. With Andrew Colmo's resignation yesterday, what should we expect from the incoming governor? Kathy Hokel. Well, speaking of having your work cut out for you, Kathy Hokel,

she has been lieutenant governors governor since. For those of us in New York, we know of her, but her name recognition has been fairly low, So that is something she's going to have to deal with. But in terms of specific issues, COVID and the delta reopening of schools just in a week or so after she takes office, we've got an economic recovery that's stagnated. She is an upstate person. We've not had a governor from upstate in decades. All of the political power, or much of it in

the state is famously downstate. And then of course you've got a whole host of issues from corruption in Albany to infrastructure. And of course she if she chooses to run, is going to be facing a really, really big field of potential Democrats and a primary and just a few months after she takes office. Well, yeah, let's let's talk about that. How has the landscape for that gubernatorial election in two shifted. I think it has opened way up.

Everybody from Letitia James to obviously Kathy Hoko who would be the incumbent if she chose to run, to build a Blasio, Jimani Williams, Cynthia Nixon. I mean, you could go on and on, big, big group of Democrats, and New York, like much of the country, on the Democratic side is fractured. You've got a lot out of energy and the progressive left left, as we saw with Cynthia Nixon's bid against Governor Cuomo last time around, and you've got moderates who rule up state. So that fight is

going to continue. And Kathy hokel is a moderate to conservative Democrat, that is how she has always defined herself. So she will have to get the energy of the progressive left if she wants to win a primary in this state. But she is also a very very good campaigner and a great fundraiser, so she's got a lot to offer there. And of course we have to say the first female Governor of New York. Which is sad to say, but in two and thirty years we finally

got to win, all right. Jennie, thank you so much once again for joining us and sharing your insights. Jennie Chanzano, Bloomberg Politics contributor, also a professor of political science at Iona Colleges, joining us on the phone there with some great insight, not only in Washington, d C. With this budget moves, but also in Albany with the hoops there. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews of full podcasts or whatever

podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three. On Fall Sweeney I'm on Twitter at pt Sweeney Before the podcast. You can always catch us worldwide at Bloomberg Radio