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Equilibrium/Sustainability — Presented by Southern Company — Replacing the ‘blood diamond

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Today is Monday.  Welcome to Equilibrium, a newsletter that tracks the growing global battle over the future of sustainability. Subscribe here: thehill.com/newsletter-signup

As the global transition to electric vehicles picks up speed, automakers are racing to reduce their reliance on a metal that has become known as “the blood diamond of batteries,” The New York Times reported.

Cobalt, which extends EV battery range and reduces overheating, also comes with a high price tag, the report said. And in the Democratic Republic of Congo — home to the world’s largest cobalt reserves — the metal is mined from “an underworld where children are put to work and unskilled and ill-equipped diggers of all ages get injured or killed,” according to the Times.

While one government-appointed official, Albert Yuma Mulimbi, says he’s working to transform the Congo into a reputable supplier of cobalt, Mulimbi has also been accused of helping divert billions of dollars in revenues, the Times reported. Worried about potential pressure from consumers, carmakers are now seeking alternative suppliers for this critical element — such as other nations with smaller reserves, according to the Times.

Today we’ll look at another way millions of Americans got from Point A to Point B this weekend — by filling the nation’s airports and shattering pandemic travel records. We’ll also explore how the new coronavirus variant has impacted oil prices.

For Equilibrium, we are Saul Elbein and Sharon Udasin. Please send tips or comments to Saul at selbein@thehill.com or Sharon at sudasin@thehill.com. Follow us on Twitter: @saul_elbein and @sharonudasin

Let’s get to it.

Oil prices rebound after omicron-induced fall 

Oil prices bounced back by more than 5 percent on Monday — to $76 a barrel —  following a Friday nosedive in response to the omicron coronavirus variant, Reuters reported.

The initial plunge occurred after the World Health Organization (WHO) designated the new omicron variant as being “of concern,” marking the fifth time a variant has received such a designation since the beginning of the pandemic, according to an earlier Reuters story. 

What’s the link to oil? The WHO announcement caused oil prices to drop by $10 a barrel on Friday — the largest single-day plunge since April 2020 — due to concerns that omicron could expand an oil supply surplus in the first quarter of 2022, Reuters reported.

“Despite the previous positive experience of quick recovery in the oil market, investors should keep an eye on news of large-scale lockdowns in the short term,” Farah Mourad, senior market analyst at XTB MENA, told Reuters.

That plunge had knock-on effects. As a result of the sharp decline in oil prices, most Gulf stock markets — which are driven by oil — ended low on Sunday, with indexes in Saudi Arabia and Dubai enduring their greatest one-day fall in nearly two years, according to Reuters.

Dubai’s main share index fell 5.2 percent, its biggest intraday drop since March 2020, while blue-chip developer Emaar Properties fell 9.4 percent and Air Arabia decreased by 7.1 percent, Reuters reported.

In the U.S., the S&P 500 also suffered its worst single-day percentage decline in nine months on Friday, The Wall Street Journal reported.

But by Monday, oil prices began to rebound. The recovery, according to Reuters, occurred after some investors decided that Friday’s slump was “overdone,” as the world waits for more information about the omicron variant.

“The fear factor had its grip on financial markets on Friday,” Norbert Ruecker of Swiss bank Julius Baer told Reuters. “Fundamentally, the announced and enacted international air travel constraints cannot explain such a sharp slump.” 

STOCKS START RECOUPING LOSSES

The S&P 500 had gained 1 percent in midday trading on Monday, while the Nasdaq Composite Index increased 1.5 percent and the Dow Jones Industrial Average jumped over 100 points, or 0.3 percent, according to the Journal.

“Friday was a panic selloff,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, told the Journal. “Traders have had time to sit back and breathe a bit.”

Atlanta Federal Reserve President Raphael Bostic told Fox Business on Friday that if the omicron variant follows a similar trajectory as the Delta variant, the economy will continue to experience slowing, but not to as great an extent as during the delta variant surge.

“With each successive variant that’s been introduced, the economy has slowed down, but the amount of slowdown has been less,” Bostic said.

OPEC+ signals no need to rush: Russian and Saudi Arabia indicated on Monday that there was no need for members of OPEC+ — the group of Gulf, African and South American oil producing countries, plus Russia — to accelerate oil output, according to Reuters. 

Saudi Aramco CEO Amin Nasser told Al Arabiya TV that oil markets had overreacted, Reuters reported.

Saudi energy minister Prince Abdulaziz bin Salman al-Saud said he was not worried about omicron, while Russian Deputy Prime Minister Alexander Novak said there was no need for urgent action, according to Reuters.

Last words: “There is no need for hasty decisions,” Novak was quoted as saying by the Interfax news agency. “We will additionally discuss with the OPEC+ countries the market situation and if any measures are warranted.”

A MESSAGE FROM SOUTHERN COMPANY

 

At Southern Company, we achieved our interim net zero energy goal ten years early. Today, we continue our work toward a net zero future. Learn more.

Air carriers brace for omicron 

The emergence of the omicron coronavirus variant is injecting fresh uncertainty into the air travel industry.

Governments around the world were “trying to buy time” this weekend as they issued a wealth of new travel restrictions amid the many unknowns surrounding omicron, according to CNN.

The Biden administration has temporarily banned visitors from South Africa — the first country to detect the new variant — and seven other African countries.

Israel instituted among the strictest restrictions — banning all foreign visitors for two weeks — while Japan followed suit with a similar rule soon after, according to CNBC. The U.K. is requiring travelers to take a PCR test upon arrival and self-isolate until receiving a negative result. 

Airlines are waiting out this wave — for now: Delta and United Airlines, the two U.S. carriers with nonstop flights to South Africa, said on Friday that they are not changing their schedules, despite the new restrictions, according to CNBC.

A spokesman for Airlines for America — a lobbyist group for major U.S. carriers — said that the group is in contact with the U.S. government, while stressing that “international travel is critical to reviving economies around the globe” and supporting jobs around the world, CNBC reported.

A word of caution: “Amid this rapidly evolving situation, it is critical that U.S. government decisions regarding international travel restrictions and requirements be rooted in science,” the Airlines for America spokesman said in a statement.

HOLIDAY AIR TRAFFIC BREAKS RECORDS

The new uncertainty over omicron comes on the heels of U.S. air travel hitting a pandemic high on Saturday, with nearly 2.5 million people crossing Transportation Security Agency (TSA) checkpoints, as our colleague Zachary Schonfeld reported for The Hill. 

The TSA screened 2,451,300 individuals that day, with checkpoint volume for the 10 days leading up to and including Sunday rising to 20.9 million — approximately 89 percent of pre-pandemic levels, TSA spokesperson Lisa Farbstein tweeted. 

Sunday’s total amounted to about 85 percent of the volume of people screened by the TSA on the same day in 2019, but was more than double the count on that specific day last year, CNN reported.

Things went smoothly for the most part. From last Monday through Sunday, airlines canceled about 400 domestic flights, or just 0.33 percent of those scheduled, The Wall Street Journal reported, citing the FlightAware tracking site.

Since Thanksgiving is typically one of the busiest travel periods in the U.S., travel conditions were looking particularly tenuous this year, after airlines had been caught off guard in recent months by a resurgence of demand, according to the Journal.

Favorable weather, holiday bonuses: Overall, the weather over Thanksgiving weekend was cooperative and airlines took proactive steps in order to prevent problems and better align schedules with staffing constraints, the Journal reported.

Some carriers offered bonuses for employees working over the holidays, to ensure that operations continued uninterrupted, the report added. 

Of course, not everything was perfect. At Newark Liberty International Airport, officials declared a taxi shortage three days last week, encouraging passengers to use ride-sharing apps or public transportation instead, as Schonfeld reported for The Hill. Meanwhile, parking facilities at Washington’s Reagan National Airport were filled to capacity on Thanksgiving Day. 

VIRTUAL EVENT ANNOUNCEMENT

Regulating Cannabis — Wednesday, December 1 at 1:00 PM ET

 

A MESSAGE FROM SOUTHERN COMPANY

 

At Southern Company, we achieved our interim net zero energy goal ten years early. Today, we continue our work toward a net zero future. Learn more.

Monday Miscellanies 

Super potatoes that can withstand heat; polar bears jeopardizing reindeers; snowfall — and lack thereof — presents seasonal oddities.

Scientists try growing a potato that can withstand climate change



Read More: Equilibrium/Sustainability — Presented by Southern Company — Replacing the ‘blood diamond

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