Member Briefing March 24, 2022

Posted By: Harold King

Invasion of Ukraine Headlines

Hydrocarbons are Used to Make Everything, and Someone has to Bear the Brunt of Higher Oil and Natural-Gas

The headlines about high oil and gas prices seem far away from products like plastic wrap or lawn fertilizer. In reality, though, these everyday items need hydrocarbons to get made, and all across the supply chain, the struggle is on over who will bear the burden of higher costs. “Oil trickles down to everything,” said Josh Lee, the financial chief for chemical distributor CJ Chemicals LLC.

Much of the higher price for oil and natural gas is likely to get passed on to consumers, analysts say. But especially in Asia, where consumer and housing demand recently has been less robust than the U.S., companies along the supply chain fear they will be the ones bearing the brunt.

Read more at the WSJ

Tax Relief for Manufacturers Organized as Passthrough Entities Part of Ongoing Budget Negotiations

In 2014 a zero percent corporate franchise tax rate was enacted for Manufacturers organized as “C” corporations. While it provided significant help to those, often larger, firms it left about 75% of manufactures still paying one of the highest tax rates in the nation, and therefore putting them at a competitive disadvantage with manufacturers located in other states. The majority of manufacturers in New York are small-to-medium sized manufacturers organized as S corps, proprietorships, LLCs and/or partnerships (pass-through entities). The Council of Industry and the Manufacturers Alliance of NY are asking that the legislature correct an inequity and extend much needed tax relief to all manufacturers regardless of how they are organized. 

You can show your support for this proposal by adding your name to a letter to the governor and legislative leaders.

Sign the letter at the Council of Industry’s Advocacy Page

Bail Debate Scrambles New York State Budget Talks

A leak of proposed changes to New York’s controversial law that largely ended cash bail requirements for many criminal charges is raining on the budget parade at the state Capitol.  With roughly a week and a half to go before the budget deal, last week’s disclosure that Gov. Kathy Hochul is trying to negotiate changes to the law have set up a difficult needle for her to thread: Progressives don’t want to do it; suburban and upstate Democrats feel like they must. 

Up until last week, Hochul’s public position had been to follow the lead of state lawmakers. But with the document outlining the proposed changes having been leaked, the proposed changes surrounding the law are now part of the often messy and secretive sausage-making that is the state budget process.  

Read more at Spectrum News

US COVID – A Third of U.S. COVID Now Caused by Omicron BA.2 as Overall Cases Fall

About one-in-three COVID-19 cases in the United States are now caused by the BA.2 Omicron sub-variant of the coronavirus, according to government data on Tuesday that also showed overall infections still declining from January’s record highs. In the Northeast, including New Jersey, New York and Massachusetts, Omicron BA.2 now makes up more than half the cases, according to data from the U.S. Centers for Disease Control and Prevention (CDC).

Despite the rise of the extremely contagious sub-variant also seen in other countries, U.S. health experts say a major wave of new infections here appears unlikely. Top U.S. infectious disease official Dr. Anthony Fauci said at a Washington Post event on Tuesday that he does not believe there will be a major surge soon, “unless something changes dramatically.”

Read more at Reuters

Madeleine Albright, First Female Secretary of State, Dies at 84

Madeleine Albright, a refugee from both Nazi Germany and Soviet communism who became the first woman to serve as U.S. secretary of State, died on Wednesday. She was 84. As the world rearranged itself after the Cold War, Albright was a major figure in international diplomacy as President Bill Clinton’s ambassador to the United Nations and later his secretary of State.

Her approach to diplomacy was dubbed, by both admirers and critics, as the Albright Doctrine, and took to heart the notion of using U.S. might in support of both American strategic interests and moral values. A statement from her family said the cause was cancer, and that she was surrounded by friends and family. The statement recounted Albright’s journey to public office, in which she “rose to the heights of American policy-making.” She was a “tireless champion of democracy and human rights,” her family said.

Read more at Politico

Moderna to Seek Authorization for COVID-19 Vaccine for Kids Under Six

Moderna on Wednesday said it will soon seek emergency use authorization for its two-dose COVID-19 vaccine in children under six years old, after preliminary data showed kids in that age group had a similar immune response to adolescents and young adults when given a smaller dose of the vaccine.

The company said it will be submitting data to the Food and Drug Administration “in the coming weeks.” However, Moderna said the vaccine was only about 44 percent effective at preventing symptomatic infection in children 6 months to 2 years old, and 37 percent effective in children aged 2 through 5. 

Read more at The Hill

India Approves Novavax for Teens

India granted emergency approval for the use of Novavax’s COVID vaccine in people aged from 12 to 17 years old on Tuesday, making the country the first in the world to approve the shot for teenagers. In a study released last month, Novavax said that its vaccine was 82% effective against infection among teenagers. The study was conducted between May and September of 2021 when the Delta variant was dominant.

India granted emergency approval for the use of Novavax’s COVID vaccine in people aged from 12 to 17 years old on Tuesday, making the country the first in the world to approve the shot for teenagers.

Read more at Fortune

Italian Study Shows Ventilation Can Cut School COVID Cases by 82%

An Italian study published on Tuesday suggests that efficient ventilation systems can reduce the transmission of COVID-19 in schools by more than 80%. An experiment overseen by the Hume foundation think-tank compared coronavirus contagion in 10,441 classrooms in Italy’s central Marche region.

COVID infections were steeply lower in the 316 classrooms that had mechanical ventilation systems, with the reduction in cases more marked according to the strength of the systems.

Read more at Reuters

6 Crucial Steps for Managing Through Periods of High Inflation

Unless you’re a child prodigy, you probably weren’t a manager the last time inflation was this high—in 1982.  Fortune’s Geoff Colvin and author Ram Charan offer steps on how to best manage in a time of high inflation: “Leaders who skillfully manage through today’s economic volatility will almost certainly report fatter profit margins and far outpace competitors for years to come.”

On one hand, such a long stretch of moderation is a blessing for consumers and corporations. On the other, most of today’s managers haven’t had to build the skills needed to guide their companies through high inflation, which comes with sharp price increases and demand for higher wages. That’s a problem. Here are some tips.

Read more at Fortune (Subscription)

UK Inflation Hits Fresh Multi-Decade High of 6.2% on Surging Energy Prices

U.K. inflation came in at an annual 6.2% in February, its highest since March 1992, as soaring food, fuel and energy costs continue to deepen the country’s cost of living crisis. February’s Consumer Price Index print was above consensus expectations among economists polled by Refinitiv for a 5.9% annual figure, and vastly outstripped January’s previous 30-year high of 5.5%.

On a monthly basis, CPI inflation was 0.8%, exceeding expectations for a 0.6% rise and marking the largest monthly CPI increase between January and February since 2009. The Bank of England has hiked interest rates at three consecutive monetary policy meetings, raising the costs of borrowing from its historic low of 0.1% to 0.75%, as it looks to contain runaway inflation without stomping out economic growth.

Read more at CNBC

European Natural Gas Prices Fall Amid Boost in Supplies – LNG Recap

European natural gas prices on Monday finished at the lowest point since Russia invaded Ukraine on Feb. 24, as the arrival of spring and an influx of liquefied natural gas (LNG) appeared to tip the balance of a market on edge over the war.  LNG deliveries are also poised to jump 71% week/week to 4.8 billion cubic meters, according to Schneider Electric. Arbitrage spreads through the remainder of the year show Europe is expected to continue edging out Asia as the premium market for Atlantic Basin LNG cargoes. 

Mild weather is expected across Central and Northern Europe over the next five days, according to Maxar’s Weather Desk. Russian natural gas flows to the continent also remain strong, and a jump in imports from Norway were adding to supplies as the week got underway. 

Read more at Natural Gas Intel

Gas Tax Holiday

With gas prices soaring nationwide, Maryland and Georgia have become the first states in the country to temporarily suspend their gas taxes. The measure in Maryland will be in effect for 30 days, saving drivers 36.1 cents per gallon on gas, or 36.85 cents per gallon on diesel fuel. Georgia’s suspension will last through May 31, suspending levies of 29.1 cents per gallon on gas, and 32.6 cents per gallon of diesel.

The White House has reportedly dropped a proposal to send out pre-paid gas cards, given strong opposition in Congress over the plan’s viability and effectiveness. Delivering the cards could also distract the IRS in the middle of the tax filing season. Regular gasoline now averages $4.23 per gallon, according to AAA, down about 7 cents from a week earlier, but up from $2.87 one year ago.

Read more at Seeking Alpha

Measuring Cybersecurity Effectiveness

Imagine a world in cybersecurity where we actually measure the effectiveness of our programs. Where we use the power and scalability of computers to perform the same types of tests considered a minimum requirement in other fields. Where we manage our control environments and assess the outcomes to determine the strength of our programs. The truth is that computing environments are actually easy to measure.

Opportunities for efficacy experiments abound. For example, an organization could apply the same techniques Microsoft did in its Security Intelligence Report volume 20: “The MSRT reported that computers that were never found to be running real-time security software during 2H15 were between 2.7 and 5.6 times as likely to be infected with malware as computers that were always found to be protected.” A closer look at this data reveals an efficacy score of about 64%.

Read more at CSO 

GlobalFoundries CEO: Meeting Chip Demand Will Take Years

Demand for GlobalFoundries chips is at least 10 times greater than output, and scaling up production will take years, says CEO Tom Caulfield. “I think for the better part of the next five to 10 years, we’ll be chasing supply in this industry, not demand,” Caulfield says. Chips are needed for just about all devices, including laptops, home appliances like refrigerators, gaming consoles and medical equipment.

The U.S. produces just around 12% of the world’s supply and it has relied heavily on chips produced in Asia. But when the pandemic hit, it shut down major production plants, decreasing supply. There is renewed focus on producing more chips at home, as some experts warn not doing so could also be a national security risk.  

Read more at CBS News

WSJ Documentary – Why Global Supply Chains May Never Be the Same

The pandemic exposed breaking points in the system that would fundamentally alter consumer expectations of getting anything we want whenever we want it.
Every day, millions of sailors, truck drivers, longshoremen, warehouse workers and delivery drivers keep mountains of goods moving into stores and homes to meet consumers’ increasing expectations of convenience. But this complex movement of goods underpinning the global economy is far more vulnerable than many imagined

Watch the video (55 minutes)