Author: Fbiz

US States Fight Trump Drill Plan With Local Bans

Some coastal states opposed to President Donald Trump’s plan to allow oil and gas drilling off most of the nation’s coastline are fighting back with proposed state laws designed to thwart the proposal.


The drilling Trump proposes would take place in federal waters offshore in an area called the Outer Continental Shelf. But states control the 3 miles of ocean closest to shore and are proposing laws designed to make it difficult, or impossible, to bring the oil or gas ashore in their areas.


A look at the issue:


What States Are Doing


States including New Jersey, New York, California, South Carolina and Rhode Island have introduced bills prohibiting any infrastructure related to offshore oil or gas production from being built in or crossing their state waters. Washington state is threatening such a bill. Maryland has introduced a bill imposing strict liability on anyone who causes a spill while engaged in offshore drilling or oil or gas extraction.


“We started thinking about how we control the first three miles of ocean, and there are state rights that we have,” said New Jersey state Sen. Jeff Van Drew, a Democrat who represents the state’s southern coast. “Even if we don’t succeed in banning it outright, we can still make it a lot more expensive to do it in this area. It’s a back-door, ingenious way to block this.”


California Democratic state Sen. Hannah-Beth Jackson said a ban on pipelines and docks could force the industry to rely on ships that would then have to sail to the waters of a different state to bring their cargo ashore. “What we can do is make drilling for offshore oil and gas so prohibitively expensive that it won’t pencil out,” she said.


Any Precendent?


In 1985, voters in Santa Cruz, California, required that any zoning changes to accommodate onshore facilities for offshore oil exploration or production must be approved by a vote of the electorate, one of 26 similar ordinances that were adopted in California. An oil and gas industry association unsuccessfully sued 13 of the communities, claiming they were interfering with lawful interstate commerce.


Oil Industry, U.S. Response


Andy Radford, a senior policy adviser with the American Petroleum Institute, said it has been 30 years since the last detailed analysis of potential offshore oil and gas supplies. He said states ought to welcome offshore drilling for the revenue it can produce for them. Offshore energy production in the Atlantic Ocean alone could support 265,000 jobs and generate $22 billion a year within 20 years, he said.


“We should take that step forward to advance our energy future,” he said. “Local communities and workers benefit from energy exploration and production, in addition to these investments generating significant state revenues to fund schools, hospitals and other public services.”


Connie Gillette, a spokeswoman for the U.S. Bureau of Ocean Energy Management, said “the laws, goals, and policies” of a state adjacent to the Outer Continental Shelf are among the factors the federal government must consider in approving oil and gas leases.


Conflicted in South Carolina


In May 2017, eight months before Trump proposed the nearly nationwide expansion of offshore drilling, a South Carolina legislator introduced a bill to prohibit oil drilling infrastructure in state waters. The bill remains in committee.


South Carolina’s House and Senate both introduced a resolution expressing support for drilling off their state’s coast and criticizing Republican Gov. Henry McMaster’s request to be exempted from the plan, saying the request is “tantamount to the state exercising excessive control of South Carolina’s free market.”

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Cuba Opens Wholesale Market to Sell Basic Staples

Cuba has opened up its first wholesale market in an economy dominated by government-run enterprises.


State-run newspaper Granma says the market is part of an ongoing effort to “reorganize” commerce on the communist island. The market will sell beans, beer, sugar, cigars and other basic staples for 20 to 30 percent less than the products are sold throughout the country.


Since 2010, the government has authorized about 500,000 people to operate private businesses, and many of them have long-sought access to a wholesale marketplace. Their wait is not over. The government says the market known as the Mercabal is only open to 35 worker-owned cooperatives in Havana, at least for now.


The state-run economy accounts for 70 to 80 percent of the Cuban economy.

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New York Councilman Investigating Kushner Real Estate Company

A New York City councilman and a tenants’ rights group said they will investigate allegations that the real estate company formerly controlled by Jared Kushner, a presidential adviser and President Donald Trump’s son-in-law, falsified building permits.

In allegations first uncovered by The Associated Press, the Kushner Companies is accused of submitting false statements between 2013 and 2016, stating it had no rent-controlled apartments in buildings it owned when it actually had hundreds.

Rent-controlled apartments come under tighter oversight from city officials when there is construction work or renovations in buildings. 

The councilman and tenants’ rights group charged the Kushner Companies of lying about rent-control in order to harass and force out tenants paying low rents so it can move in those who would pay more.

They also blame city officials for allegedly being unaware what Kushner was up to.

Rent control is a fixture in many big U.S. cities, where the government regulates rent to help make housing more affordable.

Some tenants in Kushner-owned buildings told the AP that the landlord made their lives a “living hell,” with loud construction noise, drilling, dust and leaking water. They said they believe they were part of a campaign of targeted harassment by the Kushner Companies to get them to leave.

The company denies intentionally falsifying documents in an effort to harass tenants. In a news release Monday, the company called the investigation an effort to “create an issue where none exists.”

“If mistakes or typographical errors are identified, corrective action is taken immediately with no financial benefit to the company,” it said.

The company also said it contracted out the preparation of such documents to a third party and that the faulty paperwork was amended. 

Kushner stepped down as head of his family’s company before becoming presidential adviser. But the AP said he still has a financial stake in a number of properties.

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Indonesia to Effectively Continue Fuel Subsidy

Indonesian president Joko “Jokowi” Widodo has instructed ministers to keep fuel prices stable over the next two years, said Energy Minister Ignasius Jonan, which would, in effect, continue a controversial fuel subsidy scheme that analysts say has negatively impacted growth and the environment. 

The Ministry said it would increase the per-liter subsidy for diesel and regular petrol from 500 Indonesian rupiah (about $0.35) to 700-1000 rupiah ($0.49-$0.70) while keeping pump prices unchanged.

The measure indicates how protectionist measures have been hard to shake for the initially reform-minded Jokowi, who made several inroads against subsidies in 2014 and 2015. 

Meanwhile, the rupiah continues to sink in the global market, due in part to Indonesia’s widening current-account deficit. On Monday, Credit Suisse said “the rupiah is among the most vulnerable emerging market currencies in Asia.”

Political Context

“Subsidizing fuel does tend to exacerbate currency depreciation, because the bulk of Indonesia’s petrol is imported,” said Kevin O’Rourke, a veteran Indonesian political analyst. “Fixed retail prices cause over-consumption, as the price remains the same even though the currency is declining; ordinarily, what should happen is that petrol prices rise as the currency declines, thereby discouraging consumption of the imports.”

In 2014, the year he was elected president, Jokowi raised fuel prices and capped the diesel subsidy within months of taking office. Last year he also pushed to phase out electricity subsidies, but was already facing pushback from consumers amid rising inflation. Consumer expectations are perhaps looming larger now that he is in the latter half of his term, and gearing up for a competitive reelection campaign in 2019. 

“Widodo hopes to keep retail prices stable through the April 2019 election, despite the gap between the Indonesia Crude Price (ICP) and the budget’s oil price assumption,” said O’Rourke. “Ostensibly, this subsidization aims to preserve consumer purchasing power; in reality, Widodo clearly hopes to avoid sacrificing popularity ahead of his re-election bid.” Ironically, he said, artificially low fuel prices end up creating inflation anyway, since people tend to then over-consume imported petrol, which further sinks the rupiah.

The subsidy may also imperil Indonesia’s public transport ambitions, said Jakarta-based energy policy researcher Lucky Lontoh. “Jokowi’s massive infrastructure development actually was started with a fuel subsidy reduction back in 2014, which freed some fiscal space needed to fund the infrastructure projects. More subsidies means the government will have less money to fund other development activities.” 

Environmental Impact

Fuel subsidies are considered a regressive form of spending because their benefits are captured by people wealthy enough to drive and own vehicles, said Paul Burke, an economist at Australian National University who focuses on energy and transportation. 

But they also aggravate traffic jams — including in cities like the notoriously traffic-choked Jakarta — air pollution, and oil dependence, said Burke, citing a recent paper he authored on the topic. 

Burke said Indonesia’s substantial progress on electricity subsidies are a hopeful sign and possible roadmap for fuel subsidy reform. 

“Over recent years, Indonesia has achieved substantial success in reducing electricity subsidies, by increasing some electricity tariffs to cost-reflective levels,” he said. “Poor households are among those that have been exempted from the reforms… [which] have made an important contribution to improving the efficiency of Indonesia’s electricity use. As electricity prices have increased, electricity use has shifted to a lower-growth trajectory. This has helped Indonesia to avoid the need to build too many expensive new power stations.”

In the fuel realm, Burke said a reform option that economists often suggest is a “fuel excise,” which is a tax on the sale of fuel and the opposite of a fuel subsidy. “Fuel excise would be a progressive form of revenue raising, would help to reduce pollution and traffic jams, and would help Indonesia reduce its budget deficit and fund key priorities.”

Fossil fuel subsidies have existed in Indonesia since its independence in 1949 and, per the International Energy Agency, accounted for nearly 20 percent of fiscal expenditure by the 1960’s. In that context, the reforms of modern-day Indonesia and the Jokowi administration are not inconsiderable: by 2014, about 3 percent of the GDP was spent on fossil fuel subsidies, and by 2016, after Jokowi’s initial spate of reforms, it was less than 1 percent. 

But, due to consumer expectations, the political climate, and the unique challenges of the fuel industry — Indonesia both has a lot of natural resources itself and a burgeoning consumer class — the current subsidy apparatus may prove sticky for the near future. 

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US Investigates Deaths in Hyundai-Kia Cars When Air Bags Failed

Air bags in some Hyundai and Kia cars failed to inflate in crashes and four people are dead. Now the U.S. government’s road safety agency wants to know why.

The National Highway Traffic Safety Administration says it’s investigating problems that affect an estimated 425,000 cars made by the Korean automakers. The agency also is looking into whether the same problem could happen in vehicles made by other companies.

In documents posted on its website Saturday , the safety agency says the probe covers 2011 Hyundai Sonata midsize cars and 2012 and 2013 Kia Forte compacts. The agency says it has reports of six front-end crashes with significant damage to the cars. Four people died and six were injured.

Electrical circuits 

The problem has been traced to electrical circuit shorts in air bag control computers made by parts supplier ZF-TRW. NHTSA now wants to know if other automakers used the same computer.

On Feb. 27, Hyundai recalled nearly 155,000 Sonatas because of air bag failures, which the company blamed on the short circuits.Hyundai’s sister automaker Kia, which sells similar vehicles, has yet to issue a recall.

In a statement Saturday, Kia said that it has not confirmed any air bag non-deployments in its 2002-2013 Kia Forte models arising from “the potential chip issue.” The company said it will work with NHTSA investigators.

“Kia will act promptly to conduct a safety recall, if it determines that a recall would be appropriate,” the company said.

But a consumer complaint cited in NHTSA’s investigation documents said Kia was informed of a crash near Oakland in which air bags failed to deploy and a passenger was killed.

In October 2015, the complainant told NHTSA that a 2012 Forte was involved in a serious front-end crash that occurred in July 2013. A passenger was killed and the driver was injured. According to the complaint, Kia was notified, the air bag computer was tested and it was “found not to be working.”

Kia spokesman James Bell said he could not comment beyond the company’s statement.

Hyundai recall

In addition, no deaths or injuries were disclosed in Hyundai’s recall documents, which were posted by NHTSA in early March.

Hyundai spokesman Jim Trainor says the problem occurred in rare high-speed head-on collisions that were offset from the center of the vehicles. “It’s very unusual to have that kind of collision,” he said Saturday.

Dealers will consider offering loaner cars to owners until the problem can be repaired, he said. “We certainly would do everything we can to help our customers,” Trainor said.

Hyundai said in a statement that the air bag control circuitry was damaged in three crashes and a fourth crash is under investigation.

ZF-TRW said in a statement that it is prevented by confidentiality agreements from identifying other automakers that bought its air bag control computers. The company said it is working with customers and supports the NHTSA investigation.

According to NHTSA, Hyundai investigated and found the problem was “electrical overstress” in the computers. The company didn’t have a fix developed at the time but said it was investigating the problem with ZF-TRW. Hyundai does not yet have a fix for the problem but said it expects the Sonata recall to start April 20. The problem also can stop the seat belts from tightening before a crash.

In the documents, NHTSA said it understands that the Kia Fortes under investigation use similar air bag control computers made by ZF-TRW. The agency noted a 2016 recall involving more than 1.4 million Fiat Chrysler cars and SUVs that had a similar problem causing the air bags not to deploy. Agency documents show those vehicles had air bag computers made by ZF-TRW.

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Women ‘Weed Warriors’ Leading the Way in US Pot Revolution

The pot revolution is alive and well in the state of Colorado where recreational cannabis has been legal since 2014. While the full impact of legal marijuana in Colorado has yet to be determined, what is clear is that cannabis has become a giant moneymaker for the state. And as Paula Vargas reports from Denver, women entrepreneurs — weed warriors, as some have called them — are leading the way.

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Lawmakers Say Britain Should Consider Longer EU Exit Process if Needed

Britain should consider a limited extension to its exit process from the European Union if needed to ensure details of its future relationship with the

bloc are agreed, a committee of lawmakers said in a report.

Prime Minister Theresa May formally notified the EU of Britain’s intention to leave by triggering Article 50 of the membership treaty on March 29, 2017, setting the clock ticking on a two-year exit process.

Britain has said it wants to have the basis of a trade deal set out with the EU by October, but the Exiting the EU Committee said in a report published Sunday that deadline would be tight.

“In the short time that remains, it is difficult to see how it will be possible to negotiate a full, bespoke trade and market access agreement, along with a range of other agreements, including on foreign affairs and defense cooperation,” the committee said.

“If substantial aspects of the future partnership remain to be agreed in October, the government should seek a limited extension to the Article 50 time to ensure that a political declaration on the future partnership that is sufficiently detailed and comprehensive can be concluded.”

The report also said it should be possible to prolong, if necessary, the length of any post-Brexit transition that’s agreed upon by Britain and the EU.

Britain has said it is confident it can reach a deal on the transition period at an EU summit this month. It expects the transition to last around two years after its departure date, although the European Union has said it should be shorter,

ending on Dec. 31, 2020.

The Exiting the EU committee, made up of lawmakers from all the main political parties, also called on the government to present a detailed plan on how a “frictionless” border between Northern Ireland and the Republic of Ireland would work.

The Irish border is a key sticking point in negotiations between the U.K. and the EU, as Britain has said it wants to leave the customs union but does not want a “hard” land border with customs checks.

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Merkel, Xi Agree to Work on Steel Overcapacity Within G-20

German Chancellor Angela Merkel and Chinese President Xi Jinping on Saturday discussed overcapacity in world steel markets and agreed to work on

solutions within the framework of the Group of 20 industrialized nations, Merkel’s spokesman said.

The two leaders emphasized close ties between the two countries, which are both facing planned U.S. steel and aluminum tariffs, and agreed to deepen the strategic partnership between them, Steffen Seibert said in a statement.

He said Merkel invited Chinese officials to visit Berlin for consultations, and Xi invited Merkel to visit China.

They also discussed the situation in North Korea regarding its nuclear and missile development efforts.

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