“There will be things that people can’t get,” at Christmas, White House warns

By Jarrett Renshaw and Trevor Hunnicutt

WASHINGTON (Reuters) -White House officials, scrambling to relieve global supply bottlenecks choking U.S. ports, highways and railways, warn Americans may face higher prices and some empty shelves this Christmas season.

The supply crisis, driven in part by the global COVID-19 pandemic, not only threatens to dampen U.S. spending at a critical time, it also poses a political risk for U.S. President Joe Biden.

The latest Reuters/Ipsos poll shows the economy continues to be the most important issue to Democrats and Republicans alike.

The White House has been trying to tackle inflation-inducing supply bottlenecks of everything from meat to semiconductors, and formed a task force in June that meets weekly and named a “bottleneck” czar to push private sector companies to ease snarls.

Biden himself plans to meet with senior officials on Wednesday to discuss efforts to relieve transportation bottlenecks before delivering a speech on the topic.

Supply chain woes are weighing on retail and transportation companies, which recently issued a series of downbeat earnings outlooks. Meanwhile, the Federal Reserve last month predicted a 2021 inflation rate of 4.2%, well above its 2% target.

American consumers, unused to empty store shelves, may need to be flexible and patient, White House officials said.

“There will be things that people can’t get,” a senior White House official told Reuters, when asked about holiday shopping.

“At the same time, a lot of these goods are hopefully substitutable by other things … I don’t think there’s any real reason to be panicked, but we all feel the frustration and there’s a certain need for patience to help get through a relatively short period of time.”

Inflation is biting wages. Labor Department data shows that Americans made 0.9% less per hour on average in August than they did one year prior.

The White House argues inflation is a sign that their decision to provide historic support to small businesses and households, through $1.9 trillion in COVID-19 relief funding, worked.

U.S. consumer demand stayed strong, outpacing global rivals, and the Biden administration expects the overall economy to grow at 7.1%, as inflation reaches its highest levels since the 1980s.

“We recognize that it has pinched families who are trying to get back to some semblance of normalcy as we move into the later stages of the pandemic,” said a second senior White House official.

BOTTLENECK CZAR

In August, the White House tapped John Porcari, a veteran transportation official who served in the Obama administration as a new “envoy” to the nation’s ports, but he’s known as the bottleneck czar.

Porcari told Reuters the administration has worked to make sure various parts of the supply chain, such as ports and intermodal facilities, where freight is transferred from one form of transport to another, are in steady communication.

Now it is focused on getting ports and other transportation hubs to operate on a 24-hour schedule, taking advantage of off-peak hours to move more goods in the pipeline. California ports in Long Beach and Los Angeles have agreed to extended hours, and there are more to follow, he said in an interview Monday.

“We need to make better use of that off-peak capacity and that really is the current focus,” Porcari said.

The administration is also seeking to restore inactive rail yards for extra container capacity and create “pop-up” rail yards to increase capacity.

“It’s important to remember that the goods movement system is a private sector driven system,” he said. “There’s problems in every single part of that system. And, and they tend to compound each other.

“While the pandemic was an enormously disruptive force. I think it also laid bare what was an underlying reality, which was the system was strained before the pandemic.”

A NEW WAR ON CHRISTMAS

Republican strategists are seizing on possible Christmas shortages to bash Biden’s policies as inflationary, and thwart his attempt to push a multi-trillion dollar spending package through Congress in coming weeks.

A recent op-ed by Steve Cortes, a one-time advisor to former President Donald Trump, dubbed the upcoming holiday season “Biden’s Blue Christmas,” continuing in a long tradition of conservatives criticizing Democrats over celebrations around the Christian holiday.

Trump, considered the front-runner Republican candidate for president in 2024, blasted it out in a mass email through his political action committee, Save America.

Seth Weathers, a Republican strategist who ran Trump’s Georgia campaign in 2016 said they see local impact. “People here in Georgia are paying twice as much for items than they paid a year ago and they are blaming Biden. He’s in charge.”

A Quinnipiac poll released last week showed Biden is losing the public’s trust on the economy, with only 29% of public thinking the U.S. economy is in “good” or “excellent” condition, compared with 35% in April.

“President Biden could use a holiday season win,” Quinnipiac polling analyst Tim Malloy said. “A slowdown of holiday season deliveries and the financial strain that comes with it would be coal in the stocking for the Administration at the close of the first year in office.”

(Reporting By Jarrett Renshaw and Trevor Hunnicutt; Editing by Heather Timmons, Richard Pullin and Aurora Ellis)

Winners and losers in energy sector from Texas cold snap

(Reuters) – A winter storm that hit parts of the southern United States over the past week led several energy companies to report stronger-than-expected results after they were called on to provide more power at higher prices, while others faced millions of dollars in losses.

Here is a look at the winners and losers in the energy sector from the storm:

WINNERS:

Gas producers:

Comstock Resources said the last week was “like hitting the jackpot,” adding it was able to sell at “super-premium prices” a material amount of production at anywhere from $15 per million cubic feet of gas (mcf) to as much as around $179 per mcf.

EQT Corp said it also benefited from the high prices. The company mainly produces gas out of the Marcellus and Utica shale regions in Pennsylvania and Ohio.

Australia’s Macquarie Group, the second biggest gas marketer in North America after oil major BP, lifted its profit guidance on Monday due to the effects of the extreme winter weather. It expects 2021 profit to rise by 10%, after earlier anticipating earnings to drop.

Other natural gas-weighted production companies, including Cabot Oil & Gas, Southwestern Energy Co, Range Resources Corp and Antero Resources, may benefit from the freeze, Morgan Stanley analysts said in a note.

Refiners with limited exposure to Texas markets:

Shares of refiners such as HollyFrontier Corp and Valero Energy Corp rose after the freezing temperatures knocked a large swath of U.S. Gulf Coast refining offline, said Bob Yawger, director of energy futures at Mizuho. Eurozone refiners, including Shell and Total, are positioned to benefit as they ramp up their shipments of gasoline into New York Harbor, he said.

LOSERS

Utilities:

Just Energy on Monday raised doubt about its ability to continue as a going concern, after it forecast a $250 million loss from the winter storms.

Innergex Renewable Energy Inc forecast a financial impact of up to C$60 million ($47.48 million) on its Texas wind farms.

Algonquin Power & Utilities Corp said on Friday it expects the potential hit to adjusted core earnings for this year to be between $45 million and $55 million after the cold weather restricted production at its Renewable Energy Group’s Texas-based wind facilities.

Atmos Energy said on Friday it purchased natural gas for an extra $2.5 billion to $3.5 billion due to higher cost of the fuel, adding it was evaluating financing options to pay for the additional purchase cost.

Vistra Corp estimated a one-time adverse impact of between about $900 million and $1.3 billion, and said it was unable to reaffirm or adjust its 2021 guidance.

Oilfield Services:

Solaris said on Monday last week’s weather would have an impact on first quarter financials, but did not quantify the hit.

Shale oil producers:

Shale oil producers in the southern United States could take at least two weeks to restart the more than 2 million barrels per day of crude output that shut down. Some production may never return, analysts said.

Diamondback Energy said it expects the weather to wipe off up to five days of production in the current quarter.

Cimarex Energy Inc said it expects an up to 7% hit to production volume in the quarter.

Occidental Petroleum forecast first-quarter Permian production of 450,000 barrels of oil equivalent per day to 460,000 boepd, including a 25,000 boepd hit from downtime related to the winter storm.

Laredo Petroleum said its Permian Basin operations were affected for the last 12 days and estimated the combined impact of shut-in production and completions delays to reduce first-quarter total output by about 8,000 boepd and oil production by about 3,000 bpd.

Gulf refiners:

Refiners with oil processing facilities along the Gulf Coast, the main U.S. refining hub, such as Phillips 66 and Exxon Mobil, were forced to halt operations. By Thursday last week, the historic sub-zero temperatures in Texas and Louisiana shut at least 3.5 million barrels per day, or about 19%, of U.S. refining capacity.

($1 = 1.2636 Canadian dollars)

(Compiled by Arundhati Sarkar and Arathy S Nair in Bengaluru, Laila Kearney and Devika Krishnakumar in New York and Rod Nickel in Calgary; Editing by Sonya Hepinstall, Arun Koyyur and Sriraj Kalluvila)