Despite Iran conflict, U.S. oil production is unlikely to budge
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Recruitment, development, career transition. LHH, a beautiful working world. Discover recruitment solutions at LHH.com slash beautiful. What do you think? Pretty interesting 48 hours, huh? From American Public Media, this is Marketplace. In Los Angeles, I'm Kyle Rizdal. It is Monday today. This one is the 23rd of June. Good as always to have you along, everybody.

Tell you what, raise your hand if you saw the news Saturday evening and said, man, Monday is going to be ugly in the markets.

Yeah, me too. Did the exact same thing. In the event, though, traders of pretty much everything went on sort of a relief rally today after the choreographed Iranian response. So to get a sense of what is going on, not just on Wall Street, but everywhere in this economy right now, we've called Martha Gimbel. She's the executive director of the Budget Lab at Yale. Martha, good to talk to you again.

Good to talk to you. So this does seem to be another big pile of uncertainty piled on top of an existing pile of uncertainty. Yeah. I mean, uncertainty is the name of the game in 2025. I do think that part of what you were seeing today was people thinking, oh, maybe the uncertainty is not going to be as bad as I thought it was going to be.

I wonder, though, if the economy had had taken the the sideways turn that a lot of people thought it was going to take right after tariffs and when people were using, you know, recession pretty, pretty easily. If the economy wasn't as solid as it is now, might this weekend have played out differently? What do you think?

I think that part of what you're seeing is people just realizing that they can operate in this uncertain environment. So, yes, tariffs have introduced uncertainty, but people have kind of learned to live with that. And now people are deciding that they're going to live with increased uncertainty in the Middle East as well. What are you watching? Just to sort of put a put a punctuation mark on the Middle East, because today honestly turned out to be something less than I think a lot of people thought it would be. What are you watching going forward?

I mean, to be clear, when Saturday happened, I immediately sent my husband out to fill the tank with gas. So I was with you. Yeah. You know, I was looking at oil prices, which now do look like they've kind of calmed down. People think that this particular military action doesn't seem to be heralding a bigger conflict. I'm not a geopolitical expert, so I defer to others.

But I do think that in some ways the bigger news from today was in treasuries, which were starting to come down a little bit as you had members of the feds kind of signaling that, hey, we might be more open to cutting rates than you all were previously thinking. Yeah. So let's talk about that with the caveat that we've got Justin Ho coming up in a minute on the bond market. But I do want to point out that now that we have three members of either the board of governors or regional fed presidents, Chris,

Chris Waller, Michelle Bowman, and today Austin Goolsbee, all saying, yeah, you know, maybe if it's not so bad, July could be a cut. That does seem to me to be something. Yeah, I mean, it's certainly, I think, unanticipated by a lot of people. I think a lot of us thought that they were going to want to take longer to see what the impact of tariffs was going to be on inflation. But inflation's kind of come in low. Mm-hmm.

And there are some signs that maybe the economy isn't as strong as it looks at the headline. And so maybe there's room for a cut and then they can see what happens. Play out that there are signs that maybe it's not as strong as it looks. Say more about that.

You know, we've had a little bit of a rising unemployment rate. It was obviously low. I think there's also questions about what the deportations will do to the labor market. A ton of our economic growth in recent years has come from increased immigration. And so if there starts being increased fear, people aren't going to work.

there's decreased immigration that might start holding back the labor market, which could then hold back the overall economy as well. Last thing, Martha, and then I'll let you go. And I want to talk about it in terms of the U S as the safe haven, right? We are now fully engaged in a war. Well, not fully engaged. We've done our thing and hopefully everything stays the way it is, but, but we have played our part as it were.

In a war in the Middle East and this comes on the president pulling the United States out of a lot of parts of this global economy. We saw the selling America trade around the second of April tariffs right where people were selling bonds and selling the dollar. Our standing in the global economy discuss and you got a minute to do that.

I go back to what I said at the beginning of this, which is uncertain. Right. You know, I think the thing that's hard is people expect all of this to play out immediately. People are going to have to figure out like where are places that they feel comfortable investing? Are there alternatives to the United States?

Or are they going to stick with us for now? I think you saw a little bit of that today and recently where, given some of the tensions in the Middle East, it does look like some people are moving back into U.S. assets because it's comfortable at a time of increased uncertainty. That may not hold next week. We'll see. Right, right. That's the thing. We don't know what the next week will bring. Martha Gimbel, she's running the Budget Lab at Yale. Martha, thanks a bunch. Thank you for having me. On Wall Street today, stocks up, oil down, details, numbers, you know the drill.

All right. So the bond market, as promised, the bond market today was a little complicated, not a whole lot of safe haven buying. See also the not all that threatening so far Iranian response. But also, as I said, more comments from people on the Fed that, yeah, maybe we could cut rates in July. Well, as it happens, the Treasury Department is getting set for some bond auctions this week, which, by way of reminder, come as President Trump's tariffs and the GOP's tax cut bill close.

muddy the economic waters a bit. Marketplace's Justin Ho looked into how those auctions have been going lately and what they've been telling us about what investors expect. Back in April, the Treasury Department held an auction for bonds that mature in three years, and it didn't exactly go well. I think at the time I said it was arguably one of the worst ones ever. Lawrence Gillum is chief fixed income strategist at LPL Financial. He says there wasn't much demand for those treasuries, and investors that showed up wanted to be paid higher yields.

yields. Gillum says investors were worried about all of the new tariffs and their potential impact on inflation. They were also concerned about the deficit and all of the new bonds the Treasury Department would have to issue in the future to finance it. When you have a situation where supply of something is going to increase, you tend to see prices go down, yields go up in anticipation of just the amount of supply coming to market.

And that's exactly what happened over the next few weeks. The yield on the 10-year T-note jumped between early April and late May. Thing is, Gillum says those higher yields started to make investors want to buy bonds. And that's helped Treasury auctions go much more smoothly in the time since. Investors have shown up pretty regularly and at the prices that the Treasury Department is willing to pay for these securities.

Another reason investors have been showing up more recently is because of all the new geopolitical uncertainty in the Middle East, says Randy Vogel, head of fixed income at Wilmington Trust. Whenever that kind of global type of risk increases, you know, markets are going to flee to what's still the safe haven asset of treasuries. And let's not forget all of the ongoing economic risks thanks to the president's tariffs. Guy Labar is chief fixed income strategist at Jenny Montgomery Scott.

If I don't know whether those tariffs next month are going to be 0%, 10%, 48% or double that, it's very, very hard to make decisions.

decisions, then that impacts real economic activity. And the boss says that's yet another reason for investors to buy government bonds. Slowing economic growth and a maybe recession means interest rates should fall. And so that means, or at least for bond market participants who broadly agree with that, they should be buying right now. Which means treasury auctions will probably keep going smoothly over the coming months. I'm Justin Ho for Marketplace.

Among the social media posts from the president of the United States today was one that said, and this is a quote, Everyone, keep oil prices down. I'm watching. All caps. Exclamation points. I hope that came through there. Another called on the Department of Energy, and this is another quote, to drill, baby, drill, and I mean now. Exclamation points again.

With the caveat that that's not how any of this works, and noting today's tumble in crude prices because the Iranian counterattack wasn't worse, oil prices are still up the past few weeks. And those higher prices could benefit U.S. oil companies, which, despite the president's exhortations, have been, shall we say, reluctant to do more drilling of late. Marketplace's Henry Epp reports.

Before crude prices began rising earlier this month, here was the backdrop for U.S. oil producers. One, there was already a lot of oil on the market, and OPEC countries were talking about increasing supply even more. Two, the outlook for global economic growth and oil demand was shaky, says Hugh Daigle at UT Austin.

And so in general, the producers have been exhibiting a lot of discipline in not expending a lot of capital, not really increasing their drilling rate and their rig count.

On top of that, tariffs on steel have added to producers' costs because drilling for oil requires a lot of the metal. So even though oil prices may be a bit more favorable for U.S. producers now, a lot of them may hold off on drilling. The ones that could start, Daigle says, are smaller.

I'm thinking particularly of ones that might operate in West Texas in the Permian Basin. They could say, hey, maybe let's drill a couple of additional wells and bring them online right now while we can. Drilling isn't a sure bet because oil prices are jumping around a lot due to geopolitical risks, not any fundamental change in supply or demand, says Morgan Bazilian at the Colorado School of Mines.

That kind of price situation, especially the volatility and the uncertainty,

rarely makes for a clear investment decision anywhere, including domestically. Still, even if they don't expand drilling, U.S. oil companies will benefit from higher prices, says Clark Williams Derry at the Institute for Energy Economics and Financial Analysis. The oil industry is probably going to be content to just sort of sit back, take higher profits and not adjust their drilling plans drastically.

Williams Dairy says what could get them to actually expand drilling is if oil prices jumped up even further and stayed high. But bringing that production online would take months. I'm Henry App for Marketplace.

The thing about the modern industrialized economy, one of the things, I guess, is that it relies on natural resources of virtually all kinds. Oil, of course, Henry Epp was just talking about that. Copper and aluminum and wood and so many others, including some that, honestly, not too many people have probably even heard of. And today in that category is a flaky, white-ish mineral called trona that goes into everything from beer bottles to kitty litter.

And it turns out that the biggest natural deposit of it is in Wyoming. Wyoming Public Radio's Caitlin Tan takes us to where the supply chain starts. A giant cage elevator lowers me and miner Cale Pitt in his hard hat from the surface of southwest Wyoming into the underground world of Trona mining. Tiny light at the very bottom is where we're headed. It's a little over 1,600 feet. How deep? 1,600 feet.

As the elevator descends, it gets warmer. Dust hangs in the air. Four minutes later, the cage opens up to a dark abyss of mine tunnels. How you guys ready? Pitt's headlamp catches shimmers of trona crystal on the walls, ceiling, and floor. Kind of has a hollow type sound to it. The mine operates 24-7 and is a labyrinth of 3,000 miles of rough two-track.

So to get anywhere, you gotta drive. It takes a few months to learn where you're at in the mine to navigate. Does Google Maps work down here? No, we don't have any GPS or any phone service. They communicate via radios, which are also used to let people know about big things like family emergencies or... Super Bowl scores and things like that.

A little farther in the tunnel, Pitt pulls up to a crew of burly, sweaty men. He yells over the loud mining sounds. You guys all good? It's all good. Thanks.

The workers are coming off a 12-hour shift mining those sparkling chunks of rock, which are a big deal for Wyoming. Above ground, they're processed into a fine powder called soda ash, which is an ingredient in so many things we all use, like baking soda, windows, and even the batteries in your phone.

John Conrad heads up governmental affairs for Tata Chemicals, which runs this mine. We meet above ground in his office, and he says Wyoming is the place for Trona. 90% of the world's economically mineable Trona is here, here on top of today. Now, there is a way to make soda ash without Trona, using chemicals. It's called synthetic soda ash, and the main producer? China. I mean, that's our threat.

Their ability to make soda ash at a cheaper price are just the same. The majority of the world's soda ash comes from China's synthetic pile. So Conrad says Wyoming is trying to hold its place in the market. But U.S. trade policy could disrupt that. Most of Wyoming's soda ash is exported, and Conrad is worried about reciprocal tariffs imposed by countries that buy it. If some of our overseas markets don't want to compete or pay the tariffs, they'll probably turn to China.

Threatening Wyoming's $1.5 billion industry and thousands of jobs. Conrad says they have capacity to mine even more trona, which means more jobs and money flowing. But they're waiting for the global politics to quiet down.

It's everything but quiet 1,600 feet underground with minor Cale Pitt. He wants to show me the gut of the operations here. A half dozen workers are cutting 450 feet into the rock wall today. Morning light is starting, so they're going to start our panel belt up. Pitt stands in a sludge that occasionally bubbles. Methane gas coming out of the floor will start bubbling up out of water.

Too much methane shuts down the machines. A snaky tube shoots in fresh air and the mining equipment fires back up. The crew guides a giant machine that chews through the wall and spits out chunks of trona that slide onto a conveyor belt. That'll bring the trona above ground to be processed and eventually used all over the world. 1,600 feet below the desert of southwest Wyoming, I'm Caitlin Tan for Marketplace.

Coming up... A little teeny hippo that has a little tutu on, and it's just adorable. Exit through the gift shop, please. But first, let's do the numbers.

Dow Industrials up 374 points today, 9 tenths percent, closed at 42,581. Did the blue chips, the NASDAQ, lift at 183 points, also 9 tenths percent, finished at 19,630. The S&P 500 added 57 points. Any guesses what that was percentage point-wise?

Yes, nine-tenths of 1%, 6,025. Oil dropped, as I said. Checking some oil and gas exploration stocks. Schlumberger slipped 5.9% today. Occidental Petroleum fell back about 3.7%. ConocoPhillips.com.

down 3.1%. Novo Nordisk lost 5.5%. Today, results of next-generation obesity drug tests proved somewhat disappointing. Also, the pharmaceutical company also reported it's ending an obesity drug collaboration with HIMS and HERS Health, which promptly lost 34%. Tesla is running robo-taxis in Austin, Texas for a limited group of testers. That news sent shares up there. Tesla up 8.2%. You're listening to Marketplace. Here's why April chose to vaccinate her child.

I think actually meeting someone who was not vaccinated and now has a lifelong struggle with a childhood disease really cemented for me that it's super important that we as parents continue to vaccinate our children. Talk to your pediatrician or visit whyvaccines.com. Brought to you by Merck.

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Investing is risky. Robinhood Financial LLC member SIPC is a registered broker-dealer. Other fees may apply. This is Marketplace. I'm Kyle Rizdahl. The housing market stirred ever so slightly last month. Existing home sales were up eight-tenths of one percent April to May. That is fresh data from the National Association of Realtors. Still, though, down year over year and way down from the peak of the post-COVID housing boom.

Part of the reason why? Well, it turns out renting isn't looking so bad right now for both buyers and sellers. Marketplace's Matt Levin has more.

Even though buying a home feels like one of those fading pandemic activities that has gone the way of making your own sourdough bread, homes are still really expensive. The median national sales price for a home sold last month was almost $423,000, a record high for the month of May. Meanwhile, rents are not as high as they used to be, or at least not getting much higher. Lawrence Yoon is an economist at the National Association of Realtors.

So anytime when you have a more stable rent, so in some markets like Austin, Texas, Jacksonville, where rents are actually falling, it doesn't provide urgency to look for purchasing a home. If you don't think your landlord is going to jack up your rent 10% when your lease expires, the appeal of locking in a high mortgage payment for the next 30 years loses some luster.

Plus, who wants to fork over their life savings for a down payment when the economy feels so uncertain? I mean, did you listen to the first half of the show? Selma Hipp is an economist at the real estate data company Cotality. See,

Similarly to businesses, we've seen in consumer data that consumers are holding off big decisions as well. So whether, you know, they were renting and they've been thinking about buying, they may hold off on that. Would-be home sellers are also increasingly opting to just rent out their properties instead of listing them.

A lot of homeowners are sitting on bargain basement mortgage rates of two or three percent they got after the pandemic hit, which makes the economics of renting pretty profitable. The

The National Association of Realtors, YUN, has a name for them, incidental landlords. They don't want to give up those low interest rate environment. And the rents they can extract is much higher than the mortgage payment obligations. If, say, you have to move to a new city for a new job, maybe you rent out your old home and rent your new one and wait for rates and the market and the world to normalize again.

I'm Matt Levin for Marketplace. Absent, understandably, from the news firehose the past couple of days has been much talk of tariffs, which, again, one understands.

But tariffs are, though, very much still a thing. And for those at the end of the supply chain think small businesses, those tariff-induced higher prices mean lower margins, which makes running a business all the more tricky. Here's today's installment of our series, My Economy. My name is Catherine Lundeen from Lundeen's Gifts in Culver City, California. People always ask what kind of store. It really is a true gift store.

We've been around for 17 years this July. You know what they're going to ask for? They're going to ask for, do you have a jellycat? People love it so much. I think being in Culver City has its unique charm.

problems after COVID because it's such a studio city. And so I relied on all of the studios and I'm right in the hub of it. So like at lunchtime, I was super busy because everyone was out at lunch and that was my time. And now naively, I thought,

We would get back to that. And this year, honestly, we're starting to see a little bit more people in the offices, but it's been a tough five years. The tariffs haven't impacted me yet. It's impacted my emotional well-being. Hundreds and hundreds of emails of companies saying, not yet. We don't know if we're going to increase our price. We don't know what we're going to do. It's also uncertain.

A sales rep came in and she said, you have to buy now. And I'm like, are you just trying to scare me into buying stuff right now? We're looking at a little teeny hippo that has a little tutu on and it's just adorable. And they have little mice. This is a Danish company and they are all manufactured in China. So they are doing...

Starting, I believe it was June 1st, 10% tariff. I priced these out like a little bit higher than I normally would because when I get them back in, it's going to be a higher price point. The holidays are where retail make all their money for the whole year. If you don't have a good holiday, you are not going to make the rest the next year. You will have to close.

So depending on how well the holidays are this year, I will sign another year lease next March, I hope. I love doing this. I don't know what else I will do. I'm 53, I'm 54. What am I going to do? This is what I want to do. I get that. Same here. Catherine Lundeen, owner of Lundeen's Gifts in Culver City, California.

We cannot do this series without you. So write to us, won't you? Let us know what's going on. Marketplace.org slash my economy.

This final note on the way out today, just to put some actual numbers behind the so far biggest economic story of this war in the Middle East. Crude oil today, Brent North Sea, that's the global benchmark, down 8.9%, $70.14 a barrel. Martha Gimbel's watching that. I'm watching that too. Our daily production team includes Andy Corbin, Nicholas Guillaume, Maria Hollenhorst, Eru Ekpenobi, Sarah Leeson, Sean McHenry, and Sophia Terenzio.

I'm Kyle Risno. We will see you tomorrow, everybody. This is APM. This Old House has been America's most trusted source for all things DIY and home improvement for decades. And now we're on the radio and on demand. I think you're breaking into this wall regardless. I was hoping you wouldn't say that. I need to go and get some whiskey, I think. I would get the whiskey for sure. Subscribe to This Old House Radio Hour from LAist Studios, wherever you get your podcasts.