Aurelia Butler

Gazprom’s statement came a day after it said it would not resume gas supply to Germany via Nord Stream 1 until an oil leak it said it had detected in a turbine was fixed. It said the repairs could only be carried out at a specially fitted workshop.The Kremlin has blamed Western sanctions for disrupting Nord Stream 1 and putting barriers in the way of routine maintenance work. Western officials have rejected this claim and Siemens Energy said sanctions do not prohibit maintenance.Before the latest round of maintenance, Gazprom had already cut flows to just 20% of the pipeline’s capacity. “Siemens is taking part in repair work in accordance with the current contract, is detecting malfunctions … and is ready to fix the oil leaks. Only there is nowhere to do the repair,” Gazprom said in a statement on its Telegram channel on Saturday.Siemens Energy said it had not been commissioned to carry out the work but was available, adding that the Gazprom reported leak did not normally affect the operation of a turbine and could be sealed on site. “Irrespective of this, we have already pointed out several times that there are enough additional turbines available in the Portovaya compressor station for Nord Stream 1 to operate,” a spokesperson for the company said.Flows through Nord Stream 1 were due to resume early on Saturday morning. But hours before it was set to start pumping gas, Gazprom published a photo on Friday of what it said was an oil leak on a piece of Nord Stream 1 equipment.Siemens Energy, which supplies and maintains equipment at Nord Stream 1’s Portovaya compressor station said on Friday the leak did not constitute a technical reason to stop gas flows.Europe has accused Russia of using gas supplies as a weapon in what Moscow has called an “economic war” with the West over the fallout from Russia’s invasion of Ukraine.Asked about the halt on Saturday, Economic Commissioner Paolo Gentiloni said the European Union expects Russia to respect energy contracts it has agreed but was prepared to meet the challenge if Moscow fails to do so.German network regulator said the country’s gas supply was currently guaranteed but the situation was tense and further deterioration could not be ruled out.”The defects alleged by the Russian side are not a technical reason for the halt of operations,” the Federal Network Agency said in its daily gas situation report. More

The discounts on cars and trucks that US dealerships traditionally offer over holiday weekends have vanished as tight supply has turbocharged pricing enough to help fuel inflation.Eric Frehsee, president of family-owned Tamaroff Jeffrey Automotive Group in suburban Detroit, remembers how as a teenager, Labor Day at the dealership meant balloons, barbecue and discounts designed to clear the lot before the next year’s models began arriving in October.But the business of selling cars has changed so much since the pandemic’s start that Frehsee, now 37, is closing the dealership for the weekend. If a customer wants to buy, the finance manager is watching his iPad.“We’d always have a three-day blitz, with additional incentives and rebates and special financing,” he said. But now, as manufacturers struggle to produce enough vehicles to feed consumer demand, “incentives have kind of gone away, so there’s no need for that blitz”.The price of a new vehicle has climbed steadily over the past two and a half years. The average transaction price reached a record-setting $48,182 in July, an increase of 24 per cent since March 2020, according to data from Kelley Blue Book, a brand owned by Cox Automotive.New and used vehicle prices have helped to drive inflation upward over the past year. The consumer price index in July rose 8.5 per cent over the previous 12 months. The price for new vehicles rose 10.4 per cent in July, while used cars and trucks climbed 6.6 per cent. Together the two categories contributed 0.7 percentage points to the overall increase.Price growth has been fuelled by what EY-Parthenon chief economist Gregory Daco called a “significant mismatch” between vehicle supply and demand. Consumer demand for new cars and trucks rebounded more quickly than carmakers expected after Covid-19 forced plants to suspend production for months. The supply of new vehicles tightened further last year when carmakers worldwide confronted a shortage of semiconductors, a key component in systems ranging from power steering to anti-lock brakes.Inventories at dealerships around the US sit at near-record lows. In July, dealers reported they had between 30 and 40 days of inventory on hand, according to Kelley Blue Book. Inventory has increased 27 per cent from a year earlier, when days’ supply dipped into the 20s.At Frehsee’s business, inventory has dipped from a 120-day supply three years ago, to 10. His lots used to have about 1,000 vehicles parked on them. Now it is fewer than 100, and cars and trucks are parked horizontally to make the lots appear fuller. Half the 200 vehicles he has arriving this month are already sold.While the current level of about 1.1mn new vehicles for sale is too lean for the industry, it is unlikely to ever rebound to pre-pandemic levels, when it was more than three times higher, said executive analyst Michelle Krebs at Cox Automotive.“Automakers and dealers have learned that demand outstripping supply means bigger profit margins and less discounting,” she said.Incentives in August decreased 51 per cent compared to a year ago, to an average of $877 per vehicle, Deutsche Bank analyst Emmanuel Rosner wrote in a note.

Tamaroff Jeffrey is selling most cars and trucks these days at the manufacturer’s suggested retail price, Frehsee said. The dealership has had record profits. But he worries that sales could decline if changing economic conditions make the vehicles less affordable. For now, many of his customers are trading-in leased vehicles with substantial equity, and those trade-in values work to keep their new vehicle payments in the range they are used to paying.“Rising gas prices, rising interest rates and the decrease of incentives are leading to much higher car payments, and with the economy being so volatile right now there are definitely concerns about people . . . being able to absorb all these increases,” he said.The median period a US consumer owns a vehicle is six years. JD Power analyst Tyson Jominy said that means there are still Americans who have not shopped for a car or truck since before the pandemic “and are completely unaware of the conditions at a dealership: All you basically see are asphalt or used cars.”But even if a recession looms on the horizon, he said, low inventory levels, high pricing and limited discounts mean the industry will be well prepared. The large, eye-catching props that car dealers have traditionally used to capture consumers attention will not be necessary.“Do not expect any great deals, do not expect the inflatable gorilla to be out there,” Jominy said. “It’s not the same sales environment this Labor Day.” More

JAKARTA (Reuters) – Indonesian President Joko Widodo on Saturday raised some fuel prices by around 30% to contain ballooning spending on energy subsidies in Southeast Asia’s biggest economy.The move risks sparking protests and further fanning price pressures, though analysts saw a need to act to ensure fiscal discipline.WHAT HAS BEEN DECIDED ON FUEL PRICES?Indonesia raised the price of its most popular 90-octane gasoline, known as Pertalite, to 10,000 rupiah ($0.6714) per litre, up from 7,650 rupiah. The finance ministry said state energy firm Pertamina’s production costs for this type of fuel was 14,450 rupiah per litre.The price of diesel rose to 6,800 rupiah per litre, from 5,150 rupiah, compared with a production cost of 13,950 rupiah.Jokowi, as the president is popularly known, also hiked the price of 92-octane gasoline, known as Pertamax, to 14,500 rupiah per litre, from 12,500 rupiah. Pertamina does not receive compensation for losses in Pertamax sales.WHY RAISE FUEL PRICES NOW?The government has already tripled its energy subsidy spending this year from the original budget to 502.4 trillion rupiah ($33.83 billion) to keep subsidised fuel prices and some power tariffs unchanged amid high global energy prices. This has resulted in a widening price disparity between subsidised and non-subsidised fuel, prompting consumers to switch to cheaper fuels.Some economists have said raising fuel prices this year would reduce the risk of spending overruns in 2023 when the government must lower its fiscal deficit to below 3% of GDP.WHY IS HIKING FUEL PRICES CONTROVERSIAL?Fuel prices are a politically sensitive issue in Indonesia and with subsidised fuels making up more than 80% of Pertamina’s sales, the changes will have major implications for households and small businesses. Big companies are not allowed to buy subsidised fuels for their operations.Previous price increases had led to mass protests across the archipelago, including when Jokowi last raised fuel prices in 2014.The current price hike comes at a time when food prices are already trending up. August inflation was 4.69%, above the central bank’s target range for three months in a row.The government has this week started to distribute cash from a $1.6 billion additional social protection fund to cushion price pressures for the poor.Elections are set to be held in 2024.HOW WILL THE MEASURES IMPACT INFLATION, GDP?Pertamina has estimated a 30% to 40% increase in fuel prices could add 1.9 percentage point to inflation in 2022, but this assumed a bigger increase in some prices.Some economists and business groups think inflation could pick up to around 6% by the end of the year, putting pressure on the central bank to tighten monetary policy more quickly.Bank Indonesia (BI) raised interest rates on Aug. 23 for the first time since 2018 in a move analysts said was to pave the way for the fuel price hike announcement. BI is still well behind most peers in its roll back of pandemic-era stimulus and economists expect more hikes. The potential reduction in purchasing power and higher interest rates could hurt economic growth. The government targets 2022 GDP growth at 5.2%.WHAT HAPPENS TO SUBSIDY BUDGET NOW?Finance Minister Sri Mulyani Indrawati said even with the fuel prices increase, the government’s energy subsidy spending would still swell.She estimated energy subsidy allocation this year will range between 591 trillion rupiah to 649 trillion rupiah after the price hike, assuming the Indonesia Crude Price moves between $85 to $100 per barrel for the remainder of the year.The government may shift about 100 trillion rupiah of subsidy payments to 2023, pending parliamentary approval, Sri Mulyani said.She did not give any assessment on how the price hike would affect the 2022 budget deficit outlook. Her latest forecast was for a fiscal gap equivalent to 3.92% of GDP.($1 = 14,895.0000 rupiah) More