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    Biden Administration Releases Plan for $50 Billion Investment in Chips

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    The Commerce Department issued guidelines for companies angling to receive federal funding aimed at bolstering the domestic semiconductor industry.WASHINGTON — The Department of Commerce on Tuesday unveiled its plan for dispensing $50 billion aimed at building up the domestic semiconductor industry and countering China, in what is expected to be the biggest U.S. government effort in decades to shape a strategic industry.About $28 billion of the so-called CHIPS for America Fund is expected to go toward grants and loans to help build facilities for making, assembling and packaging some of the world’s more advanced chips.Another $10 billion will be devoted to expanding manufacturing for older generations of technology used in cars and communications technology, as well as specialty technologies and other industry suppliers, while $11 billion will go toward research and development initiatives related to the industry.The department is aiming to begin soliciting applications for the funding from companies no later than February, and it could begin disbursing money by next spring, Gina Raimondo, the secretary of commerce, said in an interview.The fund, which was approved by Congress in July, was created to encourage U.S. production of strategically important semiconductors and spur research and development into the next generation of chip technologies. The Biden administration says the investments will lessen dependence on a foreign supply chain that has become an urgent threat to the country’s national security.“This is a once-in-a-lifetime opportunity, a once-in-a-generation opportunity, to secure our national security and revitalize American manufacturing and revitalize American innovation and research and development,” Ms. Raimondo said. “So, although we’re working with urgency, we have to get it right, and that’s why we are laying out the strategy now.”Trade experts have called the fund the most significant investment in industrial policy that the United States has made in at least 50 years.It will come at a pivotal moment for the semiconductor industry.Tensions between the United States and China are rising over Taiwan, the self-governing island that is the source of more than two-thirds of the most advanced semiconductors. Shortages of semiconductors have also helped to fuel inflation globally, by increasing delivery times and prices for electronics, appliances and cars.Semiconductors are crucial components in mobile phones, pacemakers and coffee makers, and they are also the key to advanced technologies like quantum computing, artificial intelligence and unmanned drones.With midterm elections fast approaching, the Biden administration is under pressure to demonstrate that it can use this funding wisely and lure manufacturing investments back to the United States. The Commerce Department is responsible for choosing which companies receive the money and monitoring their investments.In its strategy paper, the Commerce Department said that the United States remained the global leader in chip design, but that it had lost its leading edge in producing the world’s most advanced semiconductors. In the last few years, China has accounted for a substantial portion of newly built manufacturing, the paper said.The high cost of building the kind of complex facilities that manufacture semiconductors, called fabs, has pushed companies to separate their facilities for designing chips from those that manufacture them. Many leading companies, like Qualcomm, Nvidia and Apple, design chips in the United States, but they contract out their fabrication to foundries based in Asia, particularly in Taiwan. The system creates a risky source of dependence for the chips industry, the White House says.The department said the funding aimed to help offset the higher costs of building and operating facilities in the United States compared with other countries, and to encourage companies to build the larger type of fabs in the United States that are now more common in Asia. Domestic and foreign companies can apply for the funds, as long as they invest in projects in the United States.To receive the money, companies will need to demonstrate the long-term economic viability of their project, as well as “spillover benefits” for the communities they operate in, like investments in infrastructure and work force development, or their ability to attract suppliers and customers, the department said.Projects that involve economically disadvantaged individuals and businesses owned by minorities, veterans or women, or that are based in rural areas, will be prioritized, the department said. So will projects that help make the supply chain more secure by, for example, providing another production location for advanced chips that are manufactured in Taiwan. Companies are encouraged to demonstrate that they can obtain other sources of funding, including private capital and state and local investment.The Commerce Department is setting up two new offices housed under the National Institute of Standards and Technology to set up the programs.One of the department’s biggest challenges will be ensuring that the government funds add to, rather than displace, money that chip making companies were already planning to invest. Companies including GlobalFoundries, Micron, Qualcomm and Intel have announced plans to make major investments in U.S. facilities that may qualify for government funding.The chips bill specifies that companies that accept funding cannot make new, high-tech investments in China or other “countries of concern” for at least a decade, unless they are producing lower-tech “legacy chips” destined to serve only the local market.The Commerce Department said it would review and audit companies that receive the funding, and claw back funds from any company that violates the rules. The guidelines also forbid recipients from engaging in stock buybacks, so that taxpayer money doesn’t end up being used to reward a company’s investors.“We’re going to run a serious, competitive, transparent process,” Ms. Raimondo said. “We are negotiating for every nickel of taxpayer money.”In addition to the new prohibitions on investing in chip manufacturing facilities in China, officials in the Biden administration have agreed that the White House should take executive action to scrutinize outbound investment in other industries as well, Ms. Raimondo said.But she added that the administration was still working through the details of how to put such a policy in place.Earlier versions of the chips bill also proposed setting up a broader system to review investments that U.S. companies make abroad to prevent certain strategic technologies from being shared with U.S. adversaries. That provision, which would have applied to cutting-edge technologies beyond the chips sector, was stripped out of the bill, but officials in the Biden administration have been considering an executive order that would establish a similar review process.The United States has a review system for investments that foreign companies make in the United States, but not vice versa.The Biden administration has also taken steps to restrict the types of advanced semiconductors and equipment that can be exported out of the United States.In statements last week, Nvidia and Advanced Micro Devices, both based in Silicon Valley, said they had been notified by the U.S. government that exports to China and Russia of certain high-end chips they produce for use in supercomputers and artificial intelligence were now restricted. These chips help power the kind of supercomputers that can be used in weapons development and intelligence gathering, including large-scale surveillance. Ms. Raimondo declined to discuss the export controls in detail but said the department was “constantly evaluating” its efforts, including how best to work with allies to deny China the equipment, software and tooling the country uses to enhance its semiconductor industry. More

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    Why Totino’s Needs 25 Ways to Make Pizza Rolls

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    It takes about 21 ingredients to make a Totino’s pizza roll, the bite-size snack that soared in popularity during the pandemic as people sought easy-to-make meals.And on any given day since last winter, at least one of those ingredients, if not many, has either been difficult to find or insanely expensive.The shortages became so bad at one point that General Mills, which makes Totino’s, simply couldn’t produce enough.“We had lots of empty shelves,” said Jon Nudi, the company’s president of North America. “Every time we had something fixed, something else popped up.”General Mills is not used to empty shelves. The company sells $19 billion worth of food a year, everything from Chex and Cheerios cereals, Annie’s organic Cheddar bunnies and Betty Crocker cake mixes to pet food under the Blue Buffalo brand. With 26 factories in North America, it juggles 13,000 ingredients from around the world for its many products.So the company’s scientists, supply chain heads and procurement managers began meeting daily late last year. The solution? The company found 25 ways — recipes, if you will — to make the pizza rolls, each with a slightly different list of ingredients, swapping in cornstarches, for example, for tapioca starch that had become hard to find, or substituting one kind of potato starch for another.From left, Nia Bowdoin, Conner Thompson, and Taylor May working in the Ingredion kitchen in Bridgewater, N.J.Lanna Apisukh for The New York TimesThe pizza roll conundrum is a microcosm of an issue that’s affecting the food industry more broadly. Managing soaring prices for most of the ingredients in cookies, chips and pizza is one thing. But for many food executives, the bigger headache now is wondering each week which ingredients will — or won’t — show up at their factories.For a while last year, sugar and low-calorie sweeteners like erythritol, which is used in products like yogurt and cereal, were tough to pin down. Then palm oil, an odorless and tasteless oil that’s in about half the packaged goods in supermarkets, became hard to find. After Russia invaded Ukraine, global supplies of sunflower oil, produced by both countries, disappeared. And more recently, because of the avian flu that swept across the United States this spring, egg prices soared, leading to shortages.While food companies have long had to manage scarcity of one or two ingredients because, say, drought reduced crop yields in a part of the world, the recent rolling shortages have affected multiple ingredients for a variety of reasons. And it’s not just ingredients that are M.I.A. Some packaging, such as aluminum cans, has been hard for soda and beer manufacturers to find.Many executives say the culprit is a combination of increased extreme weather patterns around the world because of the changing climate, global transportation and labor problems, the war in Ukraine, high energy prices, and ever-shifting consumer patterns in a post-Covid environment that make the years of data they collected to try to predict trends basically useless.“All of these wrinkles are cascading through the entire food system, and I don’t think anyone is banking on it resolving itself in the next 12 or 18 months,” said Joe Colyn, a partner at JPG Resources, which works with food companies and their supply chains. “Right now, supply trumps price. It’s more important to get surety of supply, because you can’t afford to shut the factory down because you don’t have what you need.”One ingredient being tested is pea protein, which adds texture to food.Lanna Apisukh for The New York TimesAfter years of whittling down the number of their suppliers to get better prices and keep up with quality control, food companies are racing to find alternatives. Just-in-time inventory systems that worked just fine for years are being overhauled, with companies adding warehouses, silos and storage tanks to hold raw ingredients and finished products for longer periods. They’re trying to reduce transportation costs, either by looking for manufacturers nearby or removing water from goods like vegetable and fruit juices — used frequently in beverages — and transporting them as concentrates.And, like General Mills, they’re revamping recipes, or “reformulating” in industry parlance. It’s not as easy as it sounds. Swapping out one oil or emulsifier for another not only can change the product’s texture or shelf life but can affect nutrition and allergy labeling.Testing substitute ingredients has become a greater focus at Ingredion, which food companies also hire to work on new products. Lanna Apisukh for The New York TimesThe Food and Drug Administration, which ensures that nutritional labels and other information on food are accurate, has put in temporary guidance to allow manufacturers to make “minor formulation changes” because of supply disruptions or shortages without updating the ingredient list.The leeway doesn’t apply to a change that increases the safety risk because it contains a food allergen or gluten, or that replaces a key ingredient or one featured in the name or marketing. For example, a product that claims to be made with “real butter” cannot now be made with margarine, and raisin bread must contain raisins.Before the pandemic, Ingredion, a company that makes sweeteners, starches and other ingredients used by large food companies, often had its 500 scientists and 26 labs all over the country working on new products for companies. But in recent months, much more of their time has been spent figuring out what happens to the taste, texture and shelf life of a food when one or two ingredients are switched out.“The overall reformulation of a product is a very complicated equation,” said Beth Tormey, a vice president and general manager of systems and ingredient solutions at Ingredion. “It has to meet parameters of texture and taste so that consumers like it, but it also has to fit into the regulatory box and the nutrition box. It all sounds simple from a distance, but it’s not.”Take eggs. They are, explained Leaslie Carr, a senior director at Ingredion, a key source of protein for many products, but they are more than that. For baked goods, for instance, they provide moisture and volume, helping make cakes light and fluffy.“Salad dressings also use a lot of egg for body and texture,” Ms. Carr said. “So we’re trying to figure out how to use different emulsifiers to reduce the amount of egg used, maybe reduce the egg amount by half, to produce the dressings. That gives you some flexibility to continue to manufacture the product until the egg situation stabilizes.”Mr. Thompson cutting out pizza rolls. “The overall reformulation of a product is a very complicated equation,” an Ingredion executive said.Lanna Apisukh for The New York TimesGeneral Mills started to notice the supply chain disruptions late last year.The company’s plant in Wellston, Ohio, which had churned out Totino’s pizza and pizza rolls, working to meet the surge in sales that accompanied the pandemic, suddenly couldn’t get key ingredients.“First it was the starch that we use for the cheeses,” Mr. Nudi said. “Then certain packaging and oils were hard to find. A lot of the materials that we use for Totino’s were challenged from an ingredient standpoint.”By February, there weren’t enough Totino’s pizza and pizza rolls to keep grocery freezer sections full.By then, the company had started daily meetings across its research and development, procurement and supply chain departments to figure out how to revamp and substitute ingredients. For instance when starch became difficult to find, the company began substituting and combining different starches in order to figure out what worked to make the pizza rolls look and taste the same.Ms. May removing pizza rolls from an oven. For General Mills, the starch in cheeses in its Totino’s pizza rolls was an early scarcity. Lanna Apisukh for The New York TimesIn March, the company had filled freezer sections again, Mr. Nudi said.But the lessons being learned from the “new normal” in the supply chain are being felt across the entire company.Before the pandemic, the packaged food industry was a stable environment, with a consistent level of growth, Mr. Nudi said. That made having a secure, steady supply of ingredients easier.Now General Mills is lining up multiple suppliers for each ingredient and keeping more ingredients on hand.“Just-in-time deliveries don’t work anymore,” Mr. Nudi said. “We’re adding to inventory, holding more dry ingredients and fats and oils, even though that’s tough too right now. We need tanks to store those liquids, and those just aren’t readily available.” More

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    At the Fed’s Big Conference, Investors Will Grasp for Hints About Rate Path

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    The most anticipated economic event of the summer is set to happen on Friday, when Jerome H. Powell, the Federal Reserve chair, provides an update on the economic outlook that could detail how the central bank is thinking about inflation and the path ahead for interest rates.Mr. Powell’s speech at the Federal Reserve Bank of Kansas City’s annual conference near Jackson, Wyo., is always closely watched. But it is getting special scrutiny this year as investors grasp for any hint at what might come next for the Fed, which has been raising rates rapidly in its campaign to tamp down the fastest rate of inflation in 40 years. Markets are trying to guess when the central bank, which raised rates by an unusually quick three-quarters of a percentage point at each of its last two meetings, will slow down.Inflation has shown some early signs of moderating, which could point toward a less aggressive Fed policy path. But prices are still increasing at more than three times the pace the Fed aims for, creating a pressing challenge for consumers who are struggling to afford day-to-day necessities like rent and food as wages fail to keep up.As officials weigh both glimmers of hope and a still-worrying pace of inflation, they are attempting to achieve a delicate balancing act. The Fed is trying to avoid restricting the economy so much that it plunges the United States into an unnecessary recession, while restraining it enough to bring price increases fully and firmly back under control.Mr. Powell has historically used his remarks at the conference, colloquially called Jackson Hole for the area where it is held, to detail big ideas. He laid out a new framework for monetary policy at the gathering in 2020 and in 2021 provided reasons — which have since failed to pan out — for why inflation might fade.Inflation F.A.Q.Card 1 of 5Inflation F.A.Q.What is inflation? More

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    Biden Signs Industrial Policy Bill Aimed at Bolstering Competition With China

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    WASHINGTON — President Biden on Tuesday signed into law a sprawling $280 billion bill aimed at bolstering American chip manufacturing to address global supply chain issues and counter the rising influence of China, part of a renewed effort by the White House to galvanize its base around a recent slate of legislative victories.Standing before business leaders and lawmakers in the Rose Garden, Mr. Biden said the bill was proof that bipartisanship in Washington could produce legislation that would build up a technology sector, lure semiconductor manufacturing back to the United States and eventually create thousands of new American jobs.“Fundamental change is taking place today, politically, economically and technologically,” Mr. Biden said. “Change that can either strengthen our sense of control and security, of dignity and pride in our lives and our nation, or change that weakens us.”The bipartisan compromise showed a rare consensus in a deeply divided Washington, reflecting the sense of urgency among both Republicans and Democrats for an industrial policy that could help the United States compete with China. Seventeen Republicans voted for the bill in the Senate, while 24 Republicans supported it in the House.While Republicans have long resisted intervening in global markets and Democrats have criticized pouring taxpayer funds into private companies, global supply chain shortages exacerbated by the pandemic exposed just how much the United States had come to rely on foreign countries for advanced semiconductor chips used in technologies as varied as electric vehicles and weapons sent to aid Ukraine.Read More on the Relations Between Asia and the U.S.Pelosi’s Taiwan Visit: House Speaker Nancy Pelosi’s trip to Taiwan has exacerbated tensions between the United States and China, which claims the self-governing island as its own. The visit could also undermine the Biden administration’s strategy of building economic and diplomatic ties in Asia to counter Beijing.Reassuring Allies: Amid China’s military exercises near Taiwan in response to Ms. Pelosi’s visit, the Biden administration says its commitment to the region has only deepened. But critics say the tensions over Taiwan show that Washington needs stronger military and economic strategies.CHIPS and Science Act: Congress passed a $280 billion bill aimed at building up America’s manufacturing and technological edge to counter China. It is the most significant U.S. government intervention in industrial policy in decades.In a sign of how Beijing’s rise drove the negotiations for the legislation, Mr. Biden explicitly mentioned China multiple times during his remarks at the bill-signing ceremony.“It’s no wonder the Chinese Communist Party actively lobbied U.S. business against this bill,” the president said, adding that the United States must lead the world in semiconductor production.The bill is focused on domestic manufacturing, research and national security, providing $52 billion in subsidies and tax credits for companies that manufacture chips in the United States. It also includes $200 billion for new manufacturing initiatives and scientific research, particularly in areas like artificial intelligence, robotics, quantum computing and other technologies.The legislation authorizes and funds the creation of 20 “regional technology hubs” that are intended to link together research universities with private industry in an effort to advance technology innovation in areas lacking such resources. And it provides funding to the Energy Department and the National Science Foundation for basic research into semiconductors and for building up work force development programs.“We will bring these jobs back to our shores and end our dependence on foreign chips,” said Senator Chuck Schumer, Democrat of New York and the majority leader, who pumped his fists as he stepped toward the lectern. More

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    Congress Is Giving Billions to the Chip Industry. Strings Are Attached.

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    Industrial policy is back in Washington, as a vast semiconductor and science bill gives the government new sway over a strategic industry.WASHINGTON — Amid a global semiconductor shortage, and as lawmakers dithered over a bill to boost U.S.-based chip manufacturing, Intel went to the Biden administration with a proposal that some officials found deeply alarming.Intel told Commerce Department officials that it was considering expanding its manufacturing capacity for chips by taking over an abandoned factory in Chengdu, China. The new facility, the company said, could help ease a global chip crunch that was shuttering car and electronics factories and beginning to fuel inflation.Intel ultimately shelved the plan. But for lawmakers and the administration it became a vivid example of the need to pass legislation aimed at luring the global chip industry back to the United States. It was also an argument for giving the federal government significant influence over the industry, according to lawmakers, congressional aides and administration officials, many of whom requested anonymity to discuss private deliberations.The sprawling bill that Congress finally passed last week, the CHIPS and Science Act, gives the federal government a primary role in deciding which chip makers will benefit from the legislation’s funding. The bill contains $52 billion in subsidies and tax credits for any global chip manufacturer that chooses to set up new or expand existing operations in the United States, along with more than $200 billion toward scientific research in areas like artificial intelligence, robotics and quantum computing.With concerns growing about China’s economic and technological ambitions, the bill includes strict new guardrails for firms considering expanding into China. Chip manufacturers that want to take U.S. funding cannot make new, high-tech investments in China or other “countries of concern” for at least a decade — unless they are producing lower-tech “legacy chips” destined only to serve the local market.The legislation will hand significant power over the private sector to the Commerce Department, which will choose which companies qualify for the money. Already the department has said it will give preference to companies that invest in research, new facilities and work force training, rather than those that engage in the kind of share buybacks that have been prevalent in recent years.“This is not a blank check to these companies,” Gina Raimondo, the secretary of commerce, said in an interview. “There are a lot of strings attached and a lot of taxpayer protections.”Ms. Raimondo’s department also has the authority to review future company investments in China and to claw back funds from any firm that it deems to have broken its rules, as well as the ability to make certain updates to the rules for foreign investment as time goes by.To the bill’s supporters, these provisions represent the benefits of big government spending. The new legislation will not only subsidize advanced research and manufacturing that has withered in the United States in recent decades but also give Washington a bigger role in writing the rules that shape cutting-edge industries globally.It’s an embrace of industrial policy not seen in Washington for decades. Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics who has surveyed U.S. industrial policy, said the bill was the most significant investment in industrial policy that the United States had made in at least 50 years.8 Signs That the Economy Is Losing SteamCard 1 of 9Worrying outlook. More

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    How Will Interest Rate Increases Impact Inflation?

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    The Federal Reserve is raising interest rates to fight inflation. Some economists want more; some politicians want less. What’s the logic?The Federal Reserve is expected to announce its fourth interest rate increase of 2022 on Wednesday as it races to tamp down rapid inflation. The moves have a lot of people wondering why rate increases — which raise the cost of borrowing money — are America’s main tool for cooling down prices.Senator Elizabeth Warren, the Massachusetts Democrat, wrote an opinion piece in The Wall Street Journal on Sunday arguing that the Fed’s demand-crushing rate increases are not the right policy to fight today’s inflation as fuel costs and supply chain turmoil push up prices. The policies will hurt workers, she said, and “it doesn’t have to be this way.”Others have argued that the Fed should continue to be forceful. Lawrence H. Summers, the former Democratic Treasury secretary, argued during an interview on CNN this week that the Fed needed to take “strong action” to control inflation and that allowing inflation to gallop out of control would be the “bigger mistake” than causing a recession.Onlookers could be excused for struggling to make sense of the debate. Fed officials themselves acknowledge that their tools are blunt, that they cannot fix broken supply chains and that it will be difficult to slow the economy enough without causing an economic downturn. So why is the Fed doing this?America’s central bank has for decades been what Paul Volcker, its chair in the 1980s, called “the only game in town” when it comes to fighting inflation. While there are things that elected leaders can do to combat rising prices — raising taxes to curb consumption, spending more on education and infrastructure to improve productivity, helping flailing industries — those targeted policies tend to take time. The things that elected policymakers can do quickly generally help mainly around the edges.But time is of the essence when it comes to controlling inflation. If price increases run fast for months or years on end, people begin to adjust their lives accordingly. Workers might ask for higher wages, pushing up labor costs and prompting businesses to charge more. Companies might begin to believe that consumers will accept price increases, making them less vigilant about avoiding them.By making money more expensive to borrow, the Fed’s rate moves work relatively quickly to temper demand. As buying a house or a car or expanding a business becomes pricier, people pull back from doing those things. With fewer consumers and companies competing for the available supply of goods and services, price gains are able to moderate.Unfortunately, that process could come at a hefty cost at a moment like this one. Bringing the economy into balance when supply is constrained — cars are hard to find because of semiconductor shortages, furniture is on back order, and jobs are more plentiful than laborers — could require a big decline in demand. Slowing the economy down that meaningfully could tip off a recession, leaving workers unemployed and families with lower incomes.Economists at Goldman Sachs, for example, estimate that the probability of a recession over the next two years is 50 percent. Already, signs abound that the economy is slowing as the Fed begins to push rates higher, with overall growth data, housing market trackers and some metrics of consumer spending showing a pullback.But central bankers believe that even if the risks are difficult to bear, they are necessary. A downturn that pushes unemployment higher would undoubtedly be painful, but inflation is also a major impediment for many families today. Getting it under control is critical to putting the economy back on a sustainable path, officials argue.“It is essential that we bring inflation down if we are to have a sustained period of strong labor market conditions that benefit all,” Jerome H. Powell, the Fed chair, said at his news conference last month. More

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    Truckers’ Protests Over Labor Law Block Access to Oakland’s Port

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    For days, a convoy of truckers has blocked the roads that serve the Port of Oakland, crippling a major West Coast cargo hub already hampered by global supply chain disruptions.The protest is meant to send a message to Gov. Gavin Newsom: Keep the drivers clear of a California labor law that they say threatens their livelihood.The truckers, primarily independent owners and operators, are demonstrating in opposition to Assembly Bill 5, a law passed in 2019 that requires gig workers in several industries to be classified as employees with benefits, including minimum wage and overtime pay.Along with a coalition of trade groups, the truckers want Mr. Newsom to issue an executive order putting off the application of the 2019 law to their work and to bring labor and industry to the table to negotiate a path forward.A representative of Mr. Newsom said the state would “continue to partner with truckers and the ports to ensure the continued movement of goods to California’s residents and businesses, which is critical to all of us.”Smaller protests were organized last week at the twin ports of Los Angeles and Long Beach.In a statement, Danny Wan, executive director of the Port of Oakland, said he understood the displays of frustration. But he warned against more delays surrounding the ports, a vital link in a supply chain already hemorrhaging from Russia’s invasion of Ukraine and Covid-19 lockdowns in China.“Prolonged stoppage of port operations in California for any reason will damage all the businesses operating at the ports and cause California ports to further suffer market share losses to competing ports,” he said.When Mr. Newsom signed the measure into law, it received immediate rebukes from companies like Uber and Lyft, whose leaders argued that the law would change their businesses so severely that it might well destroy them.The state law codified a California Supreme Court ruling from 2018 that said, among other things, that people must be classified as employees if their work was a regular part of a company’s business.Both Uber and Lyft, along with DoorDash, quickly lobbied for a ballot measure that would allow gig economy companies to continue treating their drivers as independent contractors.California voters passed the measure, Proposition 22, in 2020, but last year a California Superior Court judge ruled that it was unconstitutional. Uber and Lyft quickly appealed and have been exempt from complying with Assembly Bill 5 while the court proceedings play out.But that wasn’t the case for the truckers. In June, the U.S. Supreme Court declined to hear a challenge by California truckers, who under the new law are viewed as employees of the trucking companies they do business with.Nearly 70,000 California truck drivers work as independent owners and operators, ferrying goods from ports to distribution warehouses. Trucking companies and the protesting drivers argue — as Uber and Lyft did — that if Assembly Bill 5 is applied to them, the drivers will have less flexibility in when and how they work.Proponents of the law say the companies could simply take the drivers on as full- or part-time employees and continue to offer them flexible schedules.A majority of port truckers in California are independent operators and do not work for a single company. A smaller number of drivers are unionized and are represented primarily by the Teamsters.Matt Schrap, chief executive of the Harbor Trucking Association, a trade group for transportation companies serving West Coast ports, said the “frustration is that there is no pathway for folks to have independence.”“That frustration is boiling over into action,” Mr. Schrap said.Lorena Gonzalez Fletcher, a former state lawmaker who was an architect of the labor bill, rejected the idea that applying the law to the trucking industry would be a disservice to drivers.“These truck companies have a business model that is misclassifying workers,” said Ms. Gonzalez Fletcher, who is about to take over as head of the California Labor Federation. “How they have been operating has been illegal.”The trucker protests come as the International Longshore and Warehouse Union is engaged in contract negotiations with the Pacific Maritime Association, representing the shipping terminals at 29 ports from San Diego to Seattle.Farless Dailey III, president of Local 10 of the longshore union, said that for their own safety, his members were not trying to get through the truck blockade.“They don’t get paid when they don’t get in,” he said. “But we’re not going to put our members in harm’s way to pass through the line of truckers.”Officials at the port said the largest marine terminal had been closed since Monday because of the protests. Three other smaller terminals have operated, but with a limited capacity.Christopher S. Tang, a distinguished professor at the University of California, Los Angeles, Anderson School of Management, who studies supply chains, said the shutdowns at the Port of Oakland should not — for now — cause major issues for consumers.“The impact will not be significant in the short term,” he said. “Many retailers have stockpiled inventory.”On Thursday, German Ochoa, a trucker who lives in Oakland, arrived at the port, as he had every day this week.As horns from semitrucks blared in the background, Mr. Ochoa said by phone that he was standing shoulder to shoulder with other truckers. Some held poster boards that read, “Take down AB 5!!!” and “AB 5 Has Got to Go!,” he said.“This is taking away my independence,” Mr. Ochoa said. “It’s my right to be an independent driver.”Noam Scheiber More

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    Gas Prices Around the World Threaten Livelihoods and Stability

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    “NO ES SUFICIENTE” — It’s not enough. That was the message protest leaders in Ecuador delivered to the country’s president this past week after he said he would lower the price of both regular gas and diesel by 10 cents in response to riotous demonstrations over soaring fuel and food prices.The fury and fear over energy prices that have exploded in Ecuador are playing out the world over. In the United States, average gasoline prices, which have jumped to $5 per gallon, are burdening consumers and forcing an excruciating political calculus on President Biden ahead of the midterm congressional elections this fall.But in many places, the leap in fuel costs has been much more dramatic, and the ensuing misery much more acute.Families worry how to keep the lights on, fill the car’s gas tank, heat their homes and cook their food. Businesses grapple with rising transit and operating costs and with demands for wage increases from their workers.In Nigeria, stylists use the light of their cellphones to cut hair because they can’t find affordable fuel for the gasoline-powered generator. In Britain, it costs $125 to fill the tank of an average family-size car. Hungary is prohibiting motorists from buying more than 50 liters of gas a day at most service stations. Last Tuesday, police in Ghana fired tear gas and rubber bullets at demonstrators protesting against the economic hardship caused by gas price increases, inflation and a new tax on electronic payments.Discontent over soaring fuel prices prompted angry demonstrations in Quito, Ecuador.Martin Bernetti/Agence France-Presse — Getty ImagesThe staggering increase in the price of fuel has the potential to rewire economic, political and social relations around the world. High energy costs have a cascading effect, feeding inflation, compelling central banks to raise interest rates, crimping economic growth and hampering efforts to combat ruinous climate change.The invasion of Ukraine by Russia, the largest exporter of oil and gas to global markets, and the retaliatory sanctions that followed have caused gas and oil prices to gallop with an astounding ferocity. The unfolding calamity comes on top of two years of upheaval caused by the Covid-19 pandemic, off-and-on shutdowns and supply chain snarls.The spike in energy prices was a major reason the World Bank revised its economic forecast last month, estimating that global growth will slow even more than expected, to 2.9 percent this year, roughly half of what it was in 2021. The bank’s president, David Malpass, warned that “for many countries, recession will be hard to avoid.”In Europe, an over-dependence on Russian oil and natural gas has made the continent particularly vulnerable to high prices and shortages. In recent weeks, Russia has been ratcheting down gas deliveries to several European countries.Across the continent, countries are preparing blueprints for emergency rationing that involve caps on sales, reduced speed limits and lowered thermostats.As is usually the case with crises, the poorest and most vulnerable will feel the harshest effects. The International Energy Agency warned last month that higher energy prices have meant an additional 90 million people in Asia and Africa do not have access to electricity.Expensive energy radiates pain, contributing to high food prices, lowering standards of living and exposing millions to hunger. Steeper transportation costs increase the price of every item that is trucked, shipped or flown — whether it’s a shoe, cellphone, soccer ball or prescription drug.Understand Inflation and How It Impacts YouInflation 101: What’s driving inflation in the United States? What can slow the rapid price gains? Here’s what to know.Inflation Calculator: How you experience inflation can vary greatly depending on your spending habits. Answer these seven questions to estimate your personal inflation rate.Greedflation: Some experts say that big corporations are supercharging inflation by jacking up prices. We take a closer look at the issue. Changing Behaviors: From driving fewer miles to downgrading vacations, Americans are making changes to their spending because of inflation. Here’s how five households are coping.“The simultaneous rise in energy and food prices is a double punch in the gut for the poor in practically every country,” said Eswar Prasad, an economist at Cornell University, “and could have devastating consequences in some corners of the world if it persists for an extended period.”In many places, livelihoods are already being upended.Dione Dayola, who drives a commuter jeepney in metropolitan Manila, said spiraling fuel casts had cut his daily earnings to $4 from $15. “How do you expect to live on that?” he said.Jes Aznar for The New York TimesThe livelihoods of many jeepney drivers in Manila have been wiped out.Jes Aznar for The New York TimesDione Dayola, 49, leads a consortium of about 100 drivers who cruise metropolitan Manila picking up passengers in the minibuses known as jeepneys. Now, only 32 of those drivers are on the road. The rest have left to search for other jobs or have turned to begging.Before pump prices started rising, Mr. Dayola said, he would bring home about $15 a day. Now, it’s down to $4. “How do you expect to live on that?” he said.To augment the family income, Mr. Dayola’s wife, Marichu, sells food and other items on the streets, he said, while his two sons sometimes wake at dawn and spend about 15 hours a day in their jeepneys, hoping to earn more than they spend.The incomes of Manila’s jeepney drivers have been diminished.Jes Aznar for The New York TimesSome jeepney drivers in the Philippines have taken to asking neighbors for donations.Jes Aznar for The New York TimesThe Philippines buys only a minuscule amount of oil from Russia. But the reality is that it doesn’t really matter whom you buy your oil from — the price is set on the global market. Everyone is bidding against everyone else, and no country is insulated, including the United States, the world’s second largest oil producer after Saudi Arabia.Persistently expensive energy is stirring up political discontent not only in places where the war in Ukraine feels remote or irrelevant but also in countries that are leading the opposition to Russia’s invasion.Last month, Mr. Biden proposed suspending the tiny federal gas tax to reduce the sting of $5-a-gallon gas. And Mr. Biden and other leaders of the Group of 7 this past week discussed a price cap on exported Russian oil, a move that is intended to ease the burden of painful inflation on consumers and reduce the export revenue that President Vladimir V. Putin is using to wage war.Price increases are everywhere. In Laos, gas is now more than $7 per gallon, according to GlobalPetrolPrices.com; in New Zealand, it’s more than $8; in Denmark, it’s more than $9; and in Hong Kong, it’s more than $10 for every gallon.Leaders of three French energy companies have called for an “immediate, collective and massive” effort to reduce the country’s energy consumption, saying that the combination of shortages and spiking prices could threaten “social cohesion” next winter.Mexico is using money it makes from the crude oil it produces to subsidize gas prices.Celia Talbot Tobin for The New York TimesIn poorer countries, the threat is more fraught as governments are torn between offering additional public assistance, which requires taking on burdensome debt, and facing serious unrest.In Ecuador, government gas subsidies were instituted in the 1970s, and every time officials have tried to repeal them there’s been a violent backlash.The government spends roughly $3 billion a year to freeze the price of regular gas at $2.55 and the price of diesel at $1.90 per gallon.On June 26, President Guillermo Lasso proposed shaving 10 cents off each of those prices, but the powerful Ecuadorean Confederation of Indigenous Nationalities, which has led two weeks of protests, rejected the plan and demanded reductions of 40 and 45 cents. On Thursday, the government agreed to cut each price by 15 cents, and the protests subsided.“We are poor, and we can’t pay for college,” said María Yanmitaxi, 40, who traveled from a village near the Cotopaxi volcano to the capital of Quito, where the Central State University is being used to shelter hundreds of protesters. “Tractors need fuel,” she said. “Peasants need to get paid.”The gas subsidies, which amount to nearly 2 percent of the country’s gross national product, are starving other sectors of the economy, according to Andrés Albuja, an economic analyst. Health and education spending was recently reduced by $1.8 billion to secure the country’s large debt payments.Businesses in Mexico City have struggled with natural gas prices, which have soared even as the government has used subsidies to defray gasoline increases.Celia Talbot Tobin for The New York TimesMexico’s president, Andrés Manuel López Obrador, is using money the country makes from the crude oil it produces to help subsidize domestic gas prices. But analysts warn that the revenue the government earns from oil can’t make up for the money it is losing by temporarily scrapping taxes on gas and by providing an additional subsidy to companies that operate gas stations.In Nigeria, where public education and health care are in dire condition and the state cannot ensure its citizens electricity or basic safety, many people feel that the fuel subsidy is the one thing the government does for them.Kola Salami, who owns the Valentino Unisex Salon in the outskirts of Lagos, has had to hunt for affordable fuel for the gas generator he needs to run his business. “If they stop subsidizing it,” he said, I don’t think we can even. …” His voice trailed off.Kola Salami owns the Valentino Unisex Salon in Lagos, Nigeria.Tom Saater for The New York TimesMr. Salami refills petrol in a generator to power his salon.Tom Saater for The New York TimesIn South Africa, one of the world’s most economically unequal countries, the rising price of fuel has created one more fault line.As President Cyril Ramaphosa campaigns for re-election at the ruling African National Congress’s conference in December, even the party’s traditional allies have seized on the cost of fuel as a failure of political leadership.In June, after fuel reached beyond $6 a gallon, a record high, the Congress of South African Trade Unions marched through Durban, a city already wrecked by violence and looting last year, and floods this year. Higher fuel prices have been “devastating,” Sizwe Pamla, a spokesman for the trade unions, said.A town near Durban, South Africa, which was hit by devastating floods this year, drew protests when fuel prices spiked.Rajesh Jantilal/Agence France-Presse — Getty ImagesThe dizzying spiral in gas and oil prices has spurred more investment in renewable energy sources like wind, solar and low-emission hydrogen. But if clean energy is getting an investment boost, so are fossil fuels.Last month, Premier Li Keqiang of China called for increased coal production to avoid power outages during a blistering heat wave in the northern and central parts of the country and a subsequent rise in demand for air conditioning.Meanwhile, in Germany, coal plants that were slated for retirement are being refired to divert gas into storage supplies for the winter.There is little relief in sight. “We will still see high and volatile energy prices in the years to come,” said Fatih Birol, the executive director of the International Energy Agency.At this point, the only scenario in which fuel prices go down, Mr. Birol said, is a worldwide recession.Reporting was contributed by More