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U.S. autoworkers return, while possible vaccine shows promise – CTV News

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WARREN, MICH. —
More than 130,000 autoworkers returned to factories across the U.S. for the first time in nearly two months Monday in one of the biggest steps yet to restart American industry, while an experimental vaccine against the coronavirus yielded encouraging results in a small and extremely early test.

Stocks rallied on the vaccine news and signs that the worst of the crisis has passed in many countries. The Dow Jones Industrial Average soared about 900 points, or nearly 4%.

Detroit’s Big Three — Fiat Chrysler, General Motors and Ford — as well as Honda and Toyota all had screening procedures in place at the dozens of factories that reopened from the Great Lakes states south to Tennessee and Texas and out west at Tesla’s factory near the San Francisco Bay.

No one was immediately cranking out vehicles, because it will take time to get the plants restarted. But workers appeared reassured by the precautions taken by the automakers.

At a Fiat Chrysler pickup truck assembly plant in Warren, outside Detroit, workers entered a giant white tent with a sign that read: “Let’s restart and keep each other safe.” Inside they had their temperatures checked and answered a set of questions on whether they had symptoms of COVID-19.

“I feel safer than being anywhere at any stores, because they got the screening and everything,” said Ann’alazia Moore, a janitor at the factory. “I feel like that’s amazing. That’s smart. I like that. So, I feel more safe. I won’t get sick.”

Cole Stevenson, who installs steering wheels at a Ford pickup truck plant in Dearborn, Michigan, said: “The parts of the plant where people would be closer together, they’ve put up a lot of partitions. You can tell they’ve taken tape measures to just about any surface two people would need to be near each other.”

Meanwhile, an experimental vaccine by Cambridge, Massachusetts-based Moderna Inc. triggered hoped-for immune responses in eight healthy, middle-aged volunteers. They were found to have antibodies similar to those seen in people who have recovered from COVID-19.

Further studies on the vaccine’s safety, effectiveness and optimal dosage still need to be done. But with people desperate for any sign of progress against the scourge, the findings caused excitement on Wall Street.

Worldwide, about a dozen vaccine candidates are in the first stages of testing or nearing it. Health officials have said that if all goes well, studies might wrap up by late this year or early 2021.

Despite warnings from health experts that the virus could make a resurgence, many states have eased their lockdowns under pressure from President Donald Trump to save businesses and livelihoods. About 36 million Americans have applied for unemployment benefits over the past two months, and U.S. unemployment surged in April to 14.7%, a level unseen since the Depression.

U.S. health authorities will be watching closely for a second wave of infections over the next few weeks and worry that Americans will disregard social distancing over Memorial Day weekend, the unofficial start of summer. Over the past weekend, there were already large crowds. Connecticut had to close beaches before noon when they reached capacity under new restrictions.

One of California’s largest tribal casinos, Viejas Casino & Resort, near San Diego, reopened to a large crowd Monday. Customers had their temperatures taken at the door and were ordered to cover their faces, and very other slot machine was turned off to keep people separated. But the strong turnout meant many customers were still playing less than 6 feet (1.8 metres) apart.

Ronda McLauchlan lined up at 7:30 a.m. before going to work as a painting contractor because “it’s all about freedom.” She was highly critical of lockdown orders.

Elsewhere around the world, Europe pushed ahead with its reopening, allowing people into the Acropolis in Athens, high-fashion boutiques in Italy, museums in Belgium, golf courses in Ireland and beer gardens in Bavaria.

More than 4.7 million people worldwide have tested positive for the virus and over 315,000 deaths have been recorded, including about 90,000 in the U.S. and over 160,000 in Europe, according to a tally by Johns Hopkins University. Those figures are believed to understate the true dimensions of the outbreak because of limited testing, differences in counting the dead and concealment by some governments.

In other developments, the World Health Organization bowed to calls from most of its member states to launch an independent investigation into how it responded to the coronavirus. Trump has repeatedly attacked both WHO and China, claiming the U.N. agency helped Beijing conceal the extent of the outbreak in its early stages.

WHO Director-General Tedros Adhanom Ghebreyesus said the probe will take place “at the earliest appropriate moment.” The announcement, made at WHO’s annual meeting, came after a watchdog body found possible shortcomings in the agency’s warning system.

Chinese President Xi Jinping defended China’s record, saying the country provided all relevant outbreak data to WHO and other countries, including the virus’s genetic sequence, “in a most timely fashion.” He also announced that China will give $2 billion to the global fight against the virus.

But the Trump administration stepped up its attacks at the meeting, with U.S. Health and Human Services Secretary Alex Azar accusing WHO of failing to obtain the information the world needed as the outbreak emerged.

Without mentioning China by name, Azar said: “In an apparent attempt to conceal this outbreak, at least one member state made a mockery of their transparency obligations, with tremendous costs for the entire world.”

He said the United States has allocated $9 billion for the global coronavirus response.

With new infections and deaths slowing considerably in Europe, many countries are preparing to reopen their borders and trying to draw up rules for a highly unusual summer tourist season.

“This vacation this year won’t be like the ones we know from the past,” German Foreign Minister Heiko Maas told ZDF television. “The pandemic is still there, and we must at least have safety precautions for the worst case that the figures get worse again.”

Greece reopened some of its ancient sites, along with high schools, shopping malls and mainland travel. Paving stickers were used to keep visitors apart. Tourists were local, for the country still has a 14-day quarantine for arrivals, and travel to Greek islands remains broadly restricted.

Churches in Italy and at the Vatican resumed public Masses. Guards in hazmat suits took the temperatures of the faithful entering St. Peter’s Basilica, where Pope Francis celebrated an early morning Mass in a side chapel to commemorate the 100th anniversary of the birth of St. John Paul II.

Turkey’s president announced a four-day curfew during the Muslim holiday of Eid al-Fitr. The country has opted to impose short weekend and holiday curfews, instead of full lockdowns, fearing damage to the already troubled economy.

In France, authorities were concerned after about 70 infections popped up in the country’s schools since they started reopening last week. France reopened about 40,000 preschools and primary schools last week, with classes capped at 15 students.

——

Long reported from Washington, Krisher from Detroit. Associated Press writers around the world contributed.

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Canada gas prices: How is the price of gas set? – CTV News

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Amid high hopes of a return to normal with the end of COVID-19 restrictions, this year may be defined by another concerning trend: the rising price of gasoline.

Exceeding an average of $2 per litre across the country for the first time this month, the cost of gas has set a new all-time high in Canada, with the added toll coming at a time of record inflation and the start of what is often considered the summer driving season.

But what exactly is causing the increase and what are Canadians really paying for at the pump?

CTVNews.ca spoke to experts about what goes into the price of gas, the effect of refinement on high prices, concerning trends around diesel, and how costs could dissuade consumers from driving altogether.

THE PUMP

A number of factors play into the price tag drivers see when they fill up their vehicles.

One, which may not come as a surprise, is the price of oil. Due to the war in Ukraine, the price for a barrel shot up in recent months, with global benchmarks Brent Crude and West Texas Intermediate selling in excess of US$100 a barrel.

Russia is also the world’s third largest producer of oil, making up 11 per cent of the global share.

“So we’re at the mercy of international markets for better or worse,” Werner Antweiler, director of the Sauder School of Business Prediction Markets at the University of British Columbia, told CTVNews.ca in a phone interview on May 17.

Beyond the price of oil, different margins also factor into the price of gas.

They include the refining margin, which comprise the cost to refine, store and deliver. More specifically, it is the difference between the cost of crude and the wholesale price of gas.

After that, there is the retail margin, which goes to gas stations, and then the various federal, provincial and sometimes regional taxes that are added on.

The Canadian Fuels Association says, in 2021, crude oil made up 39 per cent of the price for regular gasoline, followed by 35 per cent for taxes, 20 per cent for refining and six per cent for distribution and marketing.

Generally, the price of gas reacts fairly quickly to changing oil prices, Antweiler said, a point other experts say is true. Competition between gas stations does vary depending on where in the country you live, which can play a role in what regional gas prices will be.

But price fixing or “collusion” is rare, Antweiler said.

Drivers in Quebec may remember one example from 2008, when several companies and an individual pleaded guilty and were fined in connection with a gas price-fixing scheme.

In practice, Antweiler said the retail margin for gas stations is relatively flat at around 10 cents per litre in most places where there is competition.

What is “peculiar” now is the volatility in the refining margin, which in the Vancouver area has shot up to about 70 cents per litre from 45 cents previously, Antweiler said.

This stems from issues around transportation and capacity constraints.

“It’s not the gas stations or the retailers, it’s the wholesalers,” he said.

Roger McKnight, chief petroleum analyst for En-Pro, stressed that the country is not unified on how gas prices are set.

Anywhere east of Thunder Bay, Ont., will tend to follow traders on Wall Street, specifically the futures price for oil, he said.

If the futures price rises one day, the price at the pump will generally follow 48 hours later.

West of Thunder Bay, the price of gas tends to follow more closely with the global price of crude oil, with the exception of lower mainland B.C. which is more aligned with wholesale movements in Seattle, Wash.

“So when you get right down to it, the day-to-day prices across Canada follow different markets,” McKnight said in a phone interview on May 17.

SUPPLY AND DEMAND

At the end of the day, the issue is a classic case of supply and demand.

“The supply is very, very tightly in sync with demand,” Ian Lee, an associate professor at the Sprott School of Business at Carleton University in Ottawa, told CTVNews.ca in a phone interview on May 17. “There’s no slack in the system to use slang English.”

The COVID-19 pandemic greatly reduced the demand for gas, as lockdown measures meant people largely worked from home.

As more sectors of the economy reopened, demand for gas increased sharply.

But Lee said oil producers have taken a longer time to increase production, with previous pandemic-related shutdowns making the demand for gas uncertain.

“We’re paying, all of us, higher prices than we ought to be because of the shortages at the refinery level, so that’s what’s exacerbating the problem,” Lee said.

Similar to Canada’s housing crisis, he believes the solution is to bring supply back into the marketplace. But in the short run, it “hurts like hell.”

The U.S. Energy Information Administration, which is part of the U.S. Department of Energy, releases weekly reports on the status of petroleum.

Its latest report, released May 18, shows that U.S. commercial crude oil inventories, excluding the Strategic Petroleum Reserve, fell by 3.4 million barrels from the previous week and, at 420.8 million barrels, is 14 per cent below the five-year average for this time of the year.

Motor gasoline inventories are about eight per cent below their five-year average, while distillate fuel, which includes diesel, jet fuel and heating oil, is down approximately 22 per cent from its five-year average.

“So when your supply side is all in negative and your demand side is all in positive … the consumer’s going to end up paying for that,” McKnight said.

The U.S. also has been exporting oil from its Strategic Petroleum Reserve to Europe, while Canada in March committed to increase its oil and gas exports.

OPEC, or the Organization of the Petroleum Exporting Countries, has said it will not increase production to compensate for lost Russian oil, of which a number of European countries, as well as Canada and the U.S., are boycotting. OPEC and its allied countries, which together are known as OPEC+, also includes non-member Russia.

Earlier this week, oil giant Saudi Aramco, which is 98 per cent owned by the Saudi government, said its profits had soared more than 80 per cent in the first three months of the year, causing it to overtake Apple as the world’s most valuable company.

DIESEL

The Utah State Capitol, rear, is shown behind an oil refinery on May 12, 2022, in Salt Lake City. (AP Photo/Rick Bowmer)While the price of retail gas may be top of mind for most consumers, what may be overlooked is the unusual surge in the cost of diesel.

Since diesel is used across the commercial sector, from heavy equipment to transportation, this issue is probably the most worrisome, Antweiler said.

“Diesel is the fuel of commerce and so this cost will get passed on to consumers,” he said.

This is in part being driven by missing feedstock, or the raw materials that refineries need of which Russia is a source, making it much harder to refine diesel.

Refineries need natural gas in order to make hydrogen, which is used in the refining process and also has become more expensive, Antweiler said.

Refineries tend to switch their output to gasoline during the summer to accommodate the increased demand and stocks of diesel fuel were already low coming into 2022.

Refining capacity is also limited and falling in North America and Europe, Antweiler said.

“The bottom line is that the market for diesel fuel is complex, and follows its own market logic that is not the same as for gasoline,” Antweiler said in a follow-up email to CTVNews.ca.

“Mostly, the extra demand from Europe is spilling over to North American markets. If refineries rush to make more diesel, this will lower output of gasoline. So if prices for diesel start coming down, they will go up further for gasoline.”

DEMAND DESTRUCTION

High gas prices are seen in front of a medical billboard, May 11, 2022, in Milwaukee, Wis. (AP Photo/Morry Gash)

How drivers respond to persistently high gas prices is something experts will watch for.

Lee predicts that if there is any reduction in demand for gas, it will be the result of “demand destruction,” caused by prices rising so much that it “literally kills some demand.”

With gas, people may end up driving less often, switching to smaller cars, taking mass transit, carpooling, working from home or potentially moving closer to work.

But whether that falloff in demand occurs, which will be known by measuring the average kilometres driven by Canadians, won’t be known for another year, Lee said.

“That’s why I don’t think there’s any rioting on the streets yet at $2 a litre,” Lee said.

“As painful as it is, the reaction from consumers is grumbling, a lot of grumbling for sure, but it’s been muted and I think it’s because consumers, individuals, face options to mitigate the effect of the price.

“I think if natural gas to heat homes or home heating had risen by the same magnitude, I think you would have seen riots on the streets.”

WHERE DO WE GO FROM HERE?

Concerning the price of crude oil, Antweiler doesn’t see it going much beyond US$120 a barrel unless something occurs to make the situation worse.

A lot of operations shut down during the early part of the COVID-19 pandemic as demand plummeted, and Antweiler said producers will be incentivized to increase production although this will take time, meaning prices will remain high throughout the summer.

For McKnight, the answer to when this will stop is less clear.

“I’d be a multi-billionaire if I could answer that question,” he said.

Nevertheless, he said governments could look at the HST and consider capping the amount that is charged on a litre of gasoline.

It’s a point Lee also raised, saying governments could temporarily suspend certain taxes on gasoline.

Alberta has temporarily paused collections of its gas tax, which has cut the inflation rate slightly in the province.

Lee said he would not expect gas to be more than $2 per litre a year from now.

But the distress caused by the price of oil could lead to some policy changes in the United States, he said, with Americans potentially shifting their views on pipelines as more view energy as a national security issue.

With files from CTV News and The Associated Press

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