Economics in the News – Feb 28-March 6, 2022
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
- Russia’s invasion of Ukraine has disrupted the global energy market, playing a role in causing gas prices to soar to their highest levels since 2008. According to AAA, the average price of gas on Sunday, March 6 reached $4.009 per gallon. That marks a 57-cent increase over a month.
The all-time high for a gallon of gas was $4.114 in July 2008, equivalent to $5.25 today when accounting for inflation. Russia provides more than 10 percent of the world’s oil and more than a third of the natural gas consumed in the European Union. [The New York Times]
- Ford Motor has announced that it had split its automobile operations into two distinct businesses. One – called Ford Blue – will focus on gasoline-powered vehicles that focuses on maximizing profits. The other – dubbed Ford Model e – will focus on the ramping up and development of electric vehicles and aims for rapid growth.
Ford chief executive Jim Farley announced that the automobile manufacturer would spend $50 billion on electric vehicles between 2022 and 2026. The company expects its electric business to become profitable within four years. [The New York Times]
- Following Russia’s full-scale invasion of Ukraine and economic sanctions placed by numerous countries throughout the world, the value of the Russian ruble fell to its lowest value ever against the US dollar. How will it impact Russia and what could it mean for Russians moving forward?
A weak currency makes it expensive for Russia to buy imports, bringing higher prices to Russian citizens and causing issues for businesses. Since the beginning of 2014, the Russian ruble has been declining in value after Russian President Vladimir Putin decided to invade Crimea and the United States was one of several countries to impose economic sanctions. In response to the declining value of the ruble, the Russian central bank raised its interest rates to more than 20 percent. [The Wall Street Journal]
- A labor dispute in Major League Baseball has delayed Opening Day. It marks the first labor dispute since the 1994-95 player strike that cost the league the 1994 World Series. MLB commissioner Rob Manfred announced that the league has canceled the first two series of the season after MLB owners and the players association were unable to reach an agreement by March 1. More games could be canceled depending on how long it takes the two sides to make a deal.
The league owners implemented a lockout following the expiration of the former collective bargaining agreement on Dec. 1, 2021. Major matters in play include the competitive balance tax thresholds, the minimum salary and the size of the pre-arbitration pool for young players breaking into the league. [The Athletic]
- A large cargo ship capable of carrying up to 4,000 cars sank in the mid-Atlantic while transporting luxury Porsche and Volkswagens after a fire broke out on board. The accident happened in an area outside Portugal’s economic zone. The Portuguese Navy was able to rescue all 22 crew members, who were uninjured.
The cargo ship had left Germany and was destined for the United States. Volkswagen has informed The Wall Street Journal that insurance will cover the cost of its lost vehicles, which could be at least $155 million according to experts. The total estimated loss for all the cargo aboard is close to $440 million. [NPR]