Oil prices are down a whopping 28 percent since mid-June. That’s great if you’re a consumer, not so much if you’re a driller.
During the boom, drillers that fracked for what’s called shale oil spent more money than they brought in. And they made up the gap by borrowing. Which was fine when oil sold for a high price.
Now, crude is down. Earnings are down. And lenders are fidgety.
“Many of the bankers, they’re very, very concerned about their loans to companies that are exclusively into shale formations,” says Ed Hirs of oil and gas firm Hillhouse Resources. He also teaches economics at the University of Houston. “These companies may not have the management expertise or the technical expertise to continue production and pay off these loans.”
And oil companies can be credit risks. Standard & Poor’s rates three out of four energy firms below investment grade.
The big question for lenders and investors is: how long will low prices persist?
“If oil were $80 for the next year or go even lower, cash flow is lower,” says James Burkhard, head of oil market research at IHS CERA. “And external finance would be probably lower as well, or more expensive.”
Of course, all oil companies are not the same. Those mostly in fracking in the more expensive formations are most at risk. More diversified companies and those invested in lower-cost conventional wells are less exposed. And if prices surprise analysts and rise quickly, the debt issue becomes less crucial.
For now, though, analysts and credit analysts are revising their expectations in a hurry, and fortunes are changing quickly in the oil patch. It’s nothing new.
“Look, having grown up here and seen what’s happened in this Oklahoma, Texas area, I’ve seen the booms and busts,” says Jake Dollarhide, co-founder and CEO of Longbow Asset Management in Tulsa. “I’ve seen companies go underneath overnight. Most of the time it was a two-headed monster: lower commodity prices, high debt. That’s a dangerous and scary scenario. And oftentimes it’s a recipe for insolvency."
Falling gas prices have given American consumers some extra pocket money. So, how are we celebrating? According to one economist, we tend to blow some of it at Starbucks— which - bonus! - means more jobs for baristas.
And it appears that some of us run out and buy trucks and SUVs. New automobile sales reports are out, and Chrysler’s Jeep line and Ram pickup trucks had a great month.
We wondered: Doesn't that seem like kind of a big spend for an impulse buy? Do people really just decide to go for it when gas prices drop?
"Yeah, that's definitely the case," says Jessica Caldwell, an analyst with the car-shopping site Edmunds.com. She thinks some of today's SUV buyers may be people who ditched their gas guzzlers in 2008, when the economy tanked and gas prices spiked.
"They traded into something smaller, they didn’t like it, and they want to go back," she says. "And now that gas prices are low, it gives them that push — or even that excuse — to say, ‘I’m going to have something bigger.’"
So, yes: Car buyers are sensitive to gas prices, and they've got a hair trigger.
And: People often do not do the math on fuel economy. Tom Turrentine, from the University of California at Davis Energy Efficiency Center, interviewed people from 60 households about this very question. He and his colleagues picked bankers, college professors — people he thought would be good at math.
"Nobody knew how much they spent on fuel in a year," he says. "People don't keep track of it." When he asked, they looked confused.
There was one exception: A guy who built a spreadsheet to figure out the best car for him. The spreadsheet told him to buy a used Honda Civic.
But he wanted a new Ford Escape, and that's what he bought. "Despite making all the rational calculations, he went with his heart," says Turrentine.
So — whether we never look at the data, or maybe just ignore it — are we making dumb financial decisions?
Remember, this could work in either direction. When gas prices go up, people don’t just buy more fuel-efficient cars, they pay more for them. MIT energy economist Christopher Knittel wondered: Are they overpaying?
Answer: Nope. "What we find is that consumers more or less get it right," he says.
Even without a spreadsheet, the average consumer didn’t pay so much for a Prius that the price increase was more than they could expect to save on gas.
So: Yes, we’re a little impulsive. But we’re not dumb.
The Internet browsing history of more than 100 million Verizon and AT&T smartphone customers has been made trackable.
That's the upshot of the recent revelation that both companies have been running advertising programs that use "supercookies" that can't be evaded by any of the means available for ordinary cookies.
But to understand these "supercookies," it's helpful to start with the old-fashioned kind.
"For nearly twenty years now, the cookie has become the standard way to track people online, for better or worse" says Jacob Hoffman-Andrews, the senior staff technologist at the Electronic Frontier Foundation who first brought attention to the Verizon program.
"The metaphor I use when I teach is I say a cookie is like a name tag," he says.
Browsing a website is like entering a room and being handed a name tag. It might have a fake name or a series of digits written on it, but it's an identifying label that everyone in the room--each of the many entities that serve content on a given webpage--can see. If you leave it on, anyone watching--and there are many companies watching--can see where you go.
"But you also have the option to take off that name tag," says Hoffman-Andrews. "When you clear cookies in your browser that's like ripping off all your name tags."
"On mobile we don’t have the cookie," says Jenny Wise, mobile marketing analyst at Forrester. "And so the industry is sort of cobbling together all these different solutions."
Advertisers want to track users and target ads on the mobile Internet, and across multiple devices.
"That’s sort of the holy grail for advertisers," says Wise. "And ad tech is on the case."
Those solutions range from GPS data to Facebook log-ins to device ID numbers--but it's much more fragmented than following a single cookie. And Wise says most of them are opt-out. "That's one of the key things that Verizon and AT&T are running into," says Wise.
"Supercookie" is a generic term, which can refer to any of a number of ways of getting around the limitations of cookies. But Verizon and AT&T's version aren't easily evaded--in fact it's very difficult to tell that the tracking code is being applied in the first place.
Referring to Verizon's program, Hoffman-Andrews says: "The [supercookie] is inserted after it leaves your phone, so there’s nothing you could do on the phone to detect that it’s going on."
In Verizon's case, while users can opt out of the advertising program that makes use of the data Verizon collects, the company has said that there is no opting out of the supercookie itself, which security researchers say can be easily used by third parties.
"One possible analogy that comes to mind here is a license plate," says security researcher Jonathan Mayer. "It's a lot like throwing a license plate on your web browser. And Verizon's position is 'Hey we're the DMV, if anyone wants information about someone with that website they have to come to us.'"
"But that doesn't mean you can't follow a license plate around," he says.
"That’s a very good metaphor, but so much of our intellectual and political life takes place on the Internet now, it would amount to a license plate for your brain," says the EFF's Hoffman-Andrews. "Every question you have, every news article you read would be attached to this one identity."
Verizon says those "license plates" are changed "frequently," and that that their supercookies don't "provide any information beyond what [ad tech entities that have a presence on many websites] have by virtue of [other permanent and longer-term identifiers... already widely available] and other already existing IDs."
"What Verizon and AT&T are doing--and why they might have the leg up here, if there's no backlash from privacy concerns-- is that their network goes across devices," says Forrester's Wise. "So not only do you know what I'm doing when I use my mobile phone, I'm also using that same network when I'm on my tablet, or when I'm on my TV."
"That opens up the door."
For more "targeting" or more "tracking," depending on your perspective.
Let's take a moment to put the midterm elections in context:$3.67 billion
That's how much we spent on the House and Senate midterm elections, according to the Center for Responsive Politics.$59.9 billion
That's how much we spent on beer last year according to the Bureau of Economic Analysis.
At least we know where our priorities stand. Now would someone pass me a beer?
Polls show Americans are still worried about the economy, but it hasn't really been present in this year's midterm campaigns. As with any time economic matters comes up in a race, there's the economic reason and the political one.
"Democrats have been reluctant to tie themselves to President Obama and his policies," says David Gura, Marketplace reporter based in Washington, D.C.
But the real, that is, economic reason? The U.S. economy is doing better, with lower unemployment, steady growth, lower gas prices, and other metrics that show overall improvement. Voters for whom the economy trumped all last election, can now focus on foreign policy or social issues, and candidates who excel in those areas are playing to their strengths.
And yet, as we've been reporting through our series, Your Economy, many Americans don't feel overall economic improvement in their daily lives.
"While unemployment has gone down, real income hasn't gone up," Gura says.
That's why for many voters, it feels like the economy is stuck in place.
It's Election Day in the U.S., and the biggest influence on midterm elections might not be the last-minute surge of super PAC money or robo-calls, but how voters think the economy is doing.
In tight, state-level races, we've seen candidates on both sides trying to steer the narrative of economic recovery. The New York Times' Upshot took a deep dive, showing that while there's decent evidence to suggest that the state of the economy influences presidential elections, midterms are all about perspective. And that perspective is historically very, very partisan.
FiveThirtyEight gives the Republicans a 76 percent chance of winning the senate Tuesday.
Here's a Google Maps-powered tool for finding your polling place. And as we wait for final results, here are some other numbers we're watching:$40-50 billion
Xiaomi's valuation in an upcoming round of fundraising, according to Bloomberg. The world's third-largest smartphone maker was valued at $10 billion in its last round of financing in August 2013. Xiaomi has seen huge growth in the past year, and just announced it will invest $1 billion in developing online video for its smart TVs.$9.2 billion
That's last year's estimated market for cloud computing. It's expected to grow to $42 billion by 2018. This huge emerging market is the latest battleground in the growing rivalry between Amazon and Google. The former leads in the space, the Wall Street Journal reported, but Google is expected to re-up its cloud offerings soon to try and slow Amazon's rapid growth.50,000
The number of new drivers Uber claims to hire every month, and the number of veterans the car service seeks to hire under its UberMILITARY initiative. The plan has support from the Department of Defense and former military officials, but an investigation by the Verge found that the initiative might be a raw deal for veterans.
Several UberMILITARY "partners" have said they don't make nearly as much as they were promised thanks to expenses and inconsistent pricing structures. Others have noted Uber's propensity to fire low-rated drivers at the drop of a hat: One Navy vet and single mother of seven said she's put up with sexual harassment from passengers in order to keep her driver rating high.
The price of crude oil, which had been sinking this fall, took another downward turn today.
Oil producers can choose to pump more or less oil, of course. They can also adjust prices. That’s what the world’s largest oil exporter did yesterday when Saudi Arabia cut prices for crude sold to U.S. customers.
Saudi Arabia is facing heavy competition from producers in the U.S. and nearby Latin America, according to oil strategist Julian Lee with Bloomberg First Word.
“I think the Saudis have cut crude prices to the U.S. in order to keep their oil competitive,” he says.
Lee says Saudi Arabia wants to retain a stable market share in the U.S.
Energy market analyst Sarah Emerson with ESAI warns against reading too much into yesterday’s price adjustment. Still, she thinks Saudi Arabia is trying to settle on a price per barrel that other members of the Organization of the Petroleum Exporting Countries can support when OPEC meets later this month.
“Saudi Arabia does not necessarily want to defend the price at $100 or $110,” she says. “But defending a price at $85 or $80 makes much more sense.”
Julian Lee says OPEC countries will review their production policy at the forthcoming meeting. There, he says, they could decide whether to cut production to shore up prices, or let prices fall further to choke off growth in North American production.
The share of Americans with bachelor’s degrees is on the rise, according to the Census Bureau.How many American adults have earned a bachelor’s degree or higher?
As you were brushing your teeth this morning, crude oil prices were falling nearly 2 percent. Some of this is an announcement that Saudi Arabia, that huge producer of oil, is cutting prices to U.S. customers. More on that. And a year ago, tech CEO Michael Dell paid almost $25 billion for a computer maker … called Dell. He bought enough shares to take the company private, meaning no quarterly earnings reports. Today, at the Dell World conference in Austin, he'll show off his renovations in progress. Plus, America's funeral parlors bring in an estimated $20 billion a year in the U.S. But the industry is changing.
Living life for a week without using a credit card or cash may seem impossible, but with a number of mobile payment options now available, Lisa Selin Davis decided to give it a shot.
In the process, she discovered how feasible (or not) paying exclusively with mobile payments has become, and which stores are most equipped to handle mobile payments. Spoiler alert: Selin Davis found herself mostly at retail giants.
To hear how Selin Davis' week of mobile payments went down, click on the media player above.
The funeral, or “death-care” industry, brings in an estimated $20 billion a year in the U.S., but the industry is changing. There’s been a shift towards chain funeral homes, and more people are choosing cremation. In some U.S. cities, that has black-owned funeral homes particularly worried about staying above ground.
Bowman and Young Funeral Home on the west side of Dayton is straight out of the year it was built, 1963: low ceilings, retro colors. Dwayne Bickham has been working here since he was 17 years old in 1979. He says the area was thriving when he was a kid.
“People in this community had jobs, we had Frigidaire, we had Inland,” he says. Now those factories are long-gone, and a lot of people have left the neighborhood, too.
“The children and grandchildren don’t live in Dayton,” says funeral director Keith Young.Lewis Wallace/WYSO
These days, the people shopping for a funeral service could live hundreds of miles away; they’re literally phoning it in from California or Florida or just the suburbs. Or, they’re going online instead of calling the local funeral home they grew up with.
Enter the competition: funeral home chains, which went through a big boom and a spate of buy-outs in the 1990's, and now seem to be resurgent. They’ve got the internet on lock, and TV ads in prime spots. One chain runs ads in Ohio depicting it as family-owned despite the fact that the owners live in Kansas and have chains across Ohio, including several in Dayton.
Meanwhile, black undertakers are in decline: in one survey of mortician schools, the percentage of black students went from 27 percent seven years ago to just 15 percent in 2014. As the demographics and populations of black neighborhoods have changed, funeral directors have been struggling to adapt.
“They have had to either relocate their business to where some of their clientele has moved, or re-market their business to immigrant families,” says Suzanne Smith, a professor at George Mason University and author of “To Serve the Living: Funeral Directors and the African American Way of Death.”
Young says he’s cut prices and tried to have more of a web presence in response to the competition. And he and some local ministers are trying to convince people to stick with the neighborhood undertaker on principle. He says some of his clients have been surprised by the final price tag at the chains across town.
“People get over there and find out that it’s not what they said it was gonna be. And they come back to the west side of Dayton,” he says. “They come back home.”
African-American funerals are often called homegoings, and Young says he hopes the next generation will keep coming back home for their funerals.
If you’re a CEO or a senior manager, you may have signed a non-compete agreement, which would limit or restrict your ability to work at a competing company for a pre-determined period of time after leaving your job.
But in the last couple of decades, an increasing number of American workers are being asked to sign such deals, including service-sector and low-wage employees.
“We’ve seen them expand to jobs like yoga instructors and camp counselors,” says Orly Lobel, a professor at the University of San Diego School of Law and author of the book “Talent Wants To Be Free,” which addresses the subject.
Take the case of Danny Davies, who worked at a Jimmy John’s sandwich shop. He says when he got hired, he was required to sign a non-compete agreement that limited his ability to work at any other sandwich restaurant.
“They ask everyone to sign it when you get hired,” says Davies, who hasn’t worked at Jimmy Johns since February 2014. And while neither Davies nor his colleagues initially took the agreements seriously, Davies says their views changed once they considered leaving the sandwich shop and finding a job elsewhere.
"I’ve known people that have done this: they start working somewhere…And keep this job secret, just in case,” says Davies, alluding to the concern that the franchise owner of the sandwich shop might pursue legal action against them.
There have been several stories of employees who have been restricted from taking other jobs because of non-compete agreements—from a children’s camp counselor to a physicist. Jimmy John’s is currently facing a class-action lawsuit over its non-compete agreements.
One of the rationales for requiring the non-competes from lower-wage workers is that they may have received a lot of training in their jobs, and if they leave to work at a competing company, that may be an unfair advantage. But Lobel says non-compete agreements have spread beyond even that thinking.
"I teach cases about welders who receive so little training, but they still can’t move to a competitor,” says Lobel.
Lobel says part of the reason for the expansion of these agreements is a shift in business culture. “Today, it’s really human capital that is what creates value," Lobel says. "And companies have this impulse that the way they’re going to keep people is by cutting off their outside opportunities.”
“Non-compete law is essentially state law, and it varies somewhat significantly among states,” says Michael Rosen, a partner at the Boston law firm Foley Hoag LLP.
Rosen specializes in non-compete agreements in Massachusetts, which has a relatively permissive non-compete law. Meanwhile, California is one of the most restrictive states. It does not recognize the agreements except for owners of businesses. In the summer of 2014, Massachusetts’ state legislature considered amending non-compete rules, but the initiative failed.
Rosen says there is a place for non-compete agreements in business even for low-level workers, such as those at a high-tech firm with access to confidential code.
“Generally, the legitimate interests that would justify enforcement are…protection of trade secrets or confidential information, and protection of good will,” Rosen says. “But in terms of low-skill areas where confidential information and good will are really not in jeopardy, I think it’s difficult to justify asking folks to sign a non-compete."
A year ago, tech CEO Michael Dell paid almost $25 billion for a computer maker … called Dell. He bought enough shares to take the company he founded private, meaning no quarterly earnings reports. At the Dell World conference in Austin, he’ll show off a reboot-in-progress.
One area where Dell wants to grow is data services: Helping corporate clients manage “the cloud.”
There are pitfalls to a cloud strategy, says James Kelleher, an analyst with Argus Research. "Number one, it’s not enough to announce that you’re a cloud company," he says.
Simply providing software tools isn't enough either, he says. As companies like IBM have learned, "you need to actually provide the cloud facility." Competitors like Amazon have had early success with that strategy.
"That’s really the million-dollar question here, for every technology company," says Matt Eastwood, an analyst with the tech consultancy IDC. "How quickly will that traditional profit pool begin to dry up, and how quickly will those new profit pools develop and emerge?"
As a private company, Dell won’t have to worry about the stock market freaking out if it doesn’t show results every quarter.
William Shatner has been Priceline’s spokesman for years, but the company is not following the script of Shatner’s Star Trek days.
“It’s not just William Shatner, but the whole company has to boldly go where no travel company has gone before," says Gary Leff, who writes the viewfromthewing.com blog. "They haven’t quite figured out how to teleport themselves into the future of online travel."
Leff says Priceline's third quarter earnings report will give a glimpse of the success of the company's strategy of growth through the acquisition of other companies.
Priceline seeks out new companies to buy, like the dinner reservation website Open Table.
Basically, Priceline is trying to be your one stop shop for everything; your plane ticket, hotel and restaurant reservation.
“Priceline’s really trying to expand how much of the wallet it can capture from the consumers and keep them on a Priceline-branded website," says Adam Fleck, director of consumer equity research at Morningstar.
Perhaps not a bold strategy, but enterprising.
Though a short list of candidates to replace current Attorney General Eric Holder is circulating, a nomination and confirmation is increasingly unlikely until after an expected shift in Congress.
The spotted lanternfly has officially arrived in the U.S., and leaders in Pennsylvania are hoping it won't be staying long.
Can U.S. citizens born in Jerusalem list Israel as their place of birth on their passports? A 12-year-old boy is contesting the U.S. position that no one has sovereignty over the city.
Thousands of children swallow tiny batteries used in watches, calculators and toys each year. A team from MIT and Harvard is working on a pressure-sensitive insulating shield to prevent damage.
Nigeria knows how to beat back polio. And that's helped in the battle against Ebola. But other West African countries are struggling to beat the deadly virus — and neglecting anti-polio efforts.