Oil prices are not a barrel of fun
This is an audio transcript of the FT News Briefing podcast episode: ‘Oil prices are not a barrel of fun’
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Marc Filippino
Good morning from the Financial Times. Today is Wednesday, September 20th, and this is your FT News Briefing.
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Instacart had a solid debut on the public market. And oil prices reached $95 a barrel. Plus, India and Canada’s relationship hit a really rough patch this week.
Justin Trudeau
Any involvement of a foreign government in the killing of a Canadian citizen on Canadian soil is an unacceptable violation of our sovereignty.
Marc Filippino
I’m Marc Filippino, and here’s the news you need to start your day.
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Instacart listed on the Nasdaq yesterday, and shares went up 40 per cent shortly after trading. But things cooled down after that. Shares ended the day up more than 10 per cent, so still high but significantly lower than the initial pop. This is less than a week after the chip designer Arm’s IPO. That stock rose 25 per cent on its first day of trading. Next up is Klaviyo. The market automation company is expected to disclose its IPO pricing on Thursday and raise more than $500mn.
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Oil prices are on a roll. Brent crude hit $95 a barrel yesterday, and West Texas Intermediate rose above $90 last week. Here to talk to us about this is the FT’s US energy editor Jamie Smyth. He was most recently our US pharmaceuticals correspondent. Congrats on the new gig, Jamie.
Jamie Smyth
Oh, thanks, Marc. Yeah, great to be here.
Marc Filippino
So, Jamie, what is causing oil prices to rise so rapidly?
Jamie Smyth
Well, there’s really two fundamental reasons that the price of oil is rising. Demand is much better than expected. So, you know, coming into this year, people were thinking that the global economy was having a few problems, but it’s actually performed much better than expected. And we’re seeing that people are travelling a lot. So the use of jet fuel and jet fuel demand has really risen this year. So these factors have driven record oil demand in 2023. And the other fundamental reason that the prices are rising is that, you know, we’ve got tight supply against this backdrop of higher than expected demand. We’ve had this concerted move by Saudi Arabia and Russia to restrict supply in the market. So they’ve been removing more than a million barrels of oil a day from production. So, you know, about 10, 12 days ago, Saudi Arabia and Russia indicated that they were gonna continue these supply restrictions until the end of the year.
Marc Filippino
Jamie, put $95 a barrel into context for us. I mean, what does that look like at the pump for consumers? And, could it get worse?
Jamie Smyth
Well, here in the US, you’ve really seen a surge in petrol prices. So the price of a gallon of petrol has gone up to $3.88. If you think about diesel, which is really an important fuel for freight, agriculture and other industries, that’s gone up almost a fifth in the past three months. So these increases in fuel prices really impact the economy. And whenever oil prices go up, that really stokes a rise in inflation. Most analysts think we’re gonna get to $100 oil very shortly.
Marc Filippino
And what exactly does $100 a barrel signify?
Jamie Smyth
So $100 oil has always been like this magical sort of figure that you hit within the industry. And it certainly provokes concerns that it’s gonna tip economies into recession and really dent economic growth. One thing to remember now is that we have had a lot of inflation over the last, you know, couple of years. So some experts and analysts would say that, you know, $100 oil isn’t quite as hard-hitting as it used to be. And the Saudis, for example, would, used to say, you know, $60 oil maybe a decade ago, you know, was the level that they would like to hit. But with these inflationary pressures over recent years, perhaps we’re getting to a stage where $100 is gonna be a much more common occurrence.
Marc Filippino
Jamie Smyth is the FT’s US energy editor. Thanks, Jamie.
Jamie Smyth
Thanks, Marc.
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Marc Filippino
Justin Trudeau dropped a bombshell accusation this week.
Justin Trudeau
Canadian security agencies have been actively pursuing credible allegations of a potential link between agents of the government of India and the killing of a Canadian citizen.
Marc Filippino
The Canadian prime minister said New Delhi orchestrated the shooting of Hardeep Singh Nijjar outside Vancouver in June. Nijjar was a Sikh nationalist that India accused of terrorism, and it posted bounties for his arrest.
Justin Trudeau
Any involvement of a foreign government in the killing of a Canadian citizen on Canadian soil is an unacceptable violation of our sovereignty.
Marc Filippino
Here to talk about what Trudeau’s allegations mean for the relationship between Canada and India is the FT’s John Reed in New Delhi. Hi, John.
John Reed
Hi, Marc.
Marc Filippino
John, have you ever seen anything like this?
John Reed
It is absolutely unprecedented. And if it were true — and I must stress we haven’t seen the evidence yet — it would put India in a league with Israel, Saudi Arabia, Russia, North Korea, you know, a handful of other countries that have killed other people outside its own territory.
Marc Filippino
Now, how did India and President Narendra Modi react to the allegations?
John Reed
So India has flatly rejected them. Trudeau raised this in a meeting with Modi last week. And Modi at the time rejected it then as well. They’re saying they’re absurd. And India also expelled a Canadian diplomat. Essentially tit for tat for Canada, having done the same the day before to an Indian diplomat.
Marc Filippino
John, what can you tell us about relations between Modi and Trudeau more broadly? I mean, I can’t imagine they’re good right now.
John Reed
No, they’re very poor. And this was in evidence at last week’s G20 summit meeting when the two leaders — he and Modi — clasped hands briefly and then had a meeting, which Modi did a very, very stern readout afterwards. And then later in the week, India and Canada suspended talks on a free trade association.
Marc Filippino
What are you taking away from Trudeau’s accusations, John?
John Reed
India is, after all, the world’s biggest democracy. Modi’s critics point out rightly that he does have some authoritarian tendencies, but ultimately, India’s in the league of democratic nations. Now, if it’s also a democratic nation that is, you know, allegedly responsible for a hand in the death of an activist in someone else’s borders. That’s just an extraordinary story. It’s worth remembering that the western world then joining hands with India as a counterweight to China, that this is the world’s democratic great hope. If we then find out that there’s a different side of India that we didn’t know about, then this will probably change our view of what kind of player India is on the world stage.
Marc Filippino
John Reed is the FT’s South Asia bureau chief. He’s based in New Delhi. Have a good one, John.
John Reed
Bye, Marc.
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Marc Filippino
Before we go, the Federal Reserve meets later today to decide what to do about interest rates. People widely expect that chair Jay Powell will say that the Fed is holding rates steady, but inflation is still higher than the central bank’s 2 per cent target. So there could very well be at least one more rate hike before this year is out. Oh, and by the way, stick around after today’s show for a special peek at the upcoming season of the FT’s Tech Tonic podcast. It’s all about animals and artificial intelligence.
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You can read more on all of these stories at FT.com for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.
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Artificial intelligence is revolutionising the human world with programs like ChatGPT. Now, researchers believe that the latest AI advances could help us better understand the non-human world, too. A new series of the FT’s Tech Tonic podcast looks at how AI can help us translate animal languages and even speak back to them. Series producer Persis Love joins me now. Hi, Persis.
Persis Love
Hi, Marc.
Marc Filippino
OK, so translating animal languages seems like something out of the movie Dr. Dolittle. How close are we to actually understanding them?
Persis Love
Well, thanks to AI, we are, I mean, it seems like we could be very close to understanding them. But this is actually an area that researchers have been working on for decades, like, take, for example, with sperm whales. So we spoke to the sperm whale researcher Shane Gero.
Shane Gero
’Cause, you know, I’ve known these whales for longer than all of my kids.
Persis Love
And he’s gathered all of these recordings of sperm whales talking.
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Marc Filippino
It sounds like a weird mechanical click. I mean, do they actually know what these sperm whales are saying?
Persis Love
Well, yeah, they have actually found out some communication patterns, even without the help of AI. So one thing they know is that sperm whales speak in dialects. So sperm whale families in certain areas will use certain groups of these clicks that other families in other areas just won’t use at all. But Shane says even with these recordings, trying to spot patterns without the help of algorithms is really difficult.
Shane Gero
Have we just been looking at letters when really there’s words? Or have we been just looking at words when really there are letters and sentences at different levels of the hierarchy? That’s something that’s always been a challenge. We’re now working with these amazing machine-learning teams using more advanced approaches for pattern recognition that’s really exciting.
Marc Filippino
So how does this AI work? How do you translate between human English and the language that sperm whales use?
Persis Love
So one researcher that we spoke to described the algorithms they’re using as the same ones that are in ChatGPT. And he basically said that what they do is they transcribe languages as a geometric shape. You know, if you take that shape for English, you then take that shape for Spanish. You can, like, rotate those shapes and you will find that they actually align and overlap and you would then be able to translate instantly between those. And you know, you might be asking, but like the vocabulary that we have will be completely different from the vocabulary that a sperm whale has. But even if those shapes don’t overlap completely, there will be some shared concepts, and those parts we might be able to start translating across.
Marc Filippino
And Persis, could we actually speak in real time to these animals?
Persis Love
Well, yeah. So in the same way that we are able to deepfake human voices, the AI programs are able to synthesise animal voices. We spoke to one researcher Aza Raskin who works for an organisation called Earth Species Project, and he kind of threw out this conundrum that, like, the way this whole part of the whale’s language that we won’t have any conceptual understanding of, but that doesn’t actually mean that the AI program won’t be able to synthetically speak about those concepts.
Aza Raskin
In the next couple of years, we’re going to be able to build a synthetic whale or a synthetic bird that will be able to speak in a way that they cannot determine that it’s not one of their own speaking. Now, here’s the plot twist: we will be able to get, we believe, to two-way communication before we understand what we’re saying.
Marc Filippino
So does that mean that we could potentially say something that would offend these whales?
Persis Love
I mean, yeah, we could. We have no idea. And like, ethically, this is a really thorny issue, right? And whales have actually had language for 34mn years, and humans have only had language for 300,000 years. So it’s this idea of humans uttering new sentences into a culture that existed for like millions and millions of years, longer than our culture. And it’s difficult to know what the repercussions of that might be.
Marc Filippino
Persis Love is the producer of this season of Tech Tonic. We’ll have a link to the first episode in our show notes. Thank you so much, Persis.
Persis Love
Thanks for having me, Marc.
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