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The Club PUBlication  08/26/2019

8/26/2019

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​Arctic drilling windfall to U.S. looks oversold

Predicted federal windfall of $1.8 billion may really be as low as $45 million. 

By Henry Fountain and Steve Eder New York Times 
AUGUST 22, 2019 — 7:19PM
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KATIE ORLINSKY - The 1002 Area of the Arctic Wildlife Refuge in Alaska, in November 2018. In pushing to open the Arctic National Wildlife Refuge in Alaska to oil exploration, the Trump administration pressed scientists for quick findings, dismissed bad news

When the Trump administration first pushed to open the Arctic National Wildlife Refuge in Alaska to oil exploration, it predicted that drilling would generate a windfall for the federal Treasury: $1.8 billion, by a White House estimate.

But two years later, with the expected sale of the first oil and gas leases just months away, a New York Times analysis of prior lease sales suggests that the new activity may yield as little as $45 million over the next decade. Even the latest federal government estimate is half the figure the White House predicted.

The original lofty projection was just one element of a campaign within the administration to present in the best possible light the idea of opening the refuge’s coastal plain after decades of being stymied by Democrats and environmentalists, according to internal government communications and other documents reviewed by the Times.

Opponents of exploration have said the 19 million-acre refuge, one of the largest expanses of pristine land in the United States, could be forever damaged in pursuit of oil that would bring little benefit to U.S. taxpayers.

The administration, bent on proving them wrong, turned to the federal bureaucracy to help make its case, the records show.
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Even before plans to allow the lease sales were completed and approved by Congress in late 2017, the Interior Department pressed for new — and possibly rosier — assessments of the prospects for oil discoveries that would entail field research in the environmentally fragile refuge, according to the documents.
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Sen. Lisa Murkowski, R-Alaska, touted drilling in the Arctic National Wildlife Refuge as way to generate $1.1 billion for the Treasury. Other estimates, official and unofficial, are much less.
In revising a draft plan for the new assessments, officials played down evidence that the refuge might not have much oil, deleting references to disappointing wells nearby.
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They also pushed scientists to provide studies and other information so quickly that some expressed concern over the speed of the process, according to the documents, which were obtained through public records requests by Trustees for Alaska, an environmental law firm that has opposed oil exploration in the refuge.

An Interior Department spokeswoman said the agency “absolutely” respected the work of its scientists and staff and had not interfered with it in any way. She said negative information about nearby wells was not pertinent to prospects in the refuge.
A proposal for seismic studies — which could help locate oil reserves but could also harm polar bears and other wildlife — was shelved in February, though it could be revived this winter. Another plan, for aerial surveys, went nowhere.

Government studies in the 1990s estimated as much as 11 billion barrels of recoverable oil in the 1.5 million acres of the refuge’s coastal plain, the area that could be opened to drilling.

But data from the only exploratory well ever drilled there — the so-called KIC-1 well from the mid-1980s — has been kept confidential. The Times reported this year that a decades-old legal battle provided clues that the results of that test well were disappointing. And with no new studies imminent, potential lease buyers will have no fresh information to help them decide how much to bid.

Still, the Trump administration predicted in its first proposed budget, in May 2017, that lease sales in the refuge would generate $1.8 billion over a decade. And for months afterward, as the White House and Republicans in Congress worked on legislation to permit the lease sales, they used the potential payout as political leverage.

But revenue estimates ever since have been substantially lower.

In fall 2017, the Congressional Budget Office projected $1.1 billion over a decade — a figure promoted by Sen. Lisa Murkowski, R-Alaska, when she worked with the White House to include oil exploration in the refuge as a revenue generator in the president’s tax overhaul.

Murkowski and others have pointed out that if oil is eventually produced in the refuge, the federal government will gain more revenue from per-barrel royalties. But few people expect drilling, if it occurs, to begin before 2030.

The Congressional Budget Office now estimates that the lease sales would bring in $900 million in federal revenue during the next decade, a figure it said was based on federal lease sales not only in onshore and offshore Alaska, but also in the Lower 48 states. But even that amount may be overly optimistic.

Separate from the budget estimates, the documents reviewed by the Times — thousands of pages in all — capture the worries of scientists and other specialists about the speed at which the administration has pushed to open the refuge and the potential effects of moving so quickly.

When the Interior Department drew up plans in 2017 to update assessments of the potential oil reserves in the refuge, officials stripped out disappointing findings about test wells drilled just outside the area. The details were included in a draft but removed from the final plan, a comparison of the documents showed.

In response, the Interior spokeswoman noted that only one well had been drilled in the coastal plain, and that only one seismic survey had ever been done. “Other wells and geophysical studies do not apply to the coastal plain,” she said.

Even with all of the discussion about the refuge, major oil companies have been relatively quiet about whether they intend to bid. Some people in government and in the industry attribute this to a lack of interest based on the companies’ own data-gathering over the years. Others say the companies are probably just trying not to tip their plans to competitors.

The question will not be answered, of course, until bidding begins.
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“Will it be a stupendous billion-dollar bid? Probably not,” said Larry Persily, a former federal gas official responsible for Alaska, who noted that there is no shortage of oil or gas reserves now. “Maybe it would be good to have the lease sale and find out if there is any interest,” he added. “And we can move on.”



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The Club PUBlication

8/19/2019

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Trade war has already added 5% to typical U.S. shopping basket
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Minnesota retailers are also taking a hit as tariffs eat profits. 
By  Jim Spencer Star Tribune
 
AUGUST 17, 2019 — 6:43PM
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President Donald Trump dropped some items from his tariff list last week and delayed others from Sept. 1 to Dec. 15.
As the U.S. trade war with China expands, American consumers already are feeling the sting and it stands to get worse.

Virtually all economists agree that retail price increases by national players such as Minnesota-based Target Corp. and Best Buy will quickly follow if President Donald Trump acts on threats to apply new tariffs to $300 billion worth of Chinese imports.

Last week, Trump dropped some products from his latest tariff list “based on health, safety, national security and other factors.” He delayed imposition of 10% tariffs on other products from Sept. 1 to Dec. 15. The move was meant to offer temporary relief to worried stock market investors and businesses that depend on Christmas shoppers for their livelihood. But the stock market crashed anyway based on signs of recession in the bond market and concern over the trade war.

Analysis from financial consultants Gordon Haskett Research Advisors shows cost increases already have taken hold in a typical shopping basket of 76 regular items from Target and Walmart. Target’s shopping basket cost roughly 5% more in June than it did in October 2018, Gordon Haskett said.

Despite the president repeatedly saying that the Chinese are paying the protective tariffs imposed by his administration, “the money is coming from Americans, not the Chinese,” said Robert Kudrle, an international trade specialist at the University of Minnesota. “Essentially, the president is pitting Americans against each other.”
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At Creative Lighting in St. Paul, Michael Minsberg tried to absorb the first round of tariffs, which he said created havoc with his budget. When the White House began adding more taxes to Chinese imports, which make up 90 to 95% of lighting fixtures sold in the U.S., Minsberg said he had no choice but to pass along his price increases to customers.
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Cost increases have already boosted the price of a typical shopping basket at Target or Walmart, a recent analysis found. Target’s shopping basket cost roughly 5% more in June than it did in October 2018.
The White House did not respond to a request for comment. It has said the president’s trade policies will eventually create jobs and boost U.S. manufacturing. The administration also thinks tariffs are the best way to curb unfair Chinese trade practices and intellectual property theft.
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Republicans such as Florida Sen. Marco Rubio agree. “Yes, the trade dispute with #China will cause economic pain, but so too will returning to the status quo. And Surrendering to China will cause long term & permanent economic devastation,” Rubio has tweeted.

Trump has cast farmers hit by retaliatory tariffs as victims of the trade war who must be subsidized. He rarely mentions American businesses paying 10% to 25% in new import taxes or consumers who have had to absorb those taxes.

Trump’s latest announcement of Chinese tariffs provoked a Chinese moratorium on the purchase of U.S. agricultural products. The president has promised more farm subsidies. But Minnesota farmers want a trade deal negotiated with China, not another government bailout funded by other U.S. business sectors and their customers, said soybean and hog producer Kristin Duncanson.

Duncanson, a former president of the Minnesota Soybean Growers Association and a board member of the Minnesota AgriGrowth Council, farms near Mankato. She said government relief has saved many farmers facing depressed commodity prices, bad weather and retaliatory tariffs. But she does not think more subsidies paid for by Americans is the answer.

“We don’t want to pit one part of the economy against another,” she said. Pitting farmers against consumers, she added, is “very unsettling.”

A study by three economists from the New York Federal Reserve and Columbia and Princeton universities concluded that “the tariff revenue the U.S. is now collecting is insufficient to compensate the losses being born by the consumers of imports.” By the end of 2018, the trade war had reduced “U.S. real income by $1.4 billion per month,” they added.

In their study, “The Impact of the 2018 Trade War on U.S. Prices and Welfare,” Mary Amiti of the New York Federal Reserve, Stephen Redding of Princeton and David Weinstein of Columbia determined that tariffs had “an almost immediate effect on prices in the U.S. economy.”

A tariff Trump placed on foreign-made washing machines left prices “rising sharply” in an appliance sector where costs “had been falling steadily for years.”

The biggest hits came when the White House targeted Chinese imports to push its “buy American, hire American” agenda and to punish the world’s second-largest economy for unfair trade practices and theft of U.S. intellectual property. Yet protective tariffs meant to hurt the Chinese “typically” raised import costs to U.S. businesses by 10% to 30%, Amiti, Redding and Weinstein found. Because those prices tracked with the size of the tariffs (10 to 25%), the researchers concluded that “much of the tariffs were passed on to U.S. importers and consumers.”

The researchers also said the trade war’s costs “are quite large relative to optimistic estimates of any gains that are likely to be achieved.”

In the broader economy, Amiti, Redding and Weinstein found that every job saved by protective tariffs cost $195,000, four times the annual wage of a steelworker.

They also said tariffs raised the average cost of manufacturing in the U.S. by 1%.

China’s decision to suspend purchases of U.S. agricultural products will make matters worse for many U.S. businesses and consumers, economists say. For instance, the moratorium means America’s livestock industry will not benefit from a massive market vacuum in China created by African swine flu, said Iowa State agricultural economist Dermot Hayes. Instead of going to Minnesota pork producers, that windfall will now go to Europe, Hayes predicted.

For the president to say otherwise “is complete bunk,” said Gary Hufbauer, an economist with the nonpartisan Peterson Institute for International Economics.

Yet Trump told a group of U.S. business people gathered at the White House July 15 to celebrate “Made in America Day” that “we’ve taken in tens of billions of dollars in tariffs from China.” He made the statement as he promised to use $16 billion to subsidize farmers who lost sales when China taxed U.S. soybeans and pork to retaliate.

Subsidizing farmers wounded by Chinese retaliation to the newly announced tariffs could cost an additional $16 billion on top of the $16 billion already earmarked, Hufbauer predicted.

Steve Billet, a former AT&T lobbyist now teaching in George Washington University’s business school, said the president is subsidizing farmers to lock in his political base.
At Creative Lighting, Minsberg said he is worried long-term tariff-driven price increases “will boomerang back to me” in the form of lost customers.

Scott MacDonald’s company, Mac & Mac, receives and distributes imports sold to several major Minnesota businesses. The Minnetonka company pays shipping, tariffs and delivery costs.

“It galls me when [the president] says how much money [the country] is making,” MacDonald said. “I’m losing money. I’m not going under, but I’m losing money.”

For example, MacDonald said, Menards canceled 6,000 units from a 25,000-unit order to offset a 25% tariff on a product.

Amiti, Redding and Weinstein said that in 2018 “at least $136 billion of trade was redirected as a result of import tariffs.” “This,” they added, “potentially could imply very large costs for U.S. multinationals (and Chinese exporters) who have made irreversible investments in China.” Major Minnesota corporations such as Medtronic and Cargill have significant investments in China.

The researchers did not account for the new Chinese moratorium on U.S. agriculture purchases. Also unmeasured is the impact of China’s decision last week to devalue its currency. Devaluation can lower prices of Chinese exports and temper Trump’s latest tariff threat.

The latest turns in the trade war are “very bad news for the world economy,” Kudrle said. And they are not good news for Americans, even farmers.

On July 15, Trump told the White House crowd that he has not “had one farmer say, ‘Please make a fast deal, sir. Please make a fast deal.’ ”

In Minnesota, Duncanson now hears a different story in discussions and on social media.
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More subsidies “are not what we’re hoping for,” she said. “We’re hoping for a negotiated settlement.”



Washington correspondent Jim Spencer examines the impact of federal politics and policy on Minnesota businesses, especially the medical technology, food distribution, farming, manufacturing, retail and health insurance industries.  
jim.spencer@startribune.com 612-270-1266 SpencerStrib



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The Club PUBlication  08/12/2019

8/12/2019

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​New signs of how the drug industry fueled the opioid crisis for profit.  And it appears that failures mark every point along the supply chain. 
By Joel Achenbach , Lenny Bernstein , Robert O’Harrow Jr. and Shawn BoburgWashington Post
AUGUST 10, 2019 — 10:01AM
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Recovering user Elizabeth Brooks, left, took a test with case manager Chrystal Orndorff in Big Stone Gap, Va. Amid drug industry marketing, opioids quickly became a self-sustaining industry, surging into small towns and leaving a deadly trail.
The origin, evolution and astonishing scale of the catastrophic opioid epidemic just got a lot clearer.

The drug industry — the pill manufacturers, wholesalers and retailers — found it profitable to flood some of the most vulnerable communities with billions of painkillers. They continued to move their product, and the medical community and government agencies failed to take action, even when it became apparent that these pills were fueling addiction and overdoses and were diverted to the streets.

This has been broadly known for years, but the more precise details became public for the first time in a trove of data released after a legal challenge from the Washington Post and the owner of the Charleston Gazette-Mail. The revelatory data comes from the Drug Enforcement Administration and its Automation of Reports and Consolidated Orders System (ARCOS). It tracks the movement of every prescription pill in the country, from factory to pharmacy.

“This really shows a relationship between the manufacturers and the distributors: They were all in it together,” said Jim Geldhof, a retired DEA employee who is now a consultant for plaintiffs in a lawsuit against the drug industry. “It just reinforces the fact that it was all about greed, and all about money.”

The industry has denied that, blaming criminal doctors and individuals who abused the drugs. The industry also contends that the DEA had all the information it needed to stop diversion of pills into the black market. “The DEA has been the only entity to have all of this data at their fingertips, and it could have used the information to consistently monitor the supply of opioids and when appropriate, proactively identify bad actors,” said John Parker, spokesman for the Arlington, Va.-based Healthcare Distribution Alliance. The DEA declined to comment.
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It appears that failures mark every point along the supply chain. The epidemic was not something out of sight. In full view, it intensified and the companies, health care professionals, law enforcement officials and government regulators were unable or unwilling to stop it.
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Remote mountain towns of southwestern Virginia’s coal country, where fog settles along Route 58 between the hills, received millions of prescription opioid pills between 2006 and 2012.
“We have a tradition of trusting companies, and the [government] is kind of weak here,” said Keith Humphreys, a Stanford professor. “Here it was misplaced trust.”
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The industry shipped 76 billion oxycodone and hydrocodone pills from 2006 through 2012, the period covered by the ARCOS data. They were distributed like a flash flood, spiking from 8.4 billion in 2006 to 12.6 billion in 2012. As a point of comparison, doses of morphine averaged slightly more than 500 million a year throughout the seven-year period, the data said.
The industry was supposed to self-regulate. Companies have an obligation, under the Controlled Substances Act, to report suspicious drug orders. The plaintiffs suing the drug companies allege that the incentive were tilted in favor of moving more product.
For example, the plaintiffs alleged that Ireland-based drug manufacturer Mallinckrodt gave the salespeople in charge of generic opioids “key roles” in investigating orders. Compensation “was weighted heavily to favor sales over compliance,” the plaintiffs allege, adding that sales bonuses could exceed six figures.

Mallinckrodt said the company produced opioids only within a government-controlled quota and sold only to DEA-approved distributors.

The new details have made more nuanced and complex the narrative of the pharmaceutical industry’s role in the drug epidemic. Many Americans knew about the role of Purdue Pharma, which in 1996 introduced the slow-release opioid painkiller OxyContin. Experts trace the epidemic to the appearance of Oxy, its heavy marketing, and its migration into the illicit drug trade along with other opioids.

The public’s search for accountability has centered on Purdue and its owners, the Sackler family. But during the height of the crisis, from 2006 to 2012, Purdue’s sales represented only 3% of the market.

At the top were generic drug companies many have never heard of: Actavis, now owned by Teva; Par Pharmaceutical, since acquired by Endo Pharmaceuticals of Ireland; and a generics subsidiary of Mallinckrodt, now known as SpecGx. They manufactured 88 % of the opioids in those seven years.

Several drug companies issued broad defenses, saying they were committed to providing a legal product to legitimate patients.

The new data shows that pills surged most dramatically into central Appalachia, particularly coal country, and bordering areas where the economy has been depressed.

Many people there have endured hardship and job injuries. Almost lost in the controversy is that some people need opioids badly.

In the 1990s, amid extensive drug industry marketing, the medical community seized on a big idea: that freedom from pain was a fundamental right.

Within a decade, the pills became their own self-sustaining industry, a black-market and even street-corner product. They arrived in bulk at small-town pharmacies. That trend is parallel to a rise in the death rates in those communities. Prescription opioid overdoses have killed more than 200,000 people in the U.S. since 1996.
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The accountability question is now being played out in courts. The big event is in Cleveland, where a federal judge is overseeing about 2,000 separate lawsuits filed against a rash of drug companies. The outcome could be a massive, industrywide settlement along the lines of what happened with the tobacco industry many years ago. But the drug companies have denied wrongdoing.
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The Club PUBlication  08/05/2019

8/5/2019

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Climate change, extreme disasters taking unexpected health toll
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By knocking chemicals loose and spreading them into the air, water and ground, disasters appear to be exposing people to an array of ailments. 
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By Christopher Flavelle New York Times
 
AUGUST 3, 2019 — 10:18AM
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Researchers are discovering that health issues from natural disasters linger longer than thought. Months after wildfires in California, people reported asthmalike symptoms.
New research shows that the extreme weather and fires of recent years, similar to the flooding that has struck Louisiana and the Midwest, may be making Americans sick in ways researchers are only beginning to understand.

By knocking chemicals loose from soil, homes, industrial-waste sites or other sources, and spreading them into the air, water and ground, disasters like these — often intensified by climate change — appear to be exposing people to an array of physical ailments including respiratory disease and cancer.

“We are sitting on a pile of toxic poison,” said Naresh Kumar, a professor of environmental health at the University of Miami, referring to the decades’ worth of chemicals present in the environment. “Whenever we have these natural disasters, they are stirred. And through this stirring process, we get more exposure to these chemicals.”

Kumar’s research has focused on the spread of PCBs, a suspected carcinogen, in Puerto Rico after Hurricane Maria in 2017. He led a team of researchers in Guánica, and found that PCB levels had tripled since Maria, to 450 parts per million. Worse, it was not just the soil showing elevated PCBs. It was the people, too.

The researchers tested 50 residents and found levels two to three times greater than the national average.
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Other research examined Hurricane Harvey in Houston, and the wildfires in California, looking at the contaminants dislodged and the resulting health effects. “Typically with these situations you have a mixture, a toxic stew,” said Aubrey K. Miller, senior medical adviser to the National Institute of Environmental Health Sciences. “We’ve been able to demonstrate human health effects in some of these, but that information is not adequately captured.”
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The Delta Fire burns in the Shasta-Trinity National Forest, Calif., on Thursday, Sept. 6, 2018. Fire officials say the wildfire
That is beginning to change. Until recently, researchers had been hamstrung by the difficulty of tracking long-term health changes after a disaster. One of the first cases in which good data was available, Miller said, was the collapse of the World Trade Center in the terrorist attacks of Sept. 11, 2001. Researchers have been following a group of more than 71,000 people since 2003.
That research showed the severity of health effects linked to exposure to dust from the towers, which included heavy metals, silica, wood dust, asbestos fibers and other contaminants. rates of pulmonary fibrosis.Ten % of enrollees developed asthma within six years, and firefighters saw drops in lung function. A 2013 paper reported greater-than-expected rates of thyroid and prostate cancer among rescue workers; a paper published in March showed higher
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What that data could not reveal was whether that event was unique. So in 2010, the NIH’s environmental health sciences institute began awarding research grants quickly after an event to gather human health data after a disaster.

The researchers said their work has shown health effects that they say have surprised them.

After the California wildfires in 2017, epidemiologist Irva Hertz-Picciottoused an online survey to get health information from thousands of people exposed to the smoke.
“There’s been a conventional wisdom that when people have symptoms from fires, they are transient and there’s not persistence,” she said. But her research showed that months after the initial exposure, about 15% respondents who had never had asthma reported asthmalike symptoms.

Other researchers are examining the health effects of contaminants shifted by hurricanes.

In September 2017, after Hurricane Harvey dropped 4 feet of rain on Houston, dislodging chemicals from the soil, ship channels and chemical facilities, a team from the Baylor College of Medicine distributed questionnaires; took nasal swabs, spit and saliva tests and fecal samples, and distributed silicon wristbands that measure what chemicals the residents were exposed to.
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The early results show a range of reactions, including sinus problems, skin irritation and respiratory ailments, Walker said. Now researchers are using geospatial analysis to determine which participants were close to which chemical sites, as well as what contaminants are present in their bodies and homes, to try to link specific toxins to specific health effects.

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