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Chapter 1: Why are U.S. oil inventories at a 22-year low?
oil, private credit, and elk antlers. Seriously. From American Public Media, this is MarketPlanet. In Los Angeles, I'm Kyle Rizdahl. It is Thursday today, the fourth day of June. Good as always to have you along, everybody. Here's a little choose-your-own-adventure as we get started. Today, according to AAA, regular gas right now, this is a national average, is $4.24 a gallon.
That is, depending on which adventure you choose, either down more than 18 cents from a week ago... and or nearly $1.10 more than we were paying a year ago.
Chapter 2: How is U.S. oil export affecting domestic prices?
We all know why, I imagine, but the ramifications aren't always clear. The United States is exporting more of the oil that is produced here to make up for some of that missing Persian Gulf supply, because it's a global market, right? But that, in turn, has helped convince the Trump administration to draw down the Strategic Petroleum Reserve to try to keep prices down.
Thing is, the Energy Information Administration said this week, U.S. petroleum inventories are now as low as they have been since 2004. Marketplace's Kelly Wells gets us going with what that might mean.
The U.S. is exporting more oil, but not because it's producing more oil.
We're just kind of pulling that out of our inventory and we're, you know, we're shipping it overseas.
Abhi Rajendran with the Center for Energy Studies at the Baker Institute says exports from the U.S.
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Chapter 3: What challenges does the U.S. face with oil supply?
have tempered the global supply shortage and actually kept prices relatively stable.
But the U.S. can't continue to be backstopped just through inventories for too much longer.
At this rate, analysts expect U.S. inventories to reach record lows because last time they got this low in the mid-2000s, the U.S. wasn't even close to exporting the millions of daily oil barrels it does now.
It's really easy to say, well, we can just stop that. Well, we really can't.
Patrick DeHaan, head of petroleum analysis at GasBuddy, says if we did stop exporting, oil companies would pretty much stop drilling.
You can't have a world in which the U.S. is the world's largest oil producer and we keep all of our own oil. It just wouldn't work like that. There's not enough financial incentive for oil companies to invest billions of dollars for a very limited return.
Even if the Strait of Hormuz were to open today, the U.S. would likely keep drawing down its stockpiles for months. Greg Priddy, senior fellow with the Center for the National Interest, says for one thing, oil tankers are slow and a lot of them are in the wrong place.
They're not sitting there waiting in the Arabian Sea to go in and pick a cargo up. A lot of them are parked near the destinations or tankers that would have been going to the Gulf just picked up a cargo in Texas.
And if the war keeps going until the end of the year?
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Chapter 4: What is the current state of private credit markets?
would be in a recession.
Priddy says it's likely that U.S. drivers will pay $5 per gallon by July. And if the war continues, it could be $6 by the end of the summer. I'm Kaylee Wells for Marketplace.
Today's installment of what could possibly go wrong in this economy is brought to us by the private credit markets. Blackstone's private credit fund is capping what private credit investors can withdraw at 5%. They'd been asking for 10. Other private equity firms doing the same, Partners Group and Cliffwater?
Marketplace's Sabri Beneshour has more on what's eating those investors and a very quick refresher on what private credit is in the first place.
After the great financial crisis of the late aughts, interest rates were really low for a long time. And so investors were like, well, this sucks. How are we going to make money? So they started snooping around for good places to put their wealth.
There is generally big inflow of money into alternative space.
Victoria Ivashina is a professor at Harvard Business School. A lot of investors realized, let's just do what banks do. Let's lend money to businesses, but like new kinds of businesses, like software that banks are afraid of.
Traditional debt markets were not providing those forms of financing.
People who are not banks doing bank-like things, lending specifically, is called private credit.
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Chapter 5: How are investors reacting to private credit withdrawals?
And it took off. It was exponential growth. since after the financial crisis. Private credit became even more popular when interest rates started to rise after COVID. Big companies did not like that, and they didn't like how inflexible traditional banks were about loans. So they started turning to private credit. It reflects a broader trend of Decline of traditional banking.
Tomasz Piskorski is a professor at Columbia Business School. Private credit got even bigger when cloud computing and AI and data centers all joined the party, and investors went absolutely nuts for all of that. The size of private credit more than tripled over the last few years. So why are we now hearing about investors wanting to take their money out?
Well, basically, with time, the warts on some of these investments are beginning to show, says Ivashina.
Well, as this asset class kind of expanded, we didn't see many defaults. When you start something, the problems are not imminent, right?
And sure enough, as time went on, there were defaults. And one of private credit's favorite darling software services got a big scare that AI might undermine it.
That's where some of the pressures were concentrated.
So some investors got queasy. They wanted to take their chips home early. And some private credit firms have let them do it up to a point. But the vast majority of private credit firms do not allow that. And the vast majority of investors, especially the institutional mega investors, don't want out anyway just yet. In New York, I'm Sabri Beneshour for Marketplace.
Wall Street today. Hey, here's a twist. Tech stocks suffered. The Dow had a great day. We will have the details when we do the numbers. Elk antlers, I learned, you know, today, can weigh as much as 40 pounds. They fall off the animals naturally every spring. Also, I learned that as a result of people picking them up when they are shed, there's an elk antler industry.
Here's Marketplace's Caitlin Tan.
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Chapter 6: What role does social media play in advertising today?
Lots of Carhartt jackets and camo ball caps and antlers clanking. Mike Bosworth is dragging heaping piles of antlers from his old truck bed.
I found most of these, yeah.
Wait, and I was just reading your sweatshirt. Antler addicts?
I'm an addict.
Every spring, Bosworth scours mountain foothills and forests of his home in Oregon looking for antlers.
I'm just an outdoor guy. I start finding them and it's like an Easter egg hunt for an adult.
Like a 12 miles a day type of hunt. But this year he's hiking farther for antlers.
Oh yeah, they're all in different places. Yeah, they're scattered.
A little context on elk migration. They go wherever there's the least snow. They need grass to eat. And normally when they shed their antlers, they're still in low-lying, easy-to-hike places. But with such little snow in the West this year, a lot of the elk and their antlers were deep in the mountains.
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Chapter 7: How do stealth ads influence consumer behavior?
Do you feel sad selling them?
Yeah. Yeah, I can remember where I found lots of them. Yeah.
Buying them is Roy Rasmussen, who drove down from Montana. He's sorting through the grades, or quality, of the antler.
B grade, B grade, C grade, D grade.
After loading them into Rasmussen's giant horse trailer, it's time to figure out the price tag. The nicest grade of antler is about $14 a pound.
$2.51 plus $3.51.4 plus $1.56.
It's about a $10,000 check for Bosworth.
Thank you, Bob. I'll have to buy you something to drink later.
Rasmussen is a middleman of sorts. He'll buy even more antlers and resell them over the next year for a little more money. How much antler are you selling a year?
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Chapter 8: What unique market exists for elk antlers in Jackson Hole?
So maybe you want to get one antler instead of three. Maybe you don't give him anything.
And that could mean he'd have to raise his prices for the elk antler dog juice. In Jackson, Wyoming, I'm Caitlin Tan for Marketplace.
It's not like social media is immune to advertising. It is everywhere, as you know, TikTok, Instagram, YouTube, all the rest. There's the obvious stuff, sponsored ads and the like. But there is a whole world of advertising that is trying real hard to be invisible. And there is some evidence that it's fueling just about every trend you can think of.
Lane Brown is a features writer for New York Magazine. He had the story the other day in a piece titled The Feed is Fake. Lane Brown, welcome to the program. It's good to have you on. Great to be here. So let's start with the title of this piece. And look, nobody, I hope nobody believes that whichever social feed they are on is actually completely genuine and real. But the feed is fake.
I mean, it's a little distressing. Give us the skinny here.
Sure. So basically, marketers have more or less figured out how to make things go viral and invade your social media feeds in ways that you probably don't even realize. And so when you're scrolling through Twitter or Instagram or TikTok, chances are pretty much almost most of the things you're seeing are are actually these days, stealth paid advertisements, undisclosed.
You have no idea they're ads, but they are.
As I said, that's a little distressing. How does it work? What are the mechanics?
So there are a few different methods that marketers are using, but one is this thing called clipping, which is where basically anybody with something to promote, whether it's a movie trailer or a song, they will clip it into a whole bunch of little tiny social media friendly fragments and upload it at great volume.
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