Geopolitics Again

We learned today (9/9/22) from Bloomberg that China has announced new measures in its fight against Covid-19, asking people to minimize travel during the Mid-Autumn Festival next week and National Day holidays in October.  All regions are to conduct regular PCR testing, regardless of whether they have had outbreaks or not.  These measures, which start on Sept. 10 and end on Oct. 31, will likely depress economic activity.

In the US, energy policy continues to be incoherent.  On one hand, in August Energy Secretary Jennifer Granholm called on US refiners in a threatening letter to limit exports ahead of the hurricane season.   Currently these exports go mainly to Europe and South America.  On the other hand, National Security Council spokesman John Kirby said to Bloomberg on Monday, August 29, “We’re concerned about potential energy shortages in Europe as the winter approaches.”  We saw a news story that Ecuador has started importing distillates from Russia in addition to the United States.  Given Secretary Granholm’s letter, their actions make perfect sense.

I mention these two examples to illustrate that a shipping investor should, when possible, take a non-judgemental view of a nation’s actions.  Some Americans may look at Chinese Covid policy with disapproval.  At the same time, given that we have significant conventional energy resources which we inefficiently utilize, some Chinese also likely look at US policy with wonderment.  Both nations’ actions will impact shipping demand.  In the meantime, I am headed on vacation, returning to New York for the Capital Link Conference on September 21st where we learn how these dynamics are playing out.  See you there!