The Washington Post - USA (2022-06-12)

A16 EZ RE THE WASHINGTON POST.SUNDAY, JUNE 12 , 2022

to run their air conditioner this summer. Higher energy prices are also often a harbinger of an economic downturn, as consumers respond to higher prices by reducing their spending on other goods and services. Historically, oil price spikes like the ones now facing the West have “always” preceded or led to an economic recession, according to a research note by Jeremy Grantham, an analyst at GMO, an investment and asset manage- ment firm. “I’d be on high alert right now to see if the economy succumbs to this latest stab in the heart from higher energy prices,” said Chris Rupkey, chief economist at F wdbonds. “Realistically, it’ll be a miracle if we don’t go into a recession.” But the post-covid economy has repeatedly defied experts’ ex- pectations, and there is ample reason to believe strong growth could survive higher energy prices. Gasoline purchases accounted

BY LAURA REILEY

The Food and Drug Adminis-
tration investigated reports that
as many as nine children have
died since early 2021 after con-
suming baby formula produced
at an Abbott Nutrition plant in
Michigan — seven more than
previously acknowledged by the
FDA, according to newly re-
leased documents.
The FDA previously said two
children had died and two were
sickened after consuming formu-
la from the Sturgis plant that
contained the bacterium
cronobacter sakazakii. But the
agency acknowledged on Friday
that it had received additional
reports of children dying or be-
ing sickened after allegedly
drinking formula made there.
In all nine fatalities, the agen-
cy was unable to identify the
source of the infection. In some
cases, there was not enough
leftover formula to test. Of the
babies who died of infections
from cronobacter, genomic se-
quencing turned up different
strains than what was discovered
at the Sturgis plant during an
inspection this spring.
But the disclosure deepens
questions about Abbott’s mainte-
nance of the plant, which makes
a large share of the nation’s

powdered formula supply. It also raises further doubts about the FDA’s handling of complaints related to the Sturgis factory, which was shuttered for five months over food safety con- cerns, contributing to a nationwide shortage of baby formula. The complaints were first reported by eFoodAlert and food safety expert Phyllis Entis, who obtained them through a Free- dom of Information Act request. The newly reported infant deaths were included in a list of 128 consumer complaints col- lected by the FDA via the agency’s consumer complaint system between December and March. Identities of the dead children were not made public and identi- fied only by case number. “The FDA takes its responsi- bility seriously to ensure the foods we eat are safe and meet our rigorous standards for quali- ty and safety,” an FDA spokes- man said in a statement. “Based on FDA’s thorough review and investigation of all 128 consumer complaints reported to the agency and recently released to media in response to a FOIA request, only four complaints could be included in the case series associ- ated with the Abbott Nutrition investigation.” In a statement Friday, Abbott Nutrition said no causal relation- ship had been established between Abbott’s products and any of the reported deaths. “Abbott conducts microbiolog- ical testing on products prior to distribution and no Abbott formula distributed to consumers

tested positive for Cronobacter sakazakii or Salmonella. All re- tained product tested by Abbott and the FDA during the inspection of the facility came back negative for Cronobacter sakazakii and/or Salmonella. No Sal- monella was found at the Sturgis facility,” Abbott’s statement said. “There appears to have been no sense of urgency within the FDA to address a deteriorating situation in a production facility that was, in many cases, the sole source of nourishment to a vul-

nerable population,” Entis told The Washington Post in a statement. Sam Geisler, an attorney rep- resenting more than two dozen families who say their children were sickened after consuming formula made by Abbott, said the reports are evidence of systemic problems at the Sturgis facility. “With every development, it becomes clearer and clearer that the babies were the last consider- ation on the part of regulators and the company,” Geisler said.

In congressional testimony, FDA Commissioner Robert M. Califf described conditions at the plant as “egregious.” But Califf’s agency has also come under fire for not acting quickly on complaints about op- erations there. In addition to the nine deaths, consumers who submitted complaints described 25 incidents reported by the complainants as “life-threatening illness/injury” and 80 instances of “non-life- threatening illness/injury.” The

severity of the complaints were not corroborated by medical pro- fessionals, except in the case of death or confirmed presence of a bacteria like salmonella or cronobacter. The Centers for Disease Con- trol and Prevention confirmed the presence of the bacteria and performed genome sequencing in the four previously disclosed cases, though the source of the infection — whether the formula or something else — could not be confirmed. “The CDC has not been noti- fied of additional cases received via the consumer complaint system at this time and there is no pending testing related to this investigation,” said Brian Kat- zowitz, health communication specialist for the CDC. The Sturgis plant reopened on June 4. The FDA has had investi- gators on site for several days to observe improvements made to the facility as one of several conditions for the reopening. “The crisis that has crippled the ability of parents across the country to find the formula they need to feed their babies could have been avoided if the FDA had the necessary resources and leadership structure to make food safety a priority,” said Scott Faber, senior vice president for government affairs for the Envi- ronmental Working Group. Califf said in hearings on Capi- tol Hill last month that once the baby formula crisis was resolved, the agency would focus on reor- ganizing the food safety leadership at the FDA.

Files cite claims of more illness, death after baby formula consumption

TANNEN MAURY/EPA-EFE/SHUTTERSTOCK The reopened Abbott Nutrition plant in Sturgis, Mich. In all nine fatalities involving children who died after consuming formula produced there, the FDA was unable to identify the source of the infection.

FDA, Abbott Nutrition say there’s no evidence product caused fatalities

Energy costs rose by 3.
p ercent from April to May, while
energy prices overall have spiked
by 35 percent since last year,
according to a Bureau of Labor
Statistics report released Friday.
Inflation overall reached 8.
p ercent in May, the government
reported Friday, the highest rate
in 40 years.
The unrelenting upward
march of gas prices has emerged
as one of the chief domestic politi-
cal threats to the Biden adminis-
tration ahead of this fall’s
m idterm elections, and the White
House has few obvious solutions
to reverse the trend despite an
intensive push by top aides and
the president himself. The White
House is now caught between
liberal allies in Congress who are
pushing for escalating a populist
attack on oil and gas firms, and
the views of some of their trusted
economic experts who believe
those efforts could prove counter-
productive.
A poll released Thursday by
The Washington Post and George
Mason University’s Schar School
found that Americans were
broadly concerned both with in-
flation generally and rising gas
prices in particular. About 44
percent of drivers said they have
only partially filled their car’s gas
tank as a result of higher prices,
with 61 percent of those earning
under $50,000 a year doing so.
Roughly two-thirds of drivers re-
ported making fewer trips to the
grocery store because of rising
gas prices.
“This is a huge economic and
political albatross around the
neck of the administration, and
the difficulty is there really isn’t
an easy way to tackle this using
the policy tools available to
them,” said Eswar Prasad, an
economist at Cornell University.
Americans are not accustomed
to seeing energy prices as high as
they have been over the last sev-
eral months. The average price
for a gallon of gas in the U.S. hit
$5.004 on Saturday, according to
AAA. Already, at least 19 states
have average gas prices of $5 or
more, with California above $6 a
gallon. Some analysts think
America could near a nationwide
average of $6 a gallon by the end
of the summer. Diesel prices, par-
ticularly important to the truck-
ing and construction industries,
have jumped nationally from
$3.21 last year to $5.74 on Friday, a
record, according to GasBuddy,
which tracks fuel prices.
These higher energy prices
seep into almost every major part
of the economy. They drive up the
costs for electricity, transporta-
tion, shipping, logistics, air travel,
agriculture, fertilizer and the pro-
duction of other commodities.
They cut into corporate earnings:
Walmart recently pointed to fuel
and storage spikes as hurting its
profits. Demand for natural gas is
soaring globally to make up for
Russian energy, and as a result so
is demand for U.S. natural gas,
creating new financial strains for
domestic manufacturers and the
nation’s power grid — just as
more and more Americans start

GAS PRICES FROM A

for roughly 3 percent of consumers’ annual spending before the pandemic began, according to the Bureau of Labor Statistics. Unlike the 1970s, America is now a sig- nificant producer of global energy supply — meaning high prices benefit U.S. energy producers, rather than simply strain domestic household costs, as firms can increase hiring and spending with their higher revenue. Busi- nesses are also less vulnerable to volatility in gas and oil prices than they once were, due in part to improved efficiency over the last several decades, according to Matthew J. Slaughter, an economist at Dartmouth College. Economic growth has re- mained strong in the United States since shortly after early pandemic closures were lifted, and policymakers have hoped demand would cool, as inflation is way up with the fastest increases in consumer prices in roughly four decades. Higher spending on energy could, some economists

hope, deplete demand in other sectors, allowing for other price pressures to ease. That might hurt in the short term, but it could help overall. “It sounds harsh to say, but we need a slowdown in aggregate demand,” Slaughter said. “And it’s not that large relative to other things in the consumption basket.” But even as higher gas prices help slow the economy and tame inflation, they’re also squeezing politicians. And lawmakers and the Biden administration are des- perate to reverse the trend. The White House has taken a range of actions aimed at easing the gas price crunch, such as committing to releasing 1 million barrels a day from the nation’s Strategic Petro- leum Reserve and deploying the Defense Production Act to en- courage production of critical minerals. The White House has also permitted a gasoline blend composed in part by ethanol to be sold over the summer despite

resistance from environmental groups, which argue the move will worsen air pollution. The president is also reported- ly planning a trip to Saudi Arabia, as the U.S. looks to other parts of the world for increasing oil production to reduce global depend- ence on Russia, the world’s third- largest oil supplier before the war in Ukraine. President Biden had once vowed to make Saudi Arabia a “pariah,” given its treatment of women and other human rights abuses. But the White House has defended the potential trip, both to help broker diplomatic talks in the Middle East and to increase oil production. The U.S. government has also tried to work with Venezuela and other oil producers on increasing supply since Russia’s war began. White House officials have grown frustrated, though, as their efforts to this point have been confounded by global forces. E arlier this month, a group of oil-producing nations known as OPEC Plus announced that they had committed to a bigger boost in production for this summer — a move quickly praised by the Biden administration. Internally, White House officials hoped the announcement would lead to a drop in oil prices, two people familiar with the matter said. Instead, prices continued to rise. “They were perplexed that

there wasn’t a more durable reac- tion,” said one person briefed by White House officials, speaking on the condition of anonymity to describe private conversations. “They were like, ‘Man, we can’t catch a break.’ ” Biden on Friday blamed large oil and gas companies for not doing more to increase production, accusing them of choosing profits over lower prices for Americans. “They’re not drilling. Why aren’t they drilling? Because they make more money not producing more oil,” Biden said. “The price goes up.” The Post-Schar School poll found 72 percent of Americans blamed corporations for trying to increase profits for rising gas prices, including 86 percent of Democrats, 52 percent of Repub- licans and 76 percent of indepen- dents. The overall figure blaming corporations was higher than the share who blamed Biden or dis- ruptions caused by the pandemic (both 58 percent) and about the same share who blamed Russia’s invasion of Ukraine (69 percent). Biden has stopped short of embracing some of the actions pushed by Democratic allies in Congress to target oil producers. Sens. Sheldon Whitehouse (D-R.I.) and Elizabeth Warren (D- Mass.) have pushed a tax on the profits of oil and gas firms that would return revenue to consumers, with similar measures already enacted by the United Kingdom, Italy and some other European countries. “U.S. policymakers should quickly follow suit or risk continued profiteering and pain at the pump,” said Lindsay Owens, exec- utive director of the Groundwork Collaborative, a left-leaning group. The Groundwork Collab- orative found that the largest 24 oil and gas companies recorded $174 billion in profits last year — the highest increase in seven years. The White House has said it is studying that approach, as embracing such a measure could give the administration an effec- tive political response to higher gas prices. But it would lead to a fierce blowback from industry, centrist economists and the GOP. Critics warn that taxing oil and gas companies would discourage them from increasing production, which in the long run could hurt prices. Bob McNally, an energy analyst at Rapidan Energy Group who served in the George W. Bush administration, said the White House has no options that would immediately improve the gas price crunch. He said it is critical that Biden avoid embracing solutions such as price caps and an oil profits tax that he said would make the problem worse. “The White House has two options: They can do symbolic things that don’t really lower prices, and they can do really dumb things that are counterpro- ductive,” McNally said. “Despite my many reservations about the president’s energy policies, it is nonetheless impressive that he has so far resisted reaching into the dumb basket.”

Gas hits $5 a gallon, vexing consumers and White House

SPENCER PLATT/GETTY IMAGES

GAYA GUPTA/THE WASHINGTON POST

ABOVE: A dealership in New York City. Higher fuel prices are often a harbinger of an economic downturn, as consumers respond to higher prices by reducing their spending on other goods and services. L EFT: A customer in Northeast Washington pays $5.39 per gallon.

“I’d be on high alert

right now to see if the

economy succumbs to

this latest stab in the

heart from higher

energy prices.” Chris Rupkey, chief economist at Fwdbonds

The Washington Post - USA (2022-06-12)

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