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This is an audio transcript of the FT News Briefing podcast episode: Oil prices hit 7-year high

Marc Filippino
Good morning from the Financial Times. Today is Tuesday, October 5th, and this is your FT News Briefing.

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Oil prices keep going up. Opec added more fuel to that fire yesterday. And a US senator wants regulators to probe Federal Reserve officials’ personal trading activity. Plus, Facebook’s no good, very bad month keeps getting worse. Today, a whistleblower will appear before Congress to talk about what she experienced when she was inside the company.

Frances Haugen
The thing I saw on Facebook over and over again was there were conflicts of interest between what was good for the public and what was good for Facebook. And Facebook over and over again chose to optimise for its own interests.

Marc Filippino
I’m Marc Filippino and here’s the news you need to start your day.

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US oil prices rose to their highest level in seven years after Opec and its allies said they would not speed up plans to increase crude oil production. The decision comes despite a global energy crunch and despite urging from the White House. The group is basically sticking with a plan they made in the summer to increase production only gradually, and they haven’t said much about why they came to this decision. Here’s the FT’s energy editor, David Sheppard.

David Sheppard
Normally, after an Opec meeting, the Saudi oil minister, Prince Abdulaziz bin Salman would normally . . . quite enjoys having a press conference. Having an opportunity to talk with the press, explain their thinking and see what’s going on. For the last two months, he’s avoided doing this. But people are saying in the background that what they believe is going on is a, they don’t think the oil price has risen as much as it, as natural gas or coal prices. They don’t want to be publicly seen to be getting on the wrong side of the United States, which of course is a long term ally of theirs. They also don’t want to offend their customers in Asia or Europe who might be thinking, “Well, wait, why aren’t you doing more to cap oil prices at this stage?”

Marc Filippino
Now David, can part of this just be that they want to enjoy high prices while they can, given that so many big economies and big companies really are trying to move away from fossil fuels?

David Sheppard
There’s always an element of, well, Opec itself and its allies say, or we do not target price. The high prices for a fossil fuel producer that largely relies on these revenues to fund its government budget, of course, a higher price is a nice to have the majority of the time. But there are different levels to this, you know, a price 65 to 80, probably ok. But the worry is, is that if the price keeps heading higher, heads towards a hundred, heads to 120, that’s when people start to get concerned on both sides. Both consumers from the point of view of this is bad for our economies because inflation is going to rise. Cost of industry is going to go way up. But also producers, because as they can see this push towards renewables, this push away from fossil fuels. If you get very high prices, it’s only going to accelerate that move.

Marc Filippino
The jump in oil prices is adding to inflation and interest rate fears, and that rattled markets on Monday. The yield on the benchmark 10-year Treasury note rose and stock prices fell. The S&P 500 closed down one and a half per cent. Tech stocks are especially sensitive to inflation concerns. The tech-heavy Nasdaq had its worst day since June, falling more than two per cent.

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And the worst hit of the big technology stocks was, you guessed it, Facebook. After an extensive global outage on Monday, the social media company’s stock fell nearly five per cent. This comes as Facebook’s being publicly hammered for ethically questionable and potentially dangerous practices after a former employee leaked a trove of internal documents to The Wall Street Journal. This whistleblower revealed her identity on Sunday in an interview with the CBS News programme 60 Minutes. Her name is Frances Haugen.

Frances Haugen
Facebook has demonstrated they cannot act independently. Facebook over and over again has shown it uses profit over safety. It is subsidising, is paying for its profits with our safety.

Marc Filippino
Haugen will be on Capitol Hill today taking questions from lawyers. The FT’s Kiran Stacey will be covering the hearing. He joins me now. So what kind of questions could we expect from senators to ask Haugen?

Kiran Stacey
I think there’ll be a mix of questions. There’ll be the obvious grandstanding, which always happens during hearings like this. And then there’ll be some who come with very focused questions looking to uncover more information than we already have. So what we have is a lot of documents, which suggests that Facebook had done a lot of internal research about the impact to their platforms on the users. I think what senators will want to know is, ok, what were these documents actually showing? What was the data behind them? And the obvious thing I think is going to be what the impact was from Facebook’s dismantling of this civic integrity unit, which is where Frances Haugen was working. And specifically, can we tie what happened on January the 6th back to that? Now, she said in her interview, she did think that had a role. But exactly how could the civic integrity unit have stopped it? And what exactly was the impact of it? Those are the kind of specific direct questions that I think are most likely to uncover new information.

Marc Filippino
Now, you mentioned January 6th, the attack on the US Capitol by supporters of former President Donald Trump that could come up in today’s questioning. Senators may also dig into Facebook’s awareness of the toxic effect that its app, Instagram, has on teens while being slow to actively address the issue. And we’re seeing frustration with Facebook on both sides of the aisle too, right?

Kiran Stacey
It’s kind of bipartisan to the extent that both Republicans and Democrats hate Facebook. But they hate the company, and they hate Big Tech for very different reasons. Republicans really feel that they have been stifled by large technology companies. With Facebook specifically, there will, of course, be the issue of Facebook kicking Donald Trump off the platform. On the Democratic side, really, it started, I think, with the election of Donald Trump. That was a moment where the Democrats, who had been quite close to the technology industry until that point really turned their backs on the whole industry. And then that has since been exacerbated by events, such as obviously the Capitol riots on January the 6th. But also at the moment, there’s a lot of vaccine misinformation specifically on Facebook, and that’s something that Frances Haugen talked about in her interview over the weekend.

Marc Filippino
Kiran, could this testimony and all these documents that have come out lead to any change in policy or legislation?

Kiran Stacey
There is legislation in the works on a range of issues. The first one that’s been in the works for a long time is federal privacy legislation. The other legislative action is on antitrust and competition policy. So legislation, as always in Washington, is very, very difficult to get through. And I suspect that what we see coming out of this legislatively will be quite underwhelming. What this really is about is putting public pressure on the company. And if they are able to uncover things that really damage Facebook’s reputation, it might trigger a series of events where investors start to take flight from the company and pressure builds on the board to start making management changes.

Marc Filippino
Kiran Stacey covers Capitol Hill for the FT. Thanks, Kiran.

Kiran Stacey
Thanks very much, Marc.

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Marc Filippino
US Senator Elizabeth Warren is going after the Federal Reserve again. She’s called the Fed chair Jay Powell a dangerous man and announced that she’ll oppose his renomination, his term ends in February. And yesterday, she called on securities regulators to investigate financial trades made by top Fed officials. Last week, two regional Fed presidents announced they were resigning amid a probe into their trading activity. Here’s US economics editor Colby Smith.

Colby Smith
So she has long been critical of the way in which the Fed has made some tweaks on the margins to the bank regulation that was put in place after the financial crisis. What we saw were marginal changes to some of those rules, and that is her biggest kind of criticism to date. And it’s what she cited last week when she said that she would not be supporting his renomination as chair of the Federal Reserve.

Marc Filippino
Colby, why would Elizabeth Warren push for an investigation by the Securities and Exchange Commission when the Federal Reserve is doing its own ethics investigation?

Colby Smith
In a way, the Fed is really focused I think on moving forward here on how it’s going to be changing the rules and regulations. Whereas the SEC, what Elizabeth Warren is interested in pursuing is if those trades violated any kind of insider trading rules of any kind. I think what caught a lot of people’s attention was Richard Clarida’s trades, which occurred in late February of last year. Which was a day before the Fed chair issued a rare statement that suggested the central bank was preparing to take some kind of action to support the economy at the onset of the pandemic. Now, the Fed has said that this was a pre-planned rebalancing of his portfolio and something that, you know, had prior approval. But this is exactly the type of transaction that Warren wants the SEC to take a closer look on.

Marc Filippino
Colby Smith is the FT’s US economics editor.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.

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