FT News Briefing Drought causes headaches for Panama Canal
Aug 21, 2023
The global shipping industry is grappling with severe drought conditions impacting the Panama Canal, leading to increased delays and rising costs. Private equity firms are transferring ownership of companies to rival creditors as distress rates climb. Meanwhile, Iran struggles with the paradox of ultra-cheap petrol, facing unsustainable energy subsidies amid economic challenges. The conversation highlights the intersection of climate issues with international trade and the urgent need for adaptive solutions.
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Private Equity Struggles
- Private equity firms face difficulties as debt taken for buyouts wasn't hedged against rising interest rates.
- Supply chain problems and persistent inflation add to their struggles.
Iran's Cheap Petrol Problem
- Iran faces a unique challenge with ultra-cheap petrol prices due to heavy government subsidies.
- This contrasts sharply with higher fuel prices in the U.S. and UK.
Iran's Subsidy Dilemma
- Iran's long-standing energy subsidies, rooted in its vast oil reserves, are becoming unsustainable.
- Cutting subsidies is politically challenging due to public perception of cheap energy as a right.