Who insures the insurers?

Summary

Marketplace Podcast Summary: "Who Insures the Insurers?" Hosted by Kai Ryssdal | Release Date: November 5, 2024

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1. Aviation Industry Backlogs and Supply Chain Challenges

Timestamp: 00:02 – 03:10

The episode opens with Kai Ryssdal discussing the significant backlog in the aviation industry, highlighting Boeing's recent contract vote with the International Association of Machinists and Aerospace Workers. With a backlog exceeding 6,000 planes and similar figures from Airbus, the industry faces substantial delays. Henry Epp from Marketplace explains how Boeing's year was tumultuous, starting with a door plug blowout in January that led the federal government to limit production capacities.

Fakery Karanki, an assistant professor at Purdue University, adds, “After the pandemic, actually, we observed a huge demand increase in both air freight and passenger sides” (01:27). However, COVID-19 severely disrupted the aerospace and defense manufacturing supply chain. Peter Arment, managing director at R.W. Baird, emphasizes the loss of skilled workers during lockdowns: “A lot of older, skilled workers at those suppliers left and didn't come back” (01:46). This loss has diminished productivity, exacerbating existing supply chain struggles and contributing to the large backlogs, which ultimately hold back airlines from operating newer, more efficient planes. Henry Hartevelt from Atmosphere Group warns, “If they don't get more new planes soon, passengers could start to feel it” (02:53).

2. Insurance and Reinsurance: Protecting the Protectors

Timestamp: 03:10 – 08:19

Transitioning from aviation, Ryssdal delves into the financial implications of recent natural disasters, specifically Hurricanes Helene and Milton, which together are estimated to cause $100 billion in damages. While large insurance conglomerates can absorb such losses through reinsurance, smaller insurers may face solvency issues.

Sabri Benishour from Marketplace discusses how reinsurance acts as insurance for insurance companies. Rob Newbold, president of The Extreme Events Solutions team at Verisk, explains the concept: “Reinsurance only kicks in at a certain level of desperation” (06:10). The global reinsurance market, valued at $585 billion in 2023, is projected to grow to $1.3 trillion by 2033. However, rising premiums and increased frequency of disasters strain the system. Tim Zawacki from S&P Global Market Intelligence notes, “Reinsurance rates that insurance companies have to pay can go up as much as reinsurers say they need to” (07:40), leading to potential rate hikes for consumers.

In North Carolina, insurance companies have sought permission to raise home insurance rates by over 50%, a move likely to impact homeowners significantly. James Eck from Moody's Ratings emphasizes the necessity of reinsurance for maintaining insurer viability, especially in the face of escalating natural disasters.

3. Rising Health Insurance Costs and Impact on Small Businesses

Timestamp: 08:19 – 12:23

Ryssdal shifts focus to the rising costs of health insurance and its repercussions for small businesses. According to the Bureau of Labor Statistics' Employment Cost Index, employers are paying approximately 3.5% more for healthcare than the previous year. Kimberly Adams from Marketplace outlines factors driving these costs, including higher labor costs and the addition of expensive drugs and services to health plans.

Richard Trent of the Main Street Alliance explains, “When small business owners have to contend with these elevated prices, it means that that's money that they're spending that they could be spending elsewhere” (10:07). This financial strain forces businesses to make tough decisions, such as reducing benefits or increasing prices. Kosali Simon, a health economist at Indiana University, warns about the delicate balance small businesses must maintain in using health insurance as a recruitment and retention tool without overburdening their finances.

Matthew Ray from KFF highlights that while health insurance premiums have been growing roughly in line with inflation and worker earnings over the past five years, the burden still significantly affects both employers and employees. The average family health insurance plan now costs over $25,000, posing substantial financial challenges across the board (11:41).

4. Small Business Spotlight: Rita Magalde's Bakery Journey

Timestamp: 12:23 – 20:59

The podcast features an inspiring story of Rita Magalde, owner of Sheer Ambrosia, a specialty bakery in Salt Lake City. After moving her business from a home kitchen to a commercial space, Rita details the challenges and triumphs of scaling her operations.

She recounts the financial strain of renovating a shell property, stating, “I had to spend $70,000. So I had to take out an SBA loan” (14:10), leaving little for marketing. Despite these hurdles, Rita successfully expanded her product line to include granola chocolate chip cookies and traditional Greek pastries like Corambiedes. Her perseverance is evident as she shares, “It's been a lean summer. And so that's why it was so important for me to start launching some other products besides the baklava” (14:50). Rita's story underscores the resilience required to navigate the complexities of running a small business, especially in the face of financial and logistical challenges.

5. Spain's Devastating Floods and European Food Supply Concerns

Timestamp: 18:12 – 20:59

Ryssdal reports on the catastrophic flooding in Valencia, eastern Spain, which has resulted in over 200 deaths and extensive damage to infrastructure and agriculture. William Masters from Tufts University explains Spain's pivotal role in producing Valencia oranges, olives, tomatoes, and rice. The floods threaten to disrupt the food supply chain, leading to potential shortages and increased grocery prices across Europe.

Matthew Ray from KFF notes, “The floods in Spain and the ripple effects in Europe and the UK highlight an important thing in terms of how do we respond to climate change” (20:23). Tafadzwa Mabodi at the London School of Hygiene and Tropical Medicine emphasizes the interconnectedness of global food systems, indicating that while countries like the UK may find alternative sources for their produce, the immediate aftermath could see significant market fluctuations and shortages.

6. Lithium Mining in Arkansas: A New Frontier for the Green Economy

Timestamp: 20:59 – 25:29

The episode concludes with an exploration of lithium extraction in Arkansas, a critical component for electric vehicle (EV) batteries and energy storage solutions. Elizabeth Trobal from Marketplace reports on the discovery of substantial lithium reserves in the Smackover formation, potentially holding between 5 and 19 million tons. This region, historically known for oil and natural gas production, is now eyed for lithium due to accessible brine with high lithium concentrations.

John Shah from the University of Arkansas expresses optimism about the viability of lithium extraction: “I think it can be done in a safe way and a generally beneficial way” (22:55). However, challenges remain regarding the commercial viability and environmental impact, particularly concerning water usage. Despite these hurdles, companies like Standard Lithium, Exxon Mobil, and Terravolta are investing heavily in this promising but uncertain endeavor. The U.S. government's recent grants of nearly half a billion dollars to support direct lithium extraction underscore the strategic importance of developing domestic lithium sources to reduce dependence on foreign suppliers.

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Conclusion

In this episode of Marketplace, Kai Ryssdal navigates through a spectrum of pressing economic and business issues—from the daunting backlogs in the aviation industry and the intricate mechanisms of insurance and reinsurance, to the rising healthcare costs affecting small businesses, inspirational small business stories, the far-reaching impacts of natural disasters on global food supplies, and the emerging potential of lithium mining in Arkansas. Each segment provides insightful analysis and expert perspectives, painting a comprehensive picture of the interconnectedness of today's economic landscape.

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This summary captures the key discussions, insights, and conclusions from the "Who Insures the Insurers?" episode of Marketplace. Notable quotes are attributed with corresponding timestamps to provide context and depth.

Transcript

[Kai Rysdal]

Ladies and gentlemen, it's now safe to move about the cabin of your domestically made mid sized commercial aircraft. From American Public Media, this is Marketplace in Los Angeles. I'm Kyle Rysdal. It is Tuesday, today, November 5th. Good as always to have you along, everybody. 59% was the winning margin. Speaking here, of course, of the vote by the International association of Machinists and Aerospace Workers accepting Boeing's most recent contract offer. Which means they can get back to work as soon as this week, which the company will be more than happy to have happen because there is no shortage of work to do. The planemaker reported a backlog of more than 6,000 planes earlier this fall. And that is not just a Boeing problem. Airbus, the other big cross commercial aircraft maker on this planet, has a similarly ginormous backlog. Marketplace's Henry Epp gets us going with the aviation industry's backups.

[Henry Epp]

Boeing's turbulent year started with that door plug blowout back in January, after which the federal government limited the company's capacity to build new planes. But there are underlying factors that have made everything a lot harder going back to surprise the pandemic.

[Fakery Karanki]

After the pandemic, actually, we observed a huge demand increase in both air freight.

[Henry Epp]

And passenger side Fakery Karanki is an assistant professor at Purdue University. As airlines saw more demand to carry people and things post pandemic, they ordered more planes. The problem was Covid really did incredible damage to the highly technical aerospace and.

[Fakery Karanki]

Defense manufacturing supply chain.

[Henry Epp]

Peter Arment is a managing director at R.W. baird, which is a marketplace underwriter. Hundreds of small companies around the globe supply crucial components to the two bigger aircraft manufacturers. And Arment says when pandemic lockdowns hit, a lot of older, skilled workers at those suppliers left and didn't come back. It has affected the productivity side and it's just going to take time for that to heal. But even before the pandemic, a lot of those suppliers were already struggling. After Boeing shut down production of its popular 737 Max model following two deadly crashes. Robert Mann is an independent aviation consultant.

[Kai Rysdal]

When you shut down the ubiquitous airplane, you force your suppliers to either, you.

[Fakery Karanki]

Know, eat their inventories or in some cases go out of business because they can't sell them.

[Henry Epp]

Then Covid disruptions led to a lot of the remaining suppliers dealing with supply chain issues of their own.

[Fakery Karanki]

So you're just jerking the supply chain over and over again and expecting somehow magically for it to recover.

[Henry Epp]

But it hasn't, man says, which has contributed to large backlogs. And they are holding back the airlines, says Henry Hartevelt at Atmosphere Group.

[Fakery Karanki]

Either they're operating older, more costly, less fuel efficient planes longer, or they're not even operating all of those planes. Maybe they have to be retired and they shrink.

[Henry Epp]

If they don't get more new planes soon, Hartevelt says, passengers could start to feel it. I'm Henry Epp for Marketplace.

[Kai Rysdal]

We cannot of course, know when we're going to have definitive election results, tonight or later. What we can tell you is that the policies of whoever does eventually win are going to affect this economy for years to come. Which, which gets me to this. The Fed, which is going to have to react to those policies, meets tomorrow and Thursday on interest rates. Wall street today again look not for political signals in market movements. Details, numbers. Y'all know the Dr. The damage from Hurricanes Helene and Milton is estimated, once all said and done, to be somewhere in the neighborhood of $100 billion. And a lot of that, yes, is going to be covered by Insurance. But $100 billion is real money, even to the biggest of the big insurance conglomerates. Nevertheless, they are likely to be able to absorb it without too much of a problem, thanks to something called reinsurance. Marketplace's Sabri Benishore has that one.

[Sabri Benishour]

Last week we profiled a small business owner, Hannah Berniske, working to rebuild her art business in North Carolina. Sarah Wells Rowland is going through something very similar. She started the Village Potters Art Collective in Asheville north in 2011.

[Kimberly Adams]

We probably teach approximately 80 to 100 students a week and people come from all over the country.

[Sabri Benishour]

Well, they did until Hurricane Helene sent 26ft of water through the building and.

[Kimberly Adams]

Flooded all the way up to the second floor. 37 wheels, 17 kilns, tables, slab rollers.

[Fakery Karanki]

I mean, it's, it's astronomical.

[Sabri Benishour]

One of the very few silver linings here is that Wells Rowland had insurance through fema which is covering some of the damage.

[Fakery Karanki]

We lost about $500,000 worth of equipment.

[Kimberly Adams]

And it's 166,000, but it's sure gonna help.

[Sabri Benishour]

Wells Roland and her husband have set up a GoFundMe and are applying for grants and meanwhile trying to repair mud caked motors in a borrowed barn. We don't actually yet know exactly how much insurance companies are gonna be on the hook for from the recent hurricanes, but there are estimates.

[Fakery Karanki]

So for Hurricane Helene, we have put.

[Kai Rysdal]

A range of $6 billion to $11 billion. And for Hurricane Milton, we've put a.

[Fakery Karanki]

Range of $30 billion to $50 billion.

[Sabri Benishour]

Rob Newbold is president of The Extreme Events Solutions team at Verisk, which provides analytics to the insurance industry. And as huge as these numbers are, the biggest insurers will probably have no problem covering it.

[Fakery Karanki]

There are different types of loss events.

[Kai Rysdal]

For the insurance industry. One is a so called earnings event.

[Sabri Benishour]

An earnings event is the sterile term in insurance world for a disaster or situation. That might reduce an insurance company's profits, might eat up a lot of the premiums they take in, but it's manageable. Hurricanes Helene and Milton were that for big insurers, they're that big. It's possible. For smaller insurers though, they were another.

[Fakery Karanki]

Kind of disaster, the so called solvency event.

[Sabri Benishour]

That is when the damage is so bad it affects the insurance company's actual viability as a business. And it is in these situations that insurance companies need insurance themselves. Insurance for insurance companies James Eck is a senior credit officer at Moody's Ratings. The word for this is reinsurance. Even FEMA buys reinsurance. It works because reinsurance only kicks in at a certain level of desperation. Reinsurers are not constantly paying out to insurance companies, and reinsurance firms can spread out their risk by selling policies all over the world. So a reinsurer might have property exposure.

[Kai Rysdal]

In Florida, but it could also have.

[Sabri Benishour]

Exposure in Japan for earthquakes or typhoons. The size of the global reinsurance market was $585 billion in 2023, according to Spherical Insights, and it's predicted to grow to 1.3 trillion by 2033. Like for a lot of regular insurance, the premiums for reinsurance have been rising the past few years, in part because of the cost of the damage done by storms and wildfires. Tim Zawacki is principal research analyst at S and P Global Market Intelligence.

[Fakery Karanki]

After 2022, when Hurricane Ian hit Florida, the 2023 reinsurance renewals were particularly challenging for the industry.

[Sabri Benishour]

Reinsurance rates that insurance companies have to pay can go up as much as reinsurers say they need to. But insurance rates that we pay are often limited by state regulators, which puts some insurance companies in a bind. North Carolina insurance companies recently asked for permission to raise home insurance rates by more than 50%. They probably won't get all of it, but. But they'll get some.

[Henry Epp]

Whatever the outcome of that filing happens.

[Fakery Karanki]

To be, I think will have a meaningful impact on homeowners in the state.

[Sabri Benishour]

Meanwhile, reinsurance companies have been less and less inclined to cover regular weather, leaving insurance companies to deal with it themselves. So sometimes insurers will then cover less and less or they can't make the math work and then they just stop operating in certain places. At least one insurer in North Carolina said it was closing down shop even before the recent hurricanes in New York. I'm Sabri Benishour for Marketplace.

[Kai Rysdal]

Got an email from HR the other day. Open enrollment is upon us here at Marketplace world headquarters and for a lot of other companies and health plans too, including the exchanges for the Affordable Care act, which means a lot of us are going to be crunching the numbers, trying to figure out how much more our premiums are going to set us back next year. Employers for sure calculate carefully as they decide what kinds of plans they will offer, how much they'll pay for what's covered, what's not. As of September, companies were paying about 3.5% more for health care than they'd been paying a year earlier. We learned that from the employment cost index that the Bureau of Labor Statistics released last last week. Marketplace's Kimberly Adams takes it from there.

[Kimberly Adams]

Higher costs for labor, new expensive drugs and services being added to plans. These are just some of the factors driving up health care costs. And as much as patients hate the higher premiums, they are tough for businesses as well. Especially, says Richard Trent, executive director of advocacy group Main Street Alliance. Small businesses.

[Fakery Karanki]

When small business owners have to contend with these elevated prices, it means that that's money that they're spending that they could be spending elsewhere.

[Kimberly Adams]

New employees, additional equipment.

[Fakery Karanki]

It eats into profit margins. It also impacts things like recruiting and retaining top tier talent, because in a.

[Kimberly Adams]

Tight labor market, the health plan you offer can be a big factor in convincing someone to come work for you. But if the labor market softens, employers will have more leeway to cut their health care spending.

[Fakery Karanki]

Employer costs may go down if employers decide I can really offer less generous coverage.

[Kimberly Adams]

Kosali Simon is a health economist at Indiana University, Bloomington.

[Fakery Karanki]

But when I'm using health insurance as.

[Sabri Benishour]

A way to recruit and retain my.

[Fakery Karanki]

Workers, I have to be careful in how much I use those kind of tools.

[Kimberly Adams]

A lot of small businesses seem hesitant to cut benefits 49% told the National Federation of Independent Business that they just took a hit to company profits. And 8 rising health care costs. 46% raised prices on their goods or services, but 18% say they've shifted more of the cost to employees. More broadly for workers over a five.

[Matthew Ray]

Year period, health insurance premiums are growing roughly on par with inflation and workers earnings.

[Kimberly Adams]

Matthew Ray is an associate director at kff, which regularly surveys employers about the total cost of their health care plans to them and their employees.

[Matthew Ray]

The Average family health insurance plan now costs over $25,000, which is just a lot of money, no matter which way you cut it.

[Kimberly Adams]

But, says Ray, the share that employees have to chip in has been growing relatively slowly compared to the past. In Washington, I'm Kimberly Adams from Marketplace.

[Kai Rysdal]

We're coming into the busiest retail season of the year for all kinds of retailers, including Rita Magalde. She owns Sheer Ambrosia. It's a bakery that specializes in baklava. Since last we heard from her, she's moved her business out of her home and into a commercial kitchen in Salt Lake City.

[Rita Magalde]

It's great. You know, it's 600 square feet. And originally I thought, wow, this is going to be really small. But, you know, the truth is, when you compare it to a home kitchen, it's quite large. So it's just enough space for me to work in here comfortably with at least three other people. I hired one gal. Her name is Mina, and she is from Afghanistan. She's amazing. She doesn't speak a lot of English. And I thought, you know what? It's really not that big of a deal because I learned to make baklava from someone I didn't understand. Remember the little Greek lady that. I basically watched her make it. And so that's what Mina did. We just made it together. And I would just. Whenever she would make a mistake, I would just show her, you know, with my hands and, you know, a lot of eye contact, a lot of giggling, a lot of just pantomime. This space that. That my realtor found for me, the rent isn't too crazy, but it was a shell. There was basically no walls. No, I mean, it was just. There wasn't even a cement floor, just gravel and rebar. So we had to spend. I had to spend $70,000. So I had to take out a loan. I took out an SBA loan. So, you know, there was no money left over for marketing or, you know, anything else. It's been a lean summer. And so that's why it was so important. I felt for me to start launching some other products besides the baklava. I've always baked other things for my friends and family, but it was just hard for me to kind of launch new products from home. And so now that I'm in the space, I'm launching my granola chocolate chip cookies, Corambiedes, which is a Greek butter cookie. It was actually the first Greek pastry that ever learned how to make. I'm doing a gift crate this year, and I'm having a local carpenter make those for me. These super cute crates. So we're going to have a really fun holiday season. It's going to be a little bit different because we're not just doing baklava.

[Kai Rysdal]

Rita Magaly baking not just baklava in her new commercial kitchen in Salt Lake City, Utah.

[Fakery Karanki]

Coming up, we knew the lithium was high already. Industry has been interested in this topic for many years.

[Kai Rysdal]

A hot topic indeed. But first, let's do the numbers. Dow Industrials up 427 points 1%. 42,221. The NASDAQ surged 259 points. That's about 1.4%. There's 18,439. The S&P 500 added 70 points. 1 and 2 10%. 5,782. Supreme was telling us about the world of reinsurance. So some of the companies providing that service include Reinsurance group of America. Clever, headquartered in Missouri, increased 2/3 of 1% today. Everest Group, based in Delaware, ascended 2%. Renaissance Re out of Bermuda grew 1% on the day. Today is in addition to that other thing, National Donut Day. So sweet. Fried dough anybody? Krispy Kreme traded under the ticker symbol. Come on. Yeah, you're not gonna get it. D N U T sweetened three and three 10%. Restaurant Brands International, which owns Tim Hortons, descended 2.6%. J.M. smucker, which owns Hostess Brands, which I would submit aren't really donuts to begin with, gave up 2 and was up rather 2 and 4 10%. Today you're listening to Mark Marketplace. You turn to Marketplace for up to the minute news for stories that show you the connections between global events and your personal economy. And you're not alone. Marketplace is the most widely consumed business and economic news program in the country. We're proud to make fact based journalism freely accessible and Marketplace investors make it all possible. Your year end donation today will make a real difference in our nonprofit newsroom and in the lives of millions of Marketplace listeners every single day. So please contribute what you can [e-mail].

[Sabri Benishour]

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[Fakery Karanki]

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[Sabri Benishour]

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[Fakery Karanki]

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[Kai Rysdal]

Member NYSE SIPC this is Marketplace. I'm Kai Rysdal. We get reminders with surprising regularity of how fragile our global economic ecosystem is. Sometimes it's infrastructure. Sometimes it's a pandemic, sometimes it's natural disaster and tragedy. It's been a week since the devastating flooding in and around Valencia in eastern Spain. More than 200 people are known to have died. An unknown number are still missing, along with major damage to homes and businesses and roads. Farms were flooded as well, a lot of them, and that could affect the food supply chain and thus food prices over in Europe. And the UK marketplace's Samantha Fields has that one.

[William Masters]

Spain is the biggest producer of oranges and other citrus fruit in Europe, and one of the biggest in the world.

[Fakery Karanki]

The famous product is Valencia oranges. Valencia oranges have a storied history.

[William Masters]

William Masters at the Friedman School of Nutrition at Tufts says, in addition to those famous oranges, Spain is an important agricultural producer.

[Fakery Karanki]

Olives and many other crops.

[William Masters]

Tomatoes, for example, lots of other vegetables, too. And rice is another big one. David Ortega at Michigan State University says, we don't yet know the full extent of the damage to crops and fruit.

[Matthew Ray]

Trees, but these floods will likely lead to higher grocery prices for things like citrus and some vegetables in Spain. But it can also affect European markets that rely on Spanish imports, especially during.

[William Masters]

The winter months, and UK markets, too.

[Matthew Ray]

Spain supplies 25% of Britain's fruit imports, but also 8% of its vegetable imports.

[William Masters]

The UK and EU countries that rely on produce from Spain will find ways to adjust, says Tafadzwa Mabodi at the London School of Hygiene and Tropical Medicine.

[Matthew Ray]

Most of these countries also import a significant proportion of their citrus and tomatoes.

[William Masters]

From other countries, such as South Africa and Brazil. They'll likely be able to fill the gap, though there may be shortages for a while. Mabaudi says it's a reminder of how interconnected the world and our food chain has become.

[Matthew Ray]

The floods in Spain and the ripple effects in Europe and the UK highlight an important thing in terms of how do we respond to climate change. The implications of these disasters transcend borders.

[William Masters]

So, he says, how we prepare our food system for climate change should, too. I'm Samantha Fields for Marketplace.

[Kai Rysdal]

Lithium. If you want to transition to a green economy, which one supposes you do want to do, you're going to need it. Think EVs batteries for them and for offline energy storage as well. The thing is, the United States isn't much of a producer of lithium, which is why we depend on countries like Australia and Chile and China for what we need. But as marketplaces Elizabeth Trobal reports a Jurassic era rock formation 10,000ft down might be the key to changing that.

[Matthew Ray]

It's a field trip day for John Shah's geology students. This group with the University of Arkansas is piled in a van and driving through El Dorado in southern Arkansas. You know the gas station that, yeah, that's connected to Walmart? It's called Murphy usa. It's here. Shah points out to his students where oil was once king. 800 years ago that Murphy Oil is the oil company that struck it rich in south Arkansas. Abed Back in the day, the oil boom was short lived. And today Shaw is in El Dorado because of the energy future. Because two miles underground, a recent US Geological Survey study found that there are between 5 and 19 million tons of lithium reserves, enough to power nine times the number of EVs projected to be in demand in the year 2030. Katherine Kieram at the USGS did the study.

[Fakery Karanki]

Part of what we did when we.

[Rita Magalde]

Went into South Arkansas is, you know.

[Fakery Karanki]

We knew the lithium was high already. Industry has been interested in this topic.

[Matthew Ray]

For many years, but the Smackover stretches from East Texas to Florida. But companies have been drawn to this part of the Smackover formation for the easily accessible wells left behind from oil drilling that have salty water or brine with high levels of lithium. JP Nico is with UT Austin.

[Fakery Karanki]

The only way to get into the.

[Kai Rysdal]

Subsurface, you know, is to drill a well for oil.

[Fakery Karanki]

Otherwise it's too expensive.

[Kai Rysdal]

You have to piggyback on work done by other people.

[Matthew Ray]

Companies have been trying to develop the best extraction technique.

[Fakery Karanki]

There are several ways to get lithium out of the brine. One technique you can use membranes. So on one side of the membrane.

[Kai Rysdal]

You have your residual brine, on the.

[Fakery Karanki]

Other side it's enriched in lithium.

[Matthew Ray]

Companies like Standard Lithium, Exxon Mobil and Terravolta are investing in Smackover lithium. And earlier this fall, the US government announced an nearly half a billion dollars in grants towards companies for direct lithium extraction in southern Arkansas. This investment in the battery economy comes as EVs grow in popularity, says Lukas Bednarsky with S and P Global. In the last years, lithium demand and supply broke through this 1 million tonnes mark. He says he thinks global demand will be double that by 2027. And though the US currently mines little lithium, it has plenty of resources. It's just that they're not easy or cheap to extract. And when it comes to direct lithium extraction in the Smackover specifically, there are questions about commercial viability and environmental ones, like how much water these projects might end up using. Lithium has never been mined in this way, of course. It would be great if they succeeded, right? Because then we will have a new source of lithium globally. But there are still a lot of question marks whether they will succeed in this or not. University of Arkansas's John Shaw is optimistic. You always say this with a little bit of trepidation of something scaling up really large, but I think it can be done in a safe way and a generally beneficial way. The state has gone through several energy booms, he says. First there was the 1920s smackover oil drilling. Then in the 2000s there was a big natural gas being produced from the Fayetteville Shale in northern Arkansas, and that's disappeared. He says he's hopeful lithium in the Smackover can push Arkansas back into the energy economy. I'm Elizabeth Troval for Marketplace.

[Kai Rysdal]

This final note on the way out today from the Marketplace desk of you snooze, you lose. If you've got $7 million and had been wanting to advertise whatever it is that you make or sell during the Super Bowl, I'm very sorry to have to tell you that that amazing 30 second ad you've been workshopping ain't gonna run. Fox said this week its inventory is all sold out. Kerry Barber, Jordan Manji, Dylan Mietanen, Janet Wynn, Olga Oxman, Ellen Rollins, Virginia K. Smith and Tony Wagner are the Digital and On Demand team around here. Francesca Levy is their boss, the Executive Director of Digital and On Demand. I'm Kyle Rysdal. We will see you tomorrow. Everybody. This is apm. You turn to Marketplace for up to the minute news for stories that show you the connections between global events and your personal economy. And you're not alone. Marketplace is the most widely consumed business and economic news program in the country. We're proud to make fact based journalism freely accessible and Marketplace investors make it all possible. Your year end donation today will make a real difference in our nonprofit newsroom and in the lives of millions of Marketplace listeners every single day. So please contribute what you can [e-mail] donate.