The Strait of Hormuz no-fee, China cuts down on pollution and IMAX's economic Odyssey

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0:57This is the Indicator from Planet Money. I'm Darian Woods. I'm Waylon Wong. And joining us today is Planet Money's Jeff Gorr. Hey, guys. Jeff, how's your summer going? Oh, it's been going great. Better now that I'm here. Oh, of course. And you know what's going to take your summer to the next level? What? Is Indicators of the Week! Yay! So on today's show, we have... Straight of Hormuz fees that never work. Pollution is down in China. And it might help us solve a mystery. And I'm going to talk about the Odyssey. Ugh. And the economics of IMAX. I am set.

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2:41It's Indicators of the Week. Waylon, you go first. Okay, my indicator is 20%. This is the fee that President Trump said he wanted to charge on cargo ships passing through the Strait of Hormuz. He wrote about it on Truth Social on Monday and then backed off this plan later in the week. I was following this. This is the fee that never was. Yeah, the idea was already undercut by Trump administration officials like Secretary of State Marco Rubio and Vice President J.D. Vance. So it evaporated almost as soon as it was proposed. But I wanted to bring it up because it's a reminder that for decades, countries have agreed to allow freedom of navigation in the oceans.

3:20This is enshrined in the United Nations Convention on the Law of the Sea. And the U.N. Maritime Agency said this week that there is no legal basis for charging these kinds of fees or tolls. Waylon, you know, this reminds me, in law school, they taught us that international law is basically a legal fiction. It's like Santa Claus. It's like, as long as we all agree, it works. And the minute you don't start agreeing, then it all falls apart. And then it actually turns out that the U.S. is one of the few countries that haven't ratified this maritime law. 168 other countries and the European Union have.

3:55So for the U.S., respecting the open navigation of the seas is more a matter of norms, which is, you could argue, even weaker than whatever legal fiction we've agreed on for international law. But then the U.S. can't tell off Iran for charging tolls. That's true. And so now this topic has come up a lot since the war in Iran started. We're very aware of global shipping choke points. And to your point, Darian, another one that came up this week is the Bab el-Mandeb. This is a strait at the southern end of the Red Sea. Saudi Arabia uses it to export oil. Right. Is this where the Houthi rebels in Yemen were attacking commercial ships there a couple of years ago?

4:33Yeah. And according to Iranian media reports, the Iranian government is now threatening to close the Bab el-Mandeb. Iran is allied with the Houthis. So it sounds like there's going to be more pressure on oil prices? Yeah, we'll see what next week brings. Darian, I understand your indicator stays in this region of the world. Yeah, it's about the knock-on effects of the Strait of Hormuz crisis. My indicator of the week is 7%, which is how much the pollutant nitrogen dioxide dropped in Chinese air in the second quarter of this year, roughly covering the time after the Strait of Hormuz closed. Okay, and less air pollution, that is a good thing, right?

5:10Yeah, on its own. And in reality. But does it represent less economic activity, less prosperity? You know, at the same time, pollution's been dropping. China's economic growth has been weaker than expected, just 4.3 % year on year, down from 5 % at the start of 2026. You know, the degrowth people would say that maybe this is OK if we're having less pollution, right? Nature is healing, etc. But what I find most interesting about the 7 % drop in nitrogen dioxide is that it helps us better understand a mystery in the global oil markets. A mystery? Tell us more. Do tell us more. So we've covered on the show before that since the Iran war started, oil prices didn't go up as much as many analysts predicted.

5:59Right. And then a big reason for this was China importing way less oil than almost anyone would have guessed. Yeah. And sure, there are ordinary reasons for this, like the price of gasoline goes higher and people in China drive less or use public transportation more, just like you've seen all around the world. Also, China was drawing down some of its oil reserves, just like the U.S. is doing. But some analysts were wondering if China had even more secret oil reserves that were buffering the country from needing to import as much oil. Oh, and then what happens if those secret oil reserves suddenly get depleted?

6:33Yeah, that would be the issue. But the sizable drop in nitrogen dioxide pollution strongly suggests that a big explanation is just the ordinary one, you know, that internal combustion engines are being used less. So it looks like during the war in Iran, people in China have been riding in gas cars less and riding in electric cars and buses more. It's an interesting data point on the elasticity of gas in China. And speaking of, I don't know, riding around trying to get to where you're going, Jeff, you're here to talk about an epic journey, one of the most famous journeys in the Western canon now committed to film.

7:14That was great. Was that a great torture segue? That was amazing. Speaking of freedom of the seas. Yeah, freedom of the seas and taking a long time to get somewhere. The siren song, the original Toll in the Mediterranean. Okay, okay. My indicator this week is$27. That is how much it costs to see Christopher Nolan's The Odyssey this weekend at one of the IMAX theaters here in D.C. Okay. Ay-yi-yi. Yeah, it's almost$30 to see an IMAX movie. And it got me thinking about the economics of IMAX. Because, you know, this film famously was shot entirely in 70 millimeter IMAX, which is such a hassle. You literally have to change the film every two to three minutes.

8:01And the cameras themselves, they are really, really loud. Do you guys know what an IMAX camera sounds like? I do not. Okay. Wait, I'm going to play it. I'm going to play it for you. So this traditionally, all the dialogue in an IMAX movie has to be dubbed in post. What? What are you saying? Yeah, and it's like, why? Why would any director go through that hassle in this day and age? Because the picture is so good. Yeah, well, that is one explanation, which is that you are Christopher Nolan and you're an auteur and you just love the look of IMAX. You love the maximalism. But another explanation is that IMAX is just good business.

8:40Like in this post-COVID era, movie theaters are really leaning into premium experiences like IMAX or that 40 thing. You know what I'm talking about? The seats vibrate and like spray water in your face. Or like Dolby or Dolby with laser. I don't even know what those things mean. Yeah, the lasers. Pew, pew, pew. I don't know. A bigger and bigger chunk of theater revenue is coming from these premium ticket experiences, which can cost five to ten more than a regular ticket. How many IMAX cinemas are there in this country? Not enough, apparently. It's a big rabbit hole, Darian, because there's a bunch of IMAX branded theaters that some moviegoers consider to be fake IMAX because they're actually not big enough.

9:19LIMAX. And so, for example, in Chicago, we don't have what's considered a proper IMAX theater. That's where I live. Of course, when we speak about the economics of cinemas, we have to talk about popcorn buckets, which... Oh, yes. I did an episode on that. The dune bucket, famously. Was a sandworm. Yeah, like this is another way of being able to charge a premium, right? Like basically going home with a huge souvenir popcorn bucket, you know, and then if you're spending more on wine at your seat that someone delivers to you, that's another upcharge. Yeah. Well, you guys want to know what the novelty popcorn bucket is for this one?

9:54Tell us. OK, so one of them, of course, is a Trojan horse. How could it not be? And the popcorn, it comes literally out of the belly, which I love. Amazing. The other one I've seen is an IMAX camera. Yes, it's literally an IMAX camera. It has nothing to do with Greece or the Odyssey or Homer. It's like the medium is the message, people. Go big or go home. Maybe Homer was the Christopher Nolan of his day. Go big and go home. But did you know Homer is actually many people probably over time? Oh, I didn't know that. That's what I learned in the foreword to the Emily Wilson translation of the Odyssey, which is what I read to get hyped for this movie event.

10:34And The Indicator is made by more than just one or three hosts. It's also made by producer Angel Carreras, with engineering by Robert Rodriguez. It was fact-checked by Julia Ritchie and Cooper Katzma Kim. Kate Kincannon edits the show, and The Indicator is a production of NPR. Guys, you're really killing it with these transitions. Before we go, a quick plug about a virtual event for NPR Plus supporters. We're doing a live Q &A with Redfin Chief Economist Daryl Fairweather. She's going to help us understand what's going on in the U.S. housing market and answer your questions. Adrian will be there, and I will be too.

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