Inflation

[Derec]

Oil producers control the supply part of the equation and are deliberately not increasing that supply keeping prices artificially high.

BS. US is producing more oil than at most other times in US history, all thanks to fracking (which the left hates btw.)
It is not that easy, or cheap, to increase production from a very high level. We are producing more than Saudi Arabia, even though we have 1/5 of their proven reserves.
And yet somehow oil companies are the bad guys because they seek to make profit from their investment.

 

[Derec]

$15 is a fucking pittance. Nobody should be paid so little.

I am talking US dollars. That's almost $22 Australian.

And you misunderstood. The extended unemployment was effective $15/h full time (aka $600/week) on top of regular unemployment, and all that for not working.

That you think not working is such a ‘sweet deal’ tells me only that you haven’t been unemployed for any length of time.

It certainly was a sweet deal while the extended unemployment was in effect, which was several months too long.

I have, and I can assure you that nobody is doing it for the oh-so-lucrative free cash.

Plenty people have. Extra $600/week plus waiving of the job search requirement was a pretty cushy deal while it lasted. And it lasted several months longer than it should have.

 

[bilby]

I am talking US dollars. That's almost $22 Australian

I know. It’s a fucking pittance. Minimum wage in Australia is $21.38 from July 1 this year; And very few Australians work for so little.

 

[Cheerful Charlie]

Checkout google, riedel,manhatten-institute.org.
Manhatten Institute is a conservative organization. Brien Riedel is a conservative economist. Trump in four years added $7 trillion in deficits. Trump inherited a good economy. Had he done nothing at all the U.S. would have cut national debt by over $3 trillion. But in total, we ended up with $3 trillions more in national debt. Why are we here with roaring inflation and a looming recession. Trump played a big part of the problem. Mr. "Only I can fix it!" Did nothing to pay attention to these problems. No, it wasn't the Democrats that handed out these massive tax cuts to rich and corporate GOP supporters. This cannot be blamed for everything, but this seems to be being ignored. Now add in Trump's blowing the response to Covid-19.

 

[ZiprHead]

Why not?

Marginal cost of such a production expansion, even if it could be feasibly done, would be very high. If marginal costs are higher than marginal revenue, you lose money. Why should companies do that?
Besides, that would not solve the refining bottleneck. It would not increase gasoline supply, but it would reduce our oil imports. But as I said, it would not be practical.

Haven't you heard? Oil company profits are at record high levels.

 

[Cheerful Charlie]

You forgot to include oil company price gouging.

What "gouging"? All prices are a function of supply and demand. And oil companies have hardly a high net profit margin to begin with.

Oil producers control the supply part of the equation and are deliberately not increasing that supply keeping prices artificially high.

2 wild charts show how Big Oil profits are skyrocketing as prices at the pump rise

Oil companies are raking in the largest quarterly profits in a decade, raising concerns that the sector is using high gas prices to gouge customers.

www.businessinsider.com

Several of the world's largest oil companies reported first-quarter earnings in recent weeks, giving investors new detail as to how sky-high gas prices are bolstering firms' bottom lines. Performance, in a word, was stellar. ExxonMobil reported a net profit of $5.5 billion, more than doubling its earnings from the year-ago period. Shell notched its strongest quarterly profit ever, and Chevron posted its best earnings quarter in nearly a decade.

A new analysis from the Center for American Progress examined five major oil companies — Shell, ExxonMobil, BP, Chevron, and ConocoPhillips — as gas prices soar.

The authors of the Center for American Progress post wrote that, in the first quarter of 2022, these companies "brought in more than 300 percent more in profits than in the first quarter of 2021. That is a total of more than $35 billion in profits in just three months."

"In fact, these five companies' first-quarter profits alone are equivalent to almost 28 percent of what Americans spent to fill up their gas tanks in the same time period," the authors added.

The windfalls mark a seismic shift from how oil companies were performing at the start of the pandemic. The first wave of lockdowns saw demand for energy crater. Crude oil prices even turned negative in the spring of 2020 as companies rushed to get unwanted oil off their hands.

The US is now experiencing what happens when the market swings in the opposite direction, and companies with pricing power are making a killing.

Oil companies are also spending huge amounts of money on stock buy backs.

Big Oil on course for near-record $38bn in share buybacks

Western energy majors are on course to buy back shares at near-record levels this year as soaring oil and gas prices enable them to deliver bumper profits and boost returns for investors.

The seven supermajors — including BP, Shell, ExxonMobil and Chevron — are poised to return $38bn to shareholders through buyback programmes this year, according to data from Bernstein Research. Investment bank RBC Capital Markets put the total figure higher, at $41bn.

That would be almost double the $21bn in buybacks completed in 2014 — when oil last traded above $100 a barrel — and the biggest total since 2008. The plans underscored the strength of companies that are reaping the rewards of a resurgence in energy demand as pandemic lockdown restrictions are rolled back.

Gas prices are at record levels and oil is trading at a seven-year high of more than $90 a barrel, resulting in big profits for the supermajor group rounded out by TotalEnergies, Eni and Equinor.

I do remember just a few months ago, big oil was whining they were not being allowed to bid on off shore drilling leases. Democrats replied that they already had locked leases on millions of acres of off shore areas and WERE NOT DRILLING IN MOST OF THESE LEASES. GOP claims it is bad government policies that are causi g high gas prices is a fraud, a lie, and incompetence. The question got asked, if you are not drilling on vaste properties you are holding drilling rights on, why do you even more properties? I believe Congress woman Katie Porter pointed out these facts and roasted oil company CEOs.

 

[Cheerful Charlie]

Yes, it was Katie Porter. Google "Youtube, Katie Porter grills oil company CEOs" An amazing performance! With props. A quart jar of M&Ms and 440 pounds of rice. Brutal and very funny.

 

[ZiprHead]

You forgot to include oil company price gouging.

What "gouging"? All prices are a function of supply and demand. And oil companies have hardly a high net profit margin to begin with.

Oil producers control the supply part of the equation and are deliberately not increasing that supply keeping prices artificially high.

2 wild charts show how Big Oil profits are skyrocketing as prices at the pump rise

Oil companies are raking in the largest quarterly profits in a decade, raising concerns that the sector is using high gas prices to gouge customers.

www.businessinsider.com

Several of the world's largest oil companies reported first-quarter earnings in recent weeks, giving investors new detail as to how sky-high gas prices are bolstering firms' bottom lines. Performance, in a word, was stellar. ExxonMobil reported a net profit of $5.5 billion, more than doubling its earnings from the year-ago period. Shell notched its strongest quarterly profit ever, and Chevron posted its best earnings quarter in nearly a decade.

A new analysis from the Center for American Progress examined five major oil companies — Shell, ExxonMobil, BP, Chevron, and ConocoPhillips — as gas prices soar.

The authors of the Center for American Progress post wrote that, in the first quarter of 2022, these companies "brought in more than 300 percent more in profits than in the first quarter of 2021. That is a total of more than $35 billion in profits in just three months."

"In fact, these five companies' first-quarter profits alone are equivalent to almost 28 percent of what Americans spent to fill up their gas tanks in the same time period," the authors added.

The windfalls mark a seismic shift from how oil companies were performing at the start of the pandemic. The first wave of lockdowns saw demand for energy crater. Crude oil prices even turned negative in the spring of 2020 as companies rushed to get unwanted oil off their hands.

The US is now experiencing what happens when the market swings in the opposite direction, and companies with pricing power are making a killing.

Oil companies are also spending huge amounts of money on stock buy backs.

Big Oil on course for near-record $38bn in share buybacks

Western energy majors are on course to buy back shares at near-record levels this year as soaring oil and gas prices enable them to deliver bumper profits and boost returns for investors.

The seven supermajors — including BP, Shell, ExxonMobil and Chevron — are poised to return $38bn to shareholders through buyback programmes this year, according to data from Bernstein Research. Investment bank RBC Capital Markets put the total figure higher, at $41bn.

That would be almost double the $21bn in buybacks completed in 2014 — when oil last traded above $100 a barrel — and the biggest total since 2008. The plans underscored the strength of companies that are reaping the rewards of a resurgence in energy demand as pandemic lockdown restrictions are rolled back.

Gas prices are at record levels and oil is trading at a seven-year high of more than $90 a barrel, resulting in big profits for the supermajor group rounded out by TotalEnergies, Eni and Equinor.

I do remember just a few months ago, big oil was whining they were not being allowed to bid on off shore drilling leases. Democrats replied that they already had locked leases on millions of acres of off shore areas and WERE NOT DRILLING IN MOST OF THESE LEASES. GOP claims it is bad government policies that are causi g high gas prices is a fraud, a lie, and incompetence. The question got asked, if you are not drilling on vaste properties you are holding drilling rights on, why do you even more properties? I believe Congress woman Katie Porter pointed out these facts and roasted oil company CEOs.

Approximately 9,000 leases they are just sitting on.

 

[ZiprHead]

I love Katie. Thanks for the tip, Charlie.

 

[Canard DuJour]

Analysis by Moody's Analytics (that bunch of socialists) finds that

"Arguably the most controversial of the U.S. fiscal support packages was the nearly $2 trillion American Rescue Plan that became law in March 2021. The ARP has been criticized as being too large, overstimulating an already fast-improving economy and significantly contributing to the currently uncomfortably high inflation.

This perspective is not consistent with our results(…)

The ARP has contributed to the acceleration in inflation by supporting increased consumer demand, but this occurred almost entirely in the first half of 2021 when higher inflation was not considered a problem (see Chart 13).

Inflation only became uncomfortably high when the Delta wave of the pandemic hit in late summer last year. This inflation was a surprise, but so too was the Delta variant, as it came immediately on the heels of the vaccine rollout and widespread optimism that the pandemic was more-or-less behind us. Delta slammed consumer demand, as it prompted renewed self-quarantining and border restrictions, which by itself would moderate inflation, but it also severely disrupted supply. Global supply chains were badly scrambled, as this wave of the pandemic was especially hard on Southeast Asia, which was lightly vaccinated at the time, and where most supply chains begin."

Moody's chief economist summarises:

"Aggressive fiscal policy was key to ending pandemic recession and behind the quick recovery. The controversial American Rescue Plan helped avoid a double-dip, has not materially added to the high inflation and while costly, would have been as costly to taxpayers without it."

 

[ZiprHead]

5 years at 6% unemployment or 1 year at 10%: That’s what Larry Summers says we’ll need to defeat inflation

Former Treasury Secretary Larry Summers said unemployment in the U.S. would need to rise by 5% for at least 5 years to curb inflation.

finance.yahoo.com

Former Treasury Secretary Larry Summers said unemployment in the U.S. would need to rise significantly for an extended period of time if it has any chance of curbing the inflation that is wreaking havoc on global markets.

“We need five years of unemployment above 5% to contain inflation—in other words, we need two years of 7.5% unemployment or five years of 6% unemployment or one year of 10% unemployment,” Summers said in a speech in London on Monday, Bloomberg reported.

“There are numbers that are remarkably discouraging relative to the Fed Reserve view,” he added.

Unemployment in the U.S. currently sits at 3.6% after U.S. employers added 390,000 jobs in May, according to the Bureau of Labor Statistics monthly jobs report released in early June.

Inflation historically has an inverse relationship with unemployment, meaning when inflation is high, unemployment is typically low. In basic macroeconomic principle and in the opinion of Larry Summers’, higher unemployment would translate to people having less discretionary income to purchase goods, lowering demand and reducing prices—i.e. inflation.

 

[Swammerdami]

With views like —  Lawrence_Summers#Views_on_banking_regulation — it's evident that Larry Summers was never the brightest bulb in the Econ Department. But now I'm wondering if someone should give him the Montreal Cognitive Assessment Test!

Spoiler: Up is Down and Down is Up

On an episode of Boston Legal Alan Shore (James Spader) must defend a physician charged with murder for euthanizing her dying patients. This was at the height of the Katrina disaster; her hospital lacked electricity and even drinking water; the other hospital staff had fled to save their own lives; the patients were soon to die very painful deaths from dehydration. The doctor's increasing their morphine dose was merciful and humane.

But euthanasia is illegal in Louisiana. How could Alan Shore convince the jury to acquit? The great Denny Crane (William Shatner) revived from his "mad cow" stupor long enough to comment on New Orleans during the disaster: "Up was Down and Down was Up." Normal rules did not apply. Shore used that idea in his closing argument and the jury acquitted.

Look at what's going on. Everything seems like a parody of capitalism, or even classical economic thought. Up is Down and Down is Up.

Everywhere we see contradictions:

• We need to wean people from gas guzzlers and other carbon-based fuels? Let's cut gasoline taxes and dump our precious Strategic Petroleum Reserve.
• We coddled Americans through the pandemic, paying them not to work, and now finally they have their jobs back in service industries? Larry Summers wants to reduce the supply of AND demand for service workers. Only this time don't help them out with checks: If they cut down on purchases of bread and baby food, maybe those prices will fall.
• American corporations had record-breaking profits at the height of the pandemic. Might they have used those profits to give workers raises, reduce debt, build a factory in America for a change, or — heaven forbid! — pay their fair share of taxes? Nah. They used the money for record-setting stock buybacks; the S&P 500 companies alone were buying shares at a $1 Trillion annual clip at the height of the pandemic. (I suppose that's fallen with the recent market fall: Perverse executive incentives often lead to 'Buy High, Sell Low' behavior in buybacks.)
• Mounting debt to pay for munitions and tax breaks for the super-rich threaten the safe-haven status of the world's greatest currency? Never mind that. Put your savings in NFTs and crypto. And in vacant farm-land. Wouldn't want the lower classes to be able to build homes there instead of in the over-priced cities.

Focus on the Consumer Price Index has distracted attention from Producer Prices. Prices of iron ore, steel, and steel products have skyrocketed. (Unlike with gold or petroleum, there is no single number for iron/steel price, but many numbers have tripled. WPU101 itself is almost triple what it was in 2015.) And many of the spiking producer prices are NOT set in the domestic economy. Steel and oil in particular are priced in global markets, with U.S. enemies like Russia and China being major exporters.

The U.S. is facing the worst confluence of problems since the Great Depression or the Second World War. Now would be a good time to come together as a nation and pull together toward solutions. Instead we have one political party intent on re-electing a functionally-illiterate sociopathic grifter. Crazed politicians in the QOPAnon Party are being shoved aside because they're not crazy enough! Instead of seeking bipartisan solutions to problems, QOPAnon politicos encourage their sheeple followers to make death threats against elected officials.

Up is Down and Down is Up.

 

[ZiprHead]

Elizabeth Warren grills Fed Chairman Powell.


She makes some damn good points.

 

[Jimmy Higgins]

Does she? It is like America never had interest rates above 2%. A Mortgage rate of 5% is being looked at as apocalyptic?

The Fed has increased the rate in an attempt to keep inflation from becoming a spiraling thing. Currently, inflation is being driven by outside forces and not monetary policy. However, if that inflation continues, it'll expand and the Fed is addressing that.

 

[ZiprHead]

Does she? It is like America never had interest rates above 2%. A Mortgage rate of 5% is being looked at as apocalyptic?

The Fed has increased the rate in an attempt to keep inflation from becoming a spiraling thing. Currently, inflation is being driven by outside forces and not monetary policy. However, if that inflation continues, it'll expand and the Fed is addressing that.

How is making getting a mortgage more expensive going to change the drivers of the inflation we have today?

 

[Swammerdami]

BOTH Warren and Powell make good points. There are no easy solutions.

Powell's primary and urgent duty is to quell expectations of inflation. I was pleased to see him put blame on the asset price bubble.

Does this mean that expensive progressive agenda may need to be put on hold once again, due to problems provoked in part by hyper-capitalist greed? Yes. But that is the real world we live in.

 

[TV and credit cards]

Hey Elizabeth, there are two job openings for every applicant out there. But you go ahead and paint a picture of the Feds actions causing people to lose their jobs. It’s what you do.
You know the odds are against Powell getting this throttled just right and us not going into recession. But hey, this way you’re all set up for if and when we do, you can refer back to your meeting as show how you knew it all along. If Powell does happen to get it right, all is forgotten. Literally. No one’s throwing Powell a parade for saving what is most near and dear to us all.
What a thankless fucking job this 68 year old man has that needs to neither pad his resume nor draw a paycheck at this stage of his life. Why does he do it? Must be the meetings with Elizabeth.

 

[Jason Harvestdancer]

Here's another bit of news that will definitely make prices rise. I don't consider this one to be inflation (that's a monetary phenomena) but it comes at the worst possible time.

NPR: Western Kansas wheat crops are failing just when the world needs them most

This time of year, the wheat growing in this part of western Kansas should be thigh-high and lush green.

But as a months-long drought continues to parch the region, many fields tell a different story.

“There’s nothing out there. It’s dead,” farmer Vance Ehmke said, surveying a wheat field near his land in Lane County. “It’s just ankle-high straw.”

Across western Kansas, many fields planted with wheat months ago now look like barren wastelands. The gaping spaces between rows of brown, shriveled plants reveal hardened dirt that’s scarred with deep cracks from baking in the sun.

...

The US Department of Agriculture estimates that wheat fields statewide will average roughly 39 bushels per acre this year, down sharply from 52 bushels per acre last year. But many farms in the western half of the state will produce far less than that.

USDA projections for Lane County say wheat farmers here will end up harvesting an average of 27 bushels per acre — less than half of what the county’s farmers averaged last year.

 

[ZiprHead]

 

[TV and credit cards]

I might be so bold as to refer you to post #7 of this very thread dated December 25, 2021.