Comment by csomar
2 years ago
Inflation is contagious. Once it kicks above a certain psychological level, everyone starts increasing prices and people start accepting the vicious circle by over buying to avoid inflation on their savings. Which makes the situation worse and accelerate the circle.
But it’s easier to blame greedy corporate CEO than your own failed monetary policy.
Sure, the CEO of ExxonMobil got a little "nervy" and... upped profits by £38bn.
From the article:
"Among the companies that increased their profits most from the pre-pandemic average were:
ExxonMobil: profits of £15bn increased to £53bn Shell: £16bn up to £44bn"
Increasing prices in line with inflation - direct higher costs - isn't what the research is calling out - it's the excesses.
Let's think about this. The moment COVID happened, gas prices went way down because there was too much production and oil storage has high cost. From what I understand, oil production was then ramped down to meet the demand. When things opened up, suddenly there was higher demand but it takes time for production to come up.
This seems to me to be a simple adjustment. The oil company's profits went way down the quarter the pandemic started, due to a sudden demand shift. Now they're going above average due to the sudden demand shift in the other direction.
Oil is also weird since it's heavily determined by geopolitics. The Ukraine war must have had an impact but I haven't looked into it