The cure for high gas and food prices is not higher prices. Demand much more inelastic for these goods. Much harder to absorb increases for key living staples and make demand changes in the sort run. I am all in favor of less inflation. Hope trend continues.
Can anyone tell me why the oil companies are walking away unscathed in this discussion about inflation? This cut says it all: The top five oil companies alone—"Shell, ExxonMobil, BP, Chevron, and ConocoPhillips—brought in more than 200 percent more in profits than in the first quarter of 2021."
We've come to a point in life where nothing makes sense any more.
This might be a dumb question, but are those profits from the outright sale of oil or other services as well? (Do oil companies even break those numbers out?)
As for a comparison point, how do those profits compare to the same point in 2019? I'd be hesitant to use much of anything from 2021 as a basis for setting public policy post-pandemic.
That's an excellent link and captures the piece I was missing (and shouldn't have been as a small business owner): profits (raw dollars total) vs. profit margins (profit per unit).
To rephrase Bill's question a bit: Are we seeing profit margins go up compared to (insert last reference time period here)?
Furthermore, how does that cost of processing vary based on volume? If the processing is capital-extensive, we should see that cost go down as fixed expenses (equipment) are amortized across each unit sold. It should be cheaper (on a per-unit basis) to process 1000 units than it is to process 10. Is this part of the discussion as volume ramps up? I can see it becoming VERY relevant as new fixed expenses are incurred to bring up new infrastructure to handle more volume than the existing setup can deal with.
Congrats on being an entrepreneur - guaranteed headaches and hard work - hopefully big rewards. I was always the Fortune 500 corporate nerd - too conservative to be poor, too conservative to be rich.
Don't congratulate me too much - I'm exploring options to fold my operation into a larger one in the next year, given how many new headaches my long-time client base has been erecting in providing service to them. (Had to part ways with one client when I couldn't purchase enough commercial liability insurance to satisfy their bean counters, despite the fact that I write software off-site and my actual risk to them is quite low.)
The percentage increase is a statistical fluke. Oil companies lost money in 2020 and were still recovering in early 2021. They are booming now so the statistical year-over-year increase is huge percentage wise.
Okay lets not use percentages. How about this stat: The tumult of war and climate breakdown has proved lucrative for the world’s leading oil and gas companies, with financial records showing 28 of the largest producers made close to $100bn in combined profits in just the first three months of 2022. BTW, these same companies that "lost" money during 2020 got billions in covid relief funds.
When is enough enough? For some, there's no such thing. People are getting crushed every time they drive to the pump, and the profits just keep climbing. Yet again, we are caught up in the political games of buying politicians. Don't even get me started on oil and gas subsidies.
Nothing will ever change as long as the money is driving the bus, people be damned.
"What’s more, it isn’t just the pundit class that is taking notice. The Wall Street Journal pointed out that 'all manner of raw-materials prices—corn, wheat, copper and more' seem to have peaked and have begun to decline."
For what it's worth - and you may have some special insight here - I was just shopping for round-trip airline tickets between Chicago (ORD) and Providence (PVD) and was pleasantly surprised to see the prices (for a late August flight) at half of what they were when I was looking a month back (and back within a "normal" range for when I've flown before - ~$300 round-trip). Don't know if that's inflation abating or something else going on in the airline industry, but I'm contemplating that vacation I thought I would have to put off when prices were around $600 for those same flights.
I hope you get on a flight at a decent price that actually takes off and lands reasonably close to what the promise. Too many friends having flights cancelled even a week to 10 days in advance and are having trouble rebooking.
I've been reading about those horror stories, and that's one of the main things keeping me from thinking "maybe next year".
We don't levy enough automatic penalties on airlines to quit selling capacity that they don't have or are not sure that they won't have. It should be the airline's responsibility for purchasing and booking you a replacement ticket from another airline or at a reasonably-close airport when they decide to not honor their ticket after all. If that raises prices, so be it. I'd rather pay more than deal with the uncertainty.
The cure for high gas and food prices is not higher prices. Demand much more inelastic for these goods. Much harder to absorb increases for key living staples and make demand changes in the sort run. I am all in favor of less inflation. Hope trend continues.
Can anyone tell me why the oil companies are walking away unscathed in this discussion about inflation? This cut says it all: The top five oil companies alone—"Shell, ExxonMobil, BP, Chevron, and ConocoPhillips—brought in more than 200 percent more in profits than in the first quarter of 2021."
We've come to a point in life where nothing makes sense any more.
This might be a dumb question, but are those profits from the outright sale of oil or other services as well? (Do oil companies even break those numbers out?)
As for a comparison point, how do those profits compare to the same point in 2019? I'd be hesitant to use much of anything from 2021 as a basis for setting public policy post-pandemic.
This might help.
https://www.steverrobbins.com/articles/oilprofitsexplained/
That's an excellent link and captures the piece I was missing (and shouldn't have been as a small business owner): profits (raw dollars total) vs. profit margins (profit per unit).
To rephrase Bill's question a bit: Are we seeing profit margins go up compared to (insert last reference time period here)?
Furthermore, how does that cost of processing vary based on volume? If the processing is capital-extensive, we should see that cost go down as fixed expenses (equipment) are amortized across each unit sold. It should be cheaper (on a per-unit basis) to process 1000 units than it is to process 10. Is this part of the discussion as volume ramps up? I can see it becoming VERY relevant as new fixed expenses are incurred to bring up new infrastructure to handle more volume than the existing setup can deal with.
Congrats on being an entrepreneur - guaranteed headaches and hard work - hopefully big rewards. I was always the Fortune 500 corporate nerd - too conservative to be poor, too conservative to be rich.
Don't congratulate me too much - I'm exploring options to fold my operation into a larger one in the next year, given how many new headaches my long-time client base has been erecting in providing service to them. (Had to part ways with one client when I couldn't purchase enough commercial liability insurance to satisfy their bean counters, despite the fact that I write software off-site and my actual risk to them is quite low.)
The percentage increase is a statistical fluke. Oil companies lost money in 2020 and were still recovering in early 2021. They are booming now so the statistical year-over-year increase is huge percentage wise.
Okay lets not use percentages. How about this stat: The tumult of war and climate breakdown has proved lucrative for the world’s leading oil and gas companies, with financial records showing 28 of the largest producers made close to $100bn in combined profits in just the first three months of 2022. BTW, these same companies that "lost" money during 2020 got billions in covid relief funds.
When is enough enough? For some, there's no such thing. People are getting crushed every time they drive to the pump, and the profits just keep climbing. Yet again, we are caught up in the political games of buying politicians. Don't even get me started on oil and gas subsidies.
Nothing will ever change as long as the money is driving the bus, people be damned.
"What’s more, it isn’t just the pundit class that is taking notice. The Wall Street Journal pointed out that 'all manner of raw-materials prices—corn, wheat, copper and more' seem to have peaked and have begun to decline."
For what it's worth - and you may have some special insight here - I was just shopping for round-trip airline tickets between Chicago (ORD) and Providence (PVD) and was pleasantly surprised to see the prices (for a late August flight) at half of what they were when I was looking a month back (and back within a "normal" range for when I've flown before - ~$300 round-trip). Don't know if that's inflation abating or something else going on in the airline industry, but I'm contemplating that vacation I thought I would have to put off when prices were around $600 for those same flights.
I hope you get on a flight at a decent price that actually takes off and lands reasonably close to what the promise. Too many friends having flights cancelled even a week to 10 days in advance and are having trouble rebooking.
I've been reading about those horror stories, and that's one of the main things keeping me from thinking "maybe next year".
We don't levy enough automatic penalties on airlines to quit selling capacity that they don't have or are not sure that they won't have. It should be the airline's responsibility for purchasing and booking you a replacement ticket from another airline or at a reasonably-close airport when they decide to not honor their ticket after all. If that raises prices, so be it. I'd rather pay more than deal with the uncertainty.