Tag: inflation

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free trade & free markets national politics & policies political economy

Big Oil, Big Profits — Big Deal?

Joe Biden, oil, inflation

When President Joe Biden accused oil companies of excessive profiteering, and those profits as a cause of inflation, reactions were . . . mixed.

Democrats love that kind of talk. Ronald Reagan, back in his Democrat days, pitched precisely that sort of rhetoric when he campaigned for Truman’s re-election.

Republicans, along with most other Americans, are skeptical. Or just plain incredulous.

Meanwhile, what did Big Oil say?

Chevron’s CEO, Mike Wirth, took special care to complain of the president’s rhetoric, characterizing the administration as having “largely sought to criticize, and at times vilify, our industry.”

Perhaps Biden’s worst vilification was that Exxon had “made more money than God” — as if spending more money than God were his job and that he resented any money he couldn’t spend. 

EXXON responded by noting that the multinational had continued investing in infrastructure even during the pandemic lockdowns when the company “lost more than $20 billion and had to borrow more than $30 billion to maintain investment to increase capacity to be ready for post-pandemic demand.”

In a helpful mode, the company offered that “government can promote investment through clear and consistent policy that supports U.S. resource development, such as regular and predictable lease sales, as well as streamlined regulatory approval and support for infrastructure such as pipelines.”

Biden, who ran on decreasing oil production by regulatory crackdown, received a square hit.

Nonetheless, the Democrats double-down on their worn-out “windfall profits” alarmism. 

After a huge hit to consumption during the lockdowns, the profits are there not as recompense for Big Oil’s regrettable big losses, but as incentives to get out of the Great Suppression. 

We should want profits to entice more investment.

Could it be that Biden wants neither?

This is Common Sense. I’m Paul Jacob.

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folly national politics & policies

It’s a Gas, Gas, Gas

Joe Biden, gas, inflation

“Senior White House aides are exploring new ideas to respond to high gas prices,” informs The Washington Post, “desperate to show that the administration is trying to address voter frustration about rising costs at the pump.”

Not “desperate” to lower gas prices, mind you — which have hit $5 a gallon, a double-digit increase from last month — but to “address” the resulting “voter frustration” from high prices. 

After all, there’s an election in November. Suddenly, this crisis could affect important people in Washington!

“Biden officials are taking a second look at whether the federal government could send rebate cards out to millions of American drivers to help them pay at gas stations,” The Post reports. This generous brainstorm was previously rejected because “shortages in the U.S. chip industry would make it hard to produce enough rebate cards.” 

America 2022 isn’t even technologically capable of giving money away. 

Administration experts also worried “the idea could backfire by further pushing up prices by adding to consumer demand.” Oh, didn’t Congress repeal the laws of supply and demand?

Someone “familiar with internal administration discussions” offered that the administration was looking at “telling governors to lower or waive their gas taxes.”

Grover Norquist smiles.

“Other proposals floated by policy experts include suspending the Jones Act,” notes The Post story, “which would reduce shipping costs and make it cheaper to get gasoline from the Gulf Coast to the Eastern Seaboard.”

That act should have been repealed years ago. 

“They’re fighting about narrative rather than fighting about substance,” offered an unnamed outside economic adviser, “because realistically, what are they going to do?”

They could open up energy markets, of course — approve gas pipelines rather than blocking them, perhaps. 

Could? Should? Yes. Will? 

Not Biden!

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Do More Than Baby Steps

baby formula, inflation, economics

Major disruptions such as pandemic policy in China and the Russian invasion of Ukraine obviously crimp trade and supply chains. But given such impacts, should governments here in the United States be making things better or making things worse?

Oil is one example of a good that would be more abundant and cheaper had the government left it alone — stopped blocking domestic production and the flow of oil from Canada.

Now parents are having trouble getting baby food.

A proximate cause of the shortage is the closure of a single major factory producing baby formula. But Kevin Ketels, a professor who studies the global supply chain, argues that restrictions on production had set things up so that a blow like this would be crippling.

For one thing, only a few companies, Abbott, Reckitt, and Nestlé, are allowed to participate in a government program to provide baby formula to low-income families. This is not a minor program. The federal government provides substantial grants to the states to fund it.

More importantly, only a few manufacturing facilities are allowed to produce baby formula, and “startups don’t have the volume required to produce in these facilities.”

High tariffs on baby-food imports have also reduced supply.

You would think, then, that the first thing to do would be to remove governmental barriers to production and imports.

And all, not just some.

So why isn’t that what we are hearing about now?

Well, politicians do not gain their power, prestige, and insider trading advantages by leaving well enough alone. Admitting that their stock in trade — regulation and tariffs and the like — is the cause of this problem might suggest to distracted minds that it is the cause of most, if not all, our problems.

This is Common Sense. I’m Paul Jacob.

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Unconscionable Greed!

Bernie Sanders, Elizabeth Warren, price gouging, inflation

It’s easy to blame others for greed. And when prices rise, I suppose I can imagine being so upset that . . . well, if not my mind, Bernie Sanders’ mind . . . would become unhinged:

“Greed. Greed. Greed. While Americans are struggling at the pump,” the senator tweeted on Friday the 13th, “in the first three months of this year, oil and gas companies made over $41 billion in profits, more than double their profits from last year. The problem is not inflation. The problem is corporate greed.”

That’s Bernie Sanders for you. It’s not government profligacy or Federal Reserve monetary policy or the Biden Administration’s anti-fossil fuels agenda . . . or supply-line problems, persisting COVID-lockdown effects, or anything else.

Just greed.

But is greed somehow cyclical? Why were greedy corporations providing cheap gas a year ago and then able to raise it only under Democrats’ rule?

Alas, Bernie isn’t the only low-brow demagogue in the Senate. There’s Senator Elizabeth Warren pushing a new “price gouging” bill.

So, just as Bernie never answers “why is greed so successful at gouging now?,” how does Liz answer the burning question “how can we objectively define ‘price-gouging’?”

As journalist Catherine Rampell observes on Twitter, the senator’s definition in the bill is less than enlightening: “price-gouging” is “just pricing that is ‘unconscionably excessive.’”

Now that, Senator Warren, is unconscionably vague.

And incidentally, aren’t both senators on the record as demanding higher gas prices to usher in “green energy” to “save the planet”? This all seems unconscionably . . . deceptive.

This is Common Sense. I’m Paul Jacob.

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Photo credits: Warren/Bernie/money

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media and media people national politics & policies

Who’s the Stupid S.O.B.?

Joe Biden, SOB, stupid son of a bitch, press conference, Steve Doocy

President Joe Biden called Fox reporter Peter Doocy a “stupid s.o.b.,” sans the abbreviation.

Biden had balked at answering questions about Ukraine, so Mr. Doocy asked him about inflation: “Do you think inflation is a political liability ahead of the mid-terms?”

“That’s a great asset: more inflation,” Biden mumbled into the hot mic. “What a stupid . . .”

Now, had I said that, I would hasten to explain that I was being sardonic. Of course inflation is a liability. Dubbing it a “great asset” was certainly sarcasm. It could be nothing other. Inflation is a horror show.

But the negative characterization of Doocy that immediately followed undermines that Irony Interpretation. Does it sound ironic? And if the insult is earnest, does it not suggest that the preceding declaration about inflation is not only earnest, but in the Contempt Mode that Democrats have been adopting to criticism in recent years?

Of course inflation is great! 

For them.

After all, inflation does help a few at the expense of the many. It helps insiders at the expense of the outsiders. This is ancient wisdom.

Insiders in government gain through inflation, getting to “spend first,” while we on the outside — in society — suffer from decreased purchasing power.

After the event, Biden contacted Doocy. “It’s nothing personal, pal.” 

But the objective issue is whether Biden was being sarcastic about inflation.

While we may argue over who will have the last word on monetary policy, it was Doocy who had the last laugh . . . at himself: “nobody has fact-checked [Biden] yet and said it’s not true.”

But then, fact-checkers ain’t what they used to be.

This is Common Sense. I’m Paul Jacob.

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Accountability folly national politics & policies political economy

Whip Producers Now

inflation, shock

The Biden administration is siccing agencies like the Federal Trade Commission, Department of Agriculture, and the Federal Maritime Commission onto the producers of stuff who have recently dared to raise prices.

Stuff like gas. Higher prices at the pump must be an oil-company conspiracy.

It has nothing to do with (and don’t even think it!) governmental actions that impede production, including shutting down the Keystone oil pipeline on Biden’s first day in office or calling a halt to new oil leases on public lands. Etcetera.

Nothing to do with mammoth expansion of the supply of money and credit to facilitate trillion-dollar government spending sprees.

In case you hadn’t noticed, meat costs more, too. So obviously that must be the fault of malicious meatpackers. Rest assured that beef price inflation is utterly unrelated to pandemic-policy-induced labor shortages and delays.

Or to any recent increase in efficiency-impairing trucking regulations.

Same with sundry supply-chain problems, like the ships and crates piling up at ports. Greater consumer demand, new pandemic-induced screening protocols, union rules that prevent ports from operating 24/7 or improving automation — all irrelevant.

Must be. That’s the script from 1600 Pennsylvania Avenue, anyway.

But if companies can hike prices at will, ignoring whether regulations ease or obstruct production, why doesn’t the meat industry, for example, charge a thousand dollars per pound of flesh?

Well, we know why. 

Demand for a pound of ground beef would slide to zero, or close to it.

If only the government people knew! 

Or would stop pretending they don’t know. 

A consistent recognition of the laws of economics would sure make a great gift — in any season. Instead of bullying and making things worse, government could get out of the way.

This is Common Sense. I’m Paul Jacob.

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