Left-leaning outlets grasp at straws trying to find someone to blame for inflation

June 13, 2022

By Tim Worstall

Inflation is nothing but the capitalists ripping us off. A fairly common complaint, and one that doesn’t seem quite true when considered in theory. What made the capitalists more greedy now? If they did become so, then the cause is why they got more greedy. Or even, what allowed them to act more greedily? Either of those two is, therefore, the cause of the inflation.

But of course, there’s an election coming up, and the Democrats desperately want someone to blame for inflation other than their own spending. A natural reaction there, but not one that we’ve got to aid with, of course.

We get to examine the specific arguments made and then decide whether they’re true or false. This on from Vox and Insider, being one of the untrue ones. We can check this against commonly available information too.

Vox tells us that gas prices are rising because “… the May CPI report makes more sense in the context of “corporate greed” because some oil and gas executives have scored higher profits while not increasing production to keep pace with demand — worsening the supply shortage.”

 The claim is that the capitalists, the oil companies, haven’t been expanding production, meaning that they can just charge ever-higher prices for the same old oil.

Insider tries to tell us that same story:

“The uptrend has also been a bumpy one, as producers have been wary not to repeat the growth spree of the 2010s. Investors have continued to push profit protection over faster pumping, saying firms need to pay down debts from the prior boom. That’s led to producers’ free cash flow soaring amid rising prices, a typical sign that the industry is leaving cash on the table and needs to accelerate investment.”

That is that same story. The capitalists aren’t investing enough in new production because they want to pile up profits from current pries. This could be true and in a certain part of the oil market it is true. OPEC is that grouping of oil producing countries and they do exactly this. Coordinate output levels so as to stop the oil price falling and thus reducing their profit. But that is governments do course, that’s not the private sector oil industry in the U.S.

So, can we test whether it is true about that private sector? Are they not investing in order to gain the high profits from high oil prices? The test of this is whether they’re out there drilling oil wells or not. If they’re drilling then the are attempting expand supply. Not just sit on their piles of monopoly earned profits.

Baker Hughes reports once a week the number of drill rigs in use. It’s a standard economic measure used to test – how much is the oil industry trying to expand production?

Oh, the rig count is up some 20% on this year alone. That is, we’ve no evidence of drilling being held back to bolster high prices, rather the opposite in fact. But then actually saying that might breach one of the Dems’ carefully crafted stories, right ? It’s got to be the capitalists because they’re evil.

Vox markets itself as explaining the news. It gets some 24 million visits a month as it does so. We do think that it might do better if it actually explained news items – as here drilling can’t be going down if drilling is going up. Insider is rather larger, at near 40 million vistits and tendsw to try and concentrate upon business issues. Again, we think that might work better if it informed itself about them.

It is possible that the oil companies are not expanding production in order to gain more profit.

But, if that were true, the the number of rigs being employed to look for more oil would be falling. It isn’t – it’s rising. So, the basic contention is wrong. Wouldn’t it be nice if media outlets a) knew this and b) told us this?


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