'Greedflation': who wins, who loses?
European Union citizens are experiencing inflation not seen for decades. In Germany it has reached double digits at 11 per cent, while in Austria the rate is 9.3 per cent. These rates are due to the disruption in supply chains and the shortage of fossil resources—triggered by the coronavirus crisis and the Ukraine war—on which the two countries were extremely dependent until recently. Prices are exploding not only in energy supply but also in all other essentials, including food.
At the same time, companies in certain sectors are making excess profits due to the shortage of strategic resources. Since market mechanisms are no longer working in such a constellation, it is the task of the state to intervene with regulatory policy.
The American energy giant Exxon Mobile announced earnings of $17.9 billion in the second quarter of 2022 compared with $5.5 billion in the first, tripling its profit. BP’s first-quarter profit was three times last year’s $9.1 billion. The German energy group RWE increased its profit by more than a third to €2.8 billion in the first half of 2022. And the Austrian company ÖMV recorded a profit of 124 per cent in the first two quarters.
The United States president, Joe Biden, said: ‘We will make sure that everyone knows Exxon profits.’ Implicit in his reproach was that the corporation’s profit was not related to enhanced performance, achieved by investment and technological progress. On the contrary, companies in strategic oligopoly and monopoly positions appear to be exploiting consumers’ dependency in the crisis and charging unreasonable prices for products for which there are no alternatives.
https://socialeurope.eu/greedflation-who-wins-who-loses
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