Cost-of-living crisis? You wouldn’t know it by looking at these companies’ profits | Greg Jericho

It is always quite striking just how greatly the overseers of the economy defend the status quo in order to ensure company profits keep rising.

Right now, Australians are suffering from a cost-of-living crisis.

It’s pretty obvious why this is happening.

Exhibit 1:

Click here if this graph does not display

And exhibit 2:

Click here if this graph does not display

But we too often default to the view that oil prices are rising, so petrol prices must also rise and nothing can be done about it. We are so locked into believing that the market must not be questioned that we just assume everything is happening as it should.

Well this week Ampol released its third-quarter report to the ASX. It noted that the growth in its operating profits “reflects the strength of the integrated supply chain to capture the benefits from prevailing market conditions”.

Yep, the “benefits”.

Sign up for Guardian Australia’s Politics, really newsletter here

It also reported that the “escalation of geopolitical tensions in the Middle East in recent weeks and ongoing constraints in supply of fuel products … continue to be net favourable for Ampol’s integrated supply chain”.

Yep, “net favourable”.

This isn’t about them selling more fuel. It’s about them increasing margins at Ampol’s Lytton refinery. Ampol noted that the margin in the third quarter of US$23.92 was more than double what it was a year earlier (US$10.62).

This accords with earlier reports from Ampol showing just how good the US and Israel war on Iran has been for them:

Click here if this graph does not display

It’s why Ampol’s net profit in the first half of this year was up a rather stunning 376% from $180.2m to $857.2m.

Then there is Viva Energy, which owns the Geelong oil refinery and supplies, among others, Shell-branded fuel. It has announced “strong first half earnings”, with its operating profit up 154% from $304.9m to $774.4m.

Again, this did not come from more sales – the volume of fuel it sold only rose 1.3%.

It’s pretty astonishing when you are outperforming even the gas companies:

Click here if this graph does not display

So yes, oil prices are going up, but let’s not pretend the companies that are importing the oil are struggling. No, they are passing on the costs and then some, as we can tell from the increase in the prices charged by the petroleum and coal product manufacturing companies compared with the cost of their inputs:

Click here if this graph does not display

This is important because on Wednesday at his fireside chat the deputy governor of the Reserve Bank, Andrew Hauser, was asked about strong “corporate profitability” and whether companies needed to adjust “to a lower level of profitability over time in order to get the balance right … in order to have the social licence to operate”.

It was a good question, to which Hauser suggested “companies are extremely conscious … about what is called in the trade, their social licence” before talking about small business and then future problems with AI companies.

But we don’t need to ponder what will happen in the future, because the problem of excessive profits leading to hardship for workers is happening right now and the RBA is saying nothing.

And as for caring about their social licence, companies care about ensuring their marketing budgets are spent making them look like good corporate citizens rather than actually being so.

They also spend an inordinate amount lobbying governments to ensure any concerns about social licence are overlooked.

Consider that Japanese gas companies, including Inpex, are currently complaining loudly about the proposed gas reservation policy and agitated against a 25% tax on gas exports because (as it wrote in a Senate committee submission) “Inpex’s contribution to Australia extends beyond taxation”.

In August Inpex reported that the times were very good, despite its Abu Dhabi operations being disrupted.

It noted that “despite continued uncertainty surrounding the Middle East situation, full-year profit is expected to be a record high ¥510.0 billion, supported mainly by higher sales prices and stable operations at Ichthys LNG”.

That Ichthys LNG operation is rather beloved by our current minister for resources, Madeleine King. Back in 2018, when she was the shadow minister, she attended the celebration of its first LNG shipment and said “it plays a vital role in the economy of Northern Australia and will continue to contribute to the Australian economy for decades to come”.

More recently she crowed about how “this project provides resilience and security for Japan”.

That’s nice. Especially given so much LNG is exported to Japan that it sells more of that gas to other countries than is used each year in all of eastern Australia.

And it sure is good to know that Inpex’s profits are going to reach a record high due to the Ichthys LNG project, given how much it pays in tax and royalties that helps Australians:

Click here if this chart does not display

Gotta love that social licence.

But don’t worry, I’m sure when AI firms make massive profits that increase inflation and pay little tax our governments and central banks will speak up and households won’t again be hit with higher interest rates or cuts to services.