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Illustration: Peter and Maria Hoey

 

Dear reader,



We have high inflation because of broken supply chains. But companies
have also used the inflation headlines as an excuse, to control supply
and raise prices well above their shipping and distribution costs.
"What we really want to find are companies with pricing power," said
one portfolio manager.

For our special supply chain issue, Prospect writing fellow Lee Harris
looked at a particular sector experiencing this phenomenon: the shale
oil industry. Here, a decade of misinvestment, fueled by Wall Street and
cheap credit, crashed with the pandemic in 2020. But the industry
adjusted, engaging in repeated mergers and deliberately slowing
production to goose profits, a cycle that investors hope will continue
for years. Meanwhile, energy trading houses bought oil cheap and are
"capitalizing on market dislocations." In other words, oil interests
are creating the bottleneck that Wall Street desires.

The climate-heating emissions caused by fracking make production
slowdowns rather positive for the world. But it's an example of market
manipulation that we see replicated across our economy. Commodity
traders and large companies have wrested control over necessities, and
are dictating who can get them and at what price.

You can read Lee Harris's story here.
  

You can read our entire special issue on how outsourcing,
monopolization, deregulation, financialization, and just-in-time
logistics broke our supply chains at
prospect.org/supplychain

And, you can help support this work by becoming a member today
. All of the reader support we receive
funds our editorial mission: illuminating stories about ideas, politics
and power.

If you're already a Prospect member, THANK YOU!

We can't do special issues like this without you. And if the Prospect
doesn't do it, there aren't many other places that will.

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Thank you for your consideration.

Sincerely,
David Dayen, Executive Editor
The American Prospect

 

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