Shell’s share buyback generated $9 billion in third-quarter revenue

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The next time you see a Republican ad blaming the Biden administration for inflation in general, and gas prices in particular, remember that story, point and laugh. And the next time you see a timid corporate democrat start discussing inflation in general, and “sacrifice” in particular, remember that story, point and spit. From CNN:

Shell will buy back $4 billion worth of shares and increase its dividend by 15% after posting another mammoth quarterly profit on the back of high oil and gas prices. The British company posted a net profit of $9.45 billion in the third quarter, more than double the $4.1 billion recorded a year ago. The result was driven by a strong performance from its oil exploration and production business, Shell said. The company’s shares at one point rose more than 4% in London on Thursday as investors cheered the news. The additional buybacks will bring total stock purchases for the year to $18.5 billion, or approximately 10% of the company’s share capital.

You may all be surprised to learn that stock buybacks of this type were illegal. The Security and Exchange Commission disapproved of them. Like most economists. From Harvard business review:

Why did American companies carry out these massive takeovers? With the majority of their compensation coming from stock options and stock awards, corporate executives have resorted to open-market buyouts to manipulate their company’s stock price at their own expense. benefit and that of others involved in timing the buying and selling of publicly traded stocks. Buyouts enrich these opportunistic stock sellers – investment bankers and hedge fund managers as well as senior corporate executives – at the expense of employees, as well as permanent shareholders.

It will come as no surprise to regulars here at shebeen, however, to learn that it was during the Reagan administration that the SEC passed a new rule that immunizes corporate CEOs from charges of stock manipulation that may arise from such takeovers. It made a lot of people really rich and also messed up the economy the way all those old SEC fuddy-ducks said it did. In fact, a 1% tax on buyouts was central to the funding mechanism of the Biden administration’s Cut Inflation Act last August.

Specifically, Shell’s announcement makes anyone who rushes on inflation and/or gas prices look like a fool. There have been price hikes everywhere since the pandemic hit. Rep. Katie Porter once pushed an anti-gouging bill through the House.

But somewhere between Reagan’s election and now, the Democratic candidates lost everything that allowed Franklin Roosevelt to harbor the hatred of the “malefactors of great wealth.” It should be easy to argue as fiercely against price gouging as Republicans against inflation – easier, in fact, because there’s substance behind an anti-scam campaign and real legislation to fix it. ; while the Republican “inflation” taunts use the term as a simple conspiracy word, and the people who invoke it have no substantive plan to deal with it. But over the past 40 years, as a national party, the Democrats have lost the ability to discuss class with proper vigor and fire. This Shell story should be a grenade to throw at every Republican congressional campaign. But I’m not sure Democrats can even find the pin.

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