Inflation: Which economic sectors are benefiting from rising prices and market turmoil?

Companies operating in the fossil fuel extraction and refining industry have made headlines in recent months thanks to their record profits, after wholesale gas prices soared on international markets and oil prices reached around $ 100 a year. barrel due to increased demand and fears of a decline in supply due to the Russian invasion of Ukraine. .

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Saudi Aramco made record profits in the period between April and June, while BP made a profit of £ 6.9 billion during this period and Shell tops the list with a profit of £ 9 billion worldwide.

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Centrica, the parent company of British Gas, recorded a fivefold increase in earnings from its oil, gas and nuclear activities.

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photo released, Getty Images

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Many lesser-known companies operating in the UK have also benefited, including Harbor Energy, one of the largest producers in the North Sea, which has seen growth thanks to its oil and gas acquisitions and is profitable again this year.

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Meanwhile, shares of Neptune Energy, which produces around 12 per cent of gas in the UK, recorded double profits last year, giving it the opportunity to redistribute a billion dollar dividend to shareholders, as Ithaca has obtained the ownership of Israel, the Norwegian company Equinor made a profit.

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All of these companies will be subject to a 25% liquidation tax and earnings from oil and gas mining in the UK, yet for most energy giants local mining is a small fraction of the their operations.

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For example, for BP, the UK accounts for one-tenth of total oil and gas production.

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However, there are some companies that have not yet benefited from rising oil and gas prices due to the way they buy energy in bulk, as these companies set prices in advance to secure their stance against large fluctuations in energy. market prices, a process known as hedging.

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mining companies

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At a time when countries are looking for alternatives to Russian gas, the use of coal has unexpectedly returned.

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This pays off for the mining companies that specialize in the worst fossil fuels.

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photo released, Getty Images

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Glencore also benefited from record prices for its thermal coal business, helping to double its profits to over £ 15 billion in the first half of 2022.

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Despite the withdrawal of many of its competitors from coal, “Glencore” said it will be an important fuel during the transition to more environmentally friendly forms of energy production in some countries and that it will resort to reduced production in the coming decades.

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Amid fears of a suspension of gas supplies from Russia to Europe this winter, the government has asked energy companies to delay the closure of coal-fired power plants in the UK.

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Germany’s Uniper said on Monday that it will begin producing electricity for the market via its Hayden 4 coal-fired backup power plant due to Russia’s suspension of pipeline supplies.

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food companies

Companies like Archer Daniels Midland, Pong, Cargill, and Louis-Dreyfus are unknown names, but their products make a big hit on dining tables around the world.

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Supply chain intermediaries, in times of global turmoil, play a key role in helping to maintain a steady supply of food and helping countries find alternative sources of grain to counter supply disruptions, for example, from Ukraine and Russia.

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photo released, Getty Images

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However, this turbulence means that wheat prices are now 25% higher than they were a year ago and that many other commodities are also becoming more expensive.

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Archer Daniels Midland posted a 60 percent increase in his latest quarterly profit, and Bungie’s performance was lower than expected, but he’s upbeat for the rest of the year.

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Cargill’s profits rose 23 percent to record highs of $ 165 billion in the last fiscal year, and the company claims it has recorded $ 163 million in humanitarian and other aid, which is equivalent to 0. , 1 percent of sales.

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shipping companies

Although closures to protect themselves from the outbreak of the epidemic have disrupted economies and supply chains, they have also increased the profits of shipping companies.

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Freight rates have risen and remained high since increased demand for consumer goods during closure measures due to Covid, and the restrictions have meant congestion in ports and halting new shipbuilding projects.

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photo released, Getty Images

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The container shipping industry has achieved half a trillion dollars in profits in the past two years by the end of 2022, according to data from consulting firm Drury.

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AP Moller Maersk, the second largest container shipping group in the world, also raised its annual profit forecast for the third time this year due to the long-standing outage in ports and said a “return to normal” pricing may not happen now until the end of the year.

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prestigious wineries

The combination of high inflation, relatively low interest rates, and weak economic growth for the rich makes it difficult to make good returns from traditional investments.

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So they focus on other sectors and Knight Frank brokers say the value of investments in fine wines and luxury watches increased by 16% last year.

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Investors are betting on holdings and that their value will outstrip inflation, and this will continue through this year, and the Bordeaux Index, the world’s largest wine exchange, recorded a 37% increase in stocks. sales throughout the year until June.

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However, inflation makes life more complicated for us than the economic sectors benefiting from the situation.

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