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As inflation soars at incredible rates and the war rages on in Russia, crude oil prices are predicted to climb even higher. Sorry to tell you this if you haven’t already heard…

But this summer, Americans could face an average pump price of $6.20 per gallon of gas. So expect to keep feeling the pinch of these painful petrol prices from here on.

Meanwhile, profits in the Big Oil sector are surging. Chevron (CVX), ExxonMobil (XOM), and other crude oil cohorts just reported Q1 profits totaling over $40 billion.

This gives them billions more to spend on stock buybacks and investor dividends.

Many accept these economic inconsistencies as being part and parcel of the American business machine. Others point to events outside these companies’ control. D.C. Democrats, however, feel Big Oil is taking advantage of an already strapped society by gouging prices.

So, they’re doing what Washington does best – drafting laws about it.

From The Los Angeles Times:

“A bill backed by House Democrats would give President Biden authority to declare an energy emergency that would make it unlawful to increase gasoline and home energy fuel prices in an “excessive” or exploitative manner. The bill directs the Federal Trade Commission to punish companies that engage in price gouging and adds a new unit at the FTC to monitor fuel markets.

“‘At a time when people across the country are feeling the pinch at the gas pump, Congress needs to be doing all it can to bring down costs for American families,’ said Rep. Kim Schrier (D-Wash.), who co-sponsored the bill.”

Though Republicans opposed the bill, the measure passed the House 217 to 207. And it’s now on to the Senate.

Is this all political? It might be.

President Biden definitely has taken significant heat over rising gasoline prices in the last couple of months. So Democrats might see this as the best move to fix prices without increasing production.

But is it really the best way to go about easing oil price increases? That’s the question.

The implications of imposing regulatory measures on a free market are as vast as they are volatile. And in times of economic uncertainty, they can be downright catastrophic.

Essentially then, we’re probably in for more trouble regardless.
 

More Non-REIT News to Know About

When it comes to partnering with China, Apple (AAPL) is one of the biggest players. More than 90% of its products come from the People’s Republic.

That means one of the world’s biggest tech companies is extensively entangled with one of the world’s more precarious superpowers. And it seems as though Apple is finally starting to see enough risk in this strategy to do something about it.

With supply chain chaos continuing as Beijing prolongs its incredibly strict Covid policy, the prospects of keeping production tied to China become dicier. Thus, Apple has reportedly told a number of its contractors that it wants to begin moving away from that cheap labor market.

If true, this move could trigger a manufacturing chain reaction. More American companies are bound to break their dependence on the red regime as lockdowns, and losses begin playing into the logic of these powerful corporations.

Of course, Apple has refused to comment on the issue for the time being. But as both political and pricing pressures mount against the Mac mechanism, it’s bound to have a breaking point.
 

The World According to REITs

We don’t touch on entertainment too much in the real estate investment trust (REIT) world. But I have to say there’s been a lot going on in music lately.

Just last week, we saw the release of a new Kendrick Lamar album. Jerry Lee Lewis was picked for the Country Music Hall of Fame. And Kurt Cobain’s guitar sold for $4.5 million.

But what I really found interesting was the lease announcement from Empire State Realty Trust (ESRT).

ESRT is a New York City-focused REIT that owns and manages retail and multifamily assets. A couple of days ago, it announced a new lease with SESAC Music Group – a leading music rights management and content organization – for the entire 24th floor at 250 West 57th Street.

That totals over 12,000 square feet.

The Music Group’s CEO, John Josephson, cited “industry-leading sustainability practices, proximity to transportation, and excellent building amenities” as the reason for his choice.

Located on “Billionaire’s Row,” 250 West 57th Street houses a dining culture that includes iconic New York restaurants. It also has convenient access to Central Park, Carnegie Hall, and Lincoln Center… plus in-building access to the Columbus Circle subway station.

This certainly goes to show how curating a cultured clientele for your property portfolio can pay off in the form of leasing spreads.

Even so, in these trying trading days, ESRT closed out the week last Friday at $7.85 per share – down a point and a half in five days. Sadly, the new tenant was no match for our tough economy.