Wrestling with the Inflation Bogeyman
June 17, 2022
Written By Jon Ihler
Thanks to a unique convergence of events, including an extended period of near-zero interest rates, pandemic-driven government spending, supply chain disruption, labor shortages and geopolitical unrest, we are dealing with inflation near 40-year highs. Data from the Consumer Price Index showed that U.S. inflation had hit 8.6 percent in May – a level not seen since 1981.
Prices for goods and services around the world have risen dramatically in the last year and are producing a lot of financial anxiety. Questions about the U.S. economy abound. Can the Federal Reserve get inflationary forces back under control? Will supply chains untangle any time soon? It’s too soon to tell, but my gut says no.
By a wide margin, most Americans view inflation as the top problem currently facing our country. A recent poll conducted by the Pew Research Center of 5,074 U.S. adults showed 70 percent of Americans view inflation as a “very big problem” for the country, followed by the affordability of healthcare (55 percent) and violent crime (54 percent).
Every sector of the U.S. economy has been affected by inflation in some form or another. Whether it’s higher energy prices, rising grocery bills or the booming U.S. housing market, inflation is hitting us all.
From a business standpoint, it has been challenging to stay ahead of the inflation bogeyman. We’ve had to act quickly as prices across the board have surged, but I am proud to report MFA Oil remains healthy and on a growth trajectory. The cooperative is performing well through the first three quarters of the fiscal year with earnings thus far exceeding our expectations. Rising gross margins at the retail level have contributed to revenues. However, we have also experienced increasing expenses in fuel, repair costs, credit card fees, and labor. Our company’s ability to deftly manage supply this winter has been beneficial to our success. As volatility continues to push energy markets higher, we remain focused on finding the best values we can to support members’ and customers’ needs.
Management and the Board of Directors have worked the last three years to establish a company culture anchored by our core values that align with our purpose to drive the success of our customers and communities through exceptional products and services and our more than 90-plus years of heritage. Our culture has given the cooperative the strength and resilience to handle disruptions, like the surging inflation we face today. This summer and fall, we will host customer open house events at our bulk fuel plants. These gatherings are an excellent opportunity for our members and customers to learn more about the cooperative, share feedback about our services and let us know how we can better serve you. We look forward to these meetings and the chance to hear what matters most to you. I hope you will join us. Our schedule of events is available at www.mfaoil.com/openhouse.