Marketplace: What’s Next for BP? Released on February 13, 2025

In this episode of Marketplace, host Kai Ryssdal delves into a multifaceted discussion surrounding the current economic landscape, touching on persistent inflation, the evolving dynamics of global trade, the rise of digital payment networks, the influence of financial influencers, the expansion of live concert venues, and the strategic pivot of major oil companies like BP. The episode weaves through these topics, providing listeners with insightful analysis and expert opinions to navigate the complexities of today’s business and economic environment.

1. Persistent Inflation and Housing Costs

Kai Ryssdal opens the episode by addressing the ongoing challenge of inflation. The latest Consumer Price Index (CPI) report reveals a monthly increase of 0.5% and an annual rise of 3%, indicating that inflation remains stubbornly high. Ryssdal notes that energy, hotels, airfare, and especially shelter costs are significant contributors to this trend.

Key Insights:

• Shelter Costs Breakdown: The Labor Department includes both rents and lodging away from home in its shelter costs metric. While lodging expenses rose in January, rents themselves have shown signs of stabilization.

  “Rents have been really flat. And in some parts of the country, rents have even been falling,” explains Chen Zhao, Head of Economics Research at Redfin, at [02:08].

• Regional Variations in Rent Trends: Bill Adams, Chief Economist at Comerica Bank, highlights that new apartment constructions are easing rent pressures in the Sun Belt due to cheaper and faster homebuilding. Conversely, regions like the Northeast and coastal West face constrained apartment supply, potentially leading to future rent increases.

  “The supply of new apartments could start to dwindle,” warns Ben Ayres, Senior Economist at Nationwide, at [03:00].

• Future Outlook: The episode suggests that if the supply of new housing does not keep pace with demand, housing costs may intensify inflationary pressures.

2. Turbulence in Global Trade: Tariffs and Their Impact

Syreeta Jackson, President and CEO of the Global Research Institute of International Trade, joins the conversation to discuss the recent escalation in tariffs under the Trump administration. The imposition of a 25% tariff on steel and aluminum, coupled with additional tariffs on Chinese imports and threats against Canada, Mexico, Colombia, and others, has significantly disrupted global trade dynamics.

Key Points:

• Consultant Perspective: Chen Zhao describes the role of a trade consultant amid these changes as navigating a constant storm of regulatory shifts, often with less than 24 hours to respond.

  “We just need to adjust and figure out the best strategy with the resources that are available,” Zhao states at [06:13].

• Economic Consequences: The introduction of higher tariffs inevitably leads to increased costs for businesses, which are often passed on to consumers. Exporters face challenges as retaliatory tariffs from other nations make market expansion more difficult.

  “Prices will go up. The business owner will have to carry those costs,” Zhao remarks at [07:28].

• Long-term Trade Order: Zhao emphasizes the importance of international institutions like the World Trade Organization (WTO) in maintaining global trade stability. Despite the current protectionist trends, there is hope that these institutions can prevent the collapse of the international trade system.

  “There is this international institution that can continue to govern so that trade can continue and be beneficial,” Zhao concludes at [08:42].

3. The Rise of Digital Payment Networks

The episode shifts focus to the burgeoning use of digital payment platforms, highlighting Zelle's achievement of servicing over a trillion dollars in payments last year—the highest volume for any peer-to-peer (P2P) payment app.

Highlights:

• Adoption Rates: With nearly three-quarters of consumers using mobile payments and over 90% of those under 25 engaging with apps like Zelle, Venmo, and Cash App, digital payments are becoming ubiquitous.

  “We are now partnering with over 2,200 banks across the network,” states Denise Leonhard, Zelle’s General Manager, at [10:49].

• Convenience vs. Security Risks: While P2P apps offer unparalleled convenience, they also present risks such as irreversible transactions and susceptibility to fraud. Lisa Gill from Consumer Reports points out that users bear the responsibility for resolving issues, as the apps themselves offer limited federal oversight.

  “There's a lot of onus on the individual to sort out a problem,” Gill notes at [11:34].

• Regulatory Developments: The Consumer Financial Protection Bureau (CFPB) has extended its oversight to include payment apps, suing several large banks for inadequate fraud protection. However, Zelle disputes these suits, asserting robust safeguards.

  “They provide multiple backstops to avoid mistakes and scams,” Leonhard defends Zelle at [11:50].

4. Financial Influencers: Empowerment or Misinformation?

Isabella Kwai from The New York Times explores the phenomenon of financial influencers, or "finfluencers," who wield significant sway over public financial behavior through social media.

Discussion Points:

• Diverse Spectrum of Influencers: Finfluencers range from certified financial planners to celebrities partnering with financial products. Their accessibility and ability to simplify complex financial concepts make them popular, especially among underserved demographics.

  “Financial influencers can be really anyone who is online and sharing information about investing or personal finance,” Kwai explains at [13:00].

• Risks of Misinformation: The unregulated nature of social media means that not all finfluencers are qualified, leading to the spread of misleading or harmful advice. Instances of pump-and-dump schemes and the promotion of high-risk assets highlight the dangers.

  “There is potential for misinformation to spread,” Kwai warns at [13:58].

• Regulatory Challenges: Isabella discusses the difficulties regulators face due to jurisdictional issues, where influencers based in different countries complicate enforcement efforts.

  “Jurisdiction makes it difficult for regulators to pursue some people who are perhaps spreading misinformation,” Kwai adds at [15:48].

• Consumer Responsibility: The episode underscores the importance of due diligence when following finfluencers, as regulatory protections remain limited.

  “Caveat emptor on your finances,” Syreeta Jackson advises at [16:34].

5. Expansion of Live Concert Venues in Mid-Sized Cities

2023 marked a record high for concert ticket sales in North America, prompting promoters to explore growth opportunities in mid-sized American cities. Denise Leonhard from Colorado Public Radio reports on Venue, a Colorado-based company aiming to replicate the success of established venues like the Ford Amphitheater in underserved regions.

Key Insights:

• Economic Impact: New venues are pitched as drivers of millions in economic activity, often receiving tax incentives to support their establishment.

  “These outdoor amphitheaters can bring millions of dollars in economic activity,” explains Denise Leonhard at [23:34].

• Community Challenges: Despite economic benefits, new venues can lead to local resistance due to noise pollution. Residents near Colorado Springs' Ford Amphitheater have protested over decibel levels, prompting Venue to invest $3 million in sound mitigation measures.

  “Venues are expensive to build,” Leonhard notes at [23:39].

• Balancing Act: Venue’s CEO, J.W. Roth, emphasizes the reciprocal benefits—businesses thrive alongside the venue, fostering a symbiotic relationship with the community.

  “They want my business there and they want us there,” Roth states at [25:30].

• Future Prospects: With additional venues under construction in states like Oklahoma and Texas, Venue aims to balance high-end concert experiences with community-friendly operations.

6. BP’s Strategic Business Reset

As the episode's titular theme, BP's strategic pivot serves as a focal point for discussing how traditional oil and gas companies are adapting to a rapidly changing energy landscape.

Analysis:

• Profit Declines and Strategic Shifts: BP announces a fundamental reset of its business strategy in response to a more than one-third drop in profits in 2024. Contrary to expectations of a shift towards renewables, BP, along with Shell and Equinor, continues to focus on maximizing profitability through traditional oil and gas operations.

  “These companies are trying to make money, and they have been following the political winds,” Justin Ho explains at [19:48].

• Political Influence: The Trump administration's reversal on clean energy incentives and encouragement of oil and gas drilling have altered the strategic calculus for these companies. Christopher Knittle from MIT notes that favorable policies make continued investment in fossil fuels more attractive.

  “That's changed in Washington. The Trump administration is now encouraging more oil and gas drilling,” Ho states at [20:02].

• Market Conditions: High natural gas prices in Europe, driven by geopolitical tensions like the Russian invasion of Ukraine, sustain profitability for oil companies. This enduring demand ensures that companies remain focused on their core competencies in fossil fuel extraction.

  “Natural gas prices in Europe are still high since the Russian invasion of Ukraine,” Ho remarks at [20:30].

• Investment in Renewables: Despite lucrative returns from oil and gas, the transition to renewable energy requires significant policy support and public investment to overcome the inherent learning curves and achieve profitability.

  “It takes a long time for emerging technology to eventually become profitable,” Hugh Daigle from UT Austin points out at [21:04].

7. Market Movements and Corporate Developments

Towards the episode's conclusion, Ryssdal provides a brief overview of recent market activities and corporate news:

• Stock Market Performance: Dow Industrials fell by 225 points (0.5%), NASDAQ edged up by six points (<0.1%), and the S&P 500 decreased by 16 points (0.3%).

• DoorDash Expansion: DoorDash exceeded Q1 expectations and anticipates increased demand as it incorporates more grocery stores into its delivery network, resulting in a 4% share price increase.

• Chevron Layoffs: Chevron announced plans to lay off up to 20% of its workforce to cut costs by $2-3 billion by the end of 2026, leading to a 1.6% drop in its stock price.

8. Closing Remarks

The episode wraps up with a reminder of the Federal Reserve's stance on interest rates, reinforced by recent inflation data. Chair Powell emphasized the intention to maintain restrictive policies, signaling no imminent rate cuts. Additionally, Ryssdal promotes the Marketplace newsletter and hints at upcoming content, maintaining engagement with the audience.

Conclusion

This episode of Marketplace offers a comprehensive exploration of critical economic issues shaping 2025. From the resilience of inflation and the complexities of global trade to the transformative impact of digital payments and the strategic maneuvers of oil giants like BP, Ryssdal ensures listeners are well-informed. Expert interviews and real-world examples enrich the narrative, making complex topics accessible and relevant for a broad audience.