Marketplace Podcast Summary: “What’s Next for BP?”
Hosted by Kai Ryssdal | Release Date: February 13, 2025

Introduction

In the February 13, 2025 episode of Marketplace, host Kai Ryssdal delves into the multifaceted economic landscape shaping today's business environment. The episode, titled “What’s Next for BP?”, navigates through pressing topics such as persistent inflation, shifting global trade dynamics, the rise of digital payment networks, the influence of social media financial gurus, strategic pivots in the oil industry, and evolving trends in the live music sector.

Inflation and Shelter Costs

Kai opens the discussion by addressing the latest inflation data released on February 12th. The Consumer Price Index (CPI) rose by 0.5% month-over-month and 3% year-over-year, signaling that inflation remains stubbornly high (01:11). Key contributors include energy, hotels, airfare, and notably, shelter costs, which accounted for nearly a third of the monthly increase.

Chen Zhao, head of economics research at Redfin, explains, “The Labor Department's definition of shelter costs includes rents and lodging away from home,” clarifying that while hotel costs have surged, rental prices have stabilized. Denise Leonhard adds, “For the last two and a half years, rents have been really flat, and in some parts of the country, rents have even been falling” (02:49).

The episode highlights that an influx of new apartment constructions, particularly in the Sun Belt, has alleviated some rental pressures. Bill Adams from Comerica Bank notes, “There are a lot of newly built apartments that are finally coming online” (02:58). However, high financing costs and constrained construction pipelines in regions like the Northeast may reignite rent inflation (03:41).

US Tariffs and Global Trade

Shifting focus to international trade, Kai discusses the impact of recent Trump administration tariffs on steel, aluminum, and a broad range of Chinese imports. These tariffs, coupled with threats against Canada, Mexico, Colombia, and retaliatory measures from allies, have created a turbulent trade environment (04:12).

Syretta Jackson, President and CEO of the Global Research Institute of International Trade, shares insights on navigating these challenges. She emphasizes that businesses are adapting by exploring alternative manufacturing locations, such as Mexico, to mitigate tariff impacts. “Prices will go up, the business owner will have to carry those costs, and some of those costs will be passed on to the consumer” (07:11).

Jackson also underscores the critical role of international institutions like the World Trade Organization (WTO) in sustaining global trade norms amidst rising protectionism. “We are going through a unique period with shifts, but the WTO can continue to govern so that trade remains beneficial” (09:26).

Rise of Digital Payment Networks

The podcast explores the exponential growth of peer-to-peer (P2P) payment apps. Zelle reported servicing $1 trillion in payments last year, marking a significant milestone (10:33). Denise Leonhard discusses the transformation of financial transactions, noting, “They're being used peer to landlord” (11:07).

However, the surge in digital payments brings concerns. Lisa Gill from Consumer Reports warns, “The quick, irreversible nature of these apps makes it easier to send money to the wrong person or fall prey to scammers” (12:17). Regulatory challenges persist, as these platforms are not traditional banks and offer limited fraud protection, despite recent oversight efforts by the Consumer Financial Protection Bureau (12:35).

The Influence of Financial Influencers

Social media's pervasive influence extends into the financial realm, with financial influencers—or “finfluencers”—shaping investment and personal finance decisions. Isabella Kwai from The New York Times discusses the dual-edged nature of these influencers, who range from certified financial planners to unverified personalities potentially spreading misinformation (13:43).

Isabella emphasizes the risks associated with finfluencers: “There is potential for misinformation to spread… it can be really hard for the everyday investor to discern useful advice from harmful” (14:27). The conversation highlights the necessity for consumers to exercise caution and perform due diligence when following financial advice online (16:12).

BP and the Oil Industry's Strategic Shift

A focal point of the episode is the strategic pivot within the oil industry, particularly BP's announcement to fundamentally reset its business strategy amid declining profits (21:04). Contrary to expectations that BP might pivot toward renewables, the company, along with Shell and Equinor, is doubling down on oil and natural gas production.

Severin Borenstein from UC Berkeley explains, “A few years ago, the political winds were clearly favoring renewables, but now, with the Trump administration encouraging more oil and gas drilling, the calculus has changed” (21:49). The sustained high prices of oil and natural gas, exacerbated by the Russian invasion of Ukraine, have made traditional fossil fuel investments highly profitable.

Christopher Knittle from MIT adds, “Natural gas prices in Europe are still high, and oil prices have stayed pretty high,” reinforcing why oil companies are focusing on their core competencies to maximize shareholder wealth (22:33).

Hugh Daigle at UT Austin points out the importance of policy and public investment in enabling successful transitions to emerging technologies. “Policy and public investment matter when you look at the history of emerging technologies… it takes a long time for it to become profitable” (23:07).

Concert Industry's Expansion into Mid-sized Cities

The live music sector is experiencing substantial growth, with North American concert ticket sales reaching an all-time high in 2023. Companies like Venue are targeting mid-sized cities by developing boutique amphitheaters, aiming to replicate the success of Denver’s Red Rocks with new venues in Colorado Springs and beyond (23:54).

However, this expansion is not without challenges. Local residents have raised concerns about noise pollution, as exemplified by Cherie Hutchison's testimony, “We had to cut our evening short as the band was screaming profanities… at over 70 decibels” (26:31). In response, Venue plans to invest $3 million in sound mitigation measures to address community grievances (27:06).

Dean Budnick, a concert industry writer, notes, “This is pretty common with new event spaces; it can take some time to calibrate the sound levels” (25:46). Despite initial resistance, Venue's CEO J.W. Roth remains optimistic, citing economic benefits and new business establishments like hotels and restaurants as compensatory factors (27:37).

Federal Reserve's Interest Rate Policy

Concluding the episode, Kai touches upon the Federal Reserve's stance on interest rates. Amidst ongoing inflation concerns, the Fed signals there are no imminent rate cuts. Chair Powell reaffirmed, “We want to keep policy restrictive for now” during a Capitol Hill hearing, indicating a continued focus on controlling inflation (28:19).

Conclusion

The episode weaves together diverse economic narratives, providing listeners with a comprehensive overview of current trends and strategic shifts across various industries. From the resilience of inflation factors and global trade tensions to the transformative impacts of digital finance and strategic realignments within the oil sector, Marketplace offers valuable insights into the evolving business landscape.

Notable Quotes:

• Chen Zhao (02:27): “The Labor Department's definition of shelter costs includes rents, but it also includes what it calls lodging away from home.”

• Denise Leonhard (02:49): “For the last two and a half years, rents have been really flat, and in some parts of the country, rents have even been falling.”

• Syretta Jackson (07:11): “Prices will go up, the business owner will have to carry those costs, and some of those costs will be passed on to the consumer.”

• Lisa Gill (12:17): “The quick, irreversible nature of these apps makes it easier to send money to the wrong person or fall prey to scammers.”

• Isabella Kwai (14:27): “There is potential for misinformation to spread… it can be really hard for the everyday investor to discern useful advice from harmful.”

• Severin Borenstein (21:49): “The political winds were clearly favoring renewables, but now, with the Trump administration encouraging more oil and gas drilling, the calculus has changed.”

• Hugh Daigle (23:07): “Policy and public investment matter when you look at the history of emerging technologies… it takes a long time for it to become profitable.”

• Cherie Hutchison (26:31): “We had to cut our evening short as the band was screaming profanities… at over 70 decibels.”

• Chair Powell (28:19): “We want to keep policy restrictive for now.”

This detailed summary encapsulates the key discussions and insights from the episode, enriched with timestamped quotes and attributed speakers, providing a clear and comprehensive overview for those who haven't listened to the podcast.