Marketplace - High oil prices, big oil profits

Episode Date: August 3, 2026

Permian Basin oil companies are reporting strong quarterly earnings, as the Iran war keeps prices up and supply restricted. West Texas, formerly in a slump, has seen an uptick in hiring and new rigs. But oil companies are moving cautiously — they want to avoid a bust after the boom. Also in this episode, more caution: Small businesses carefully weigh workforce expansion, the U.S. invests billions to prop up the Japanese yen, and a Colorado peach farmer preps for a water shortage.Every story has an economic angle. Want some in your inbox? Subscribe to our daily or weekly newsletter.Marketplace is more than a radio show. Check out our original reporting and financial literacy content at marketplace.org — and consider making an investment in our future.Read the stories in today’s episode:Why did the U.S. just spend billions to prop up the Japanese yen?What the bond market is trying to tell usHow small- and medium-sized firms are navigating this labor market momentBecoming a freelance court reporter helped this mom find herselfHigh oil prices lift all boats in the Permian Basin, but companies remain cautiousPeaches pay the bills for Western Colorado farmers, but drought makes their future uncertain

Go to the grocery store, check, wash the dog, yep. Intervene in global currency markets. Done, done and done. From American public media. This is Marketplace. In Los Angeles, I'm Kai Risdahl Monday. Today, August the third, good as always to have you along, everybody. So, you know that thing where you've got a bunch of stuff you've got to get done?

So you make yourself a quick to-do list? Turns out Treasury Secretary Scott Bessent is like that, too. a Reuters photographer grabbed the picture of the scratch pad in front of Bessent at a cabinet meeting last Friday to do, it said, right across the top, and then underneath, buy Japanese yen

$5 to $10 billion. That's true. It actually happened, as did the United States and Japan working together over the weekend to prop up the value of the Japanese currency and they hope stop a slide in the yen that started

back in early May. Now, you may well, be wondering, why would the Treasury Secretary have buying Japanese yen on his to-do list? Well, this is where I tell you that in this interconnected world of ours, what happens in Japan does not stay in Japan. Marketplace's Nova Saffo gets us going. The U.S. and Japan said that they took their joint action because they're friends. And as we know, that's what friends do. They help each other out. But that's not exactly the whole story. Japan has been a large buyer of U.S. government bonds.

Ishwar Prasad is Senior Professor of Trade Policy at Cornell University. In fact, Japan holds the most U.S. bonds of any foreign nation, more than a trillion dollars worth. Japan is getting rid of its U.S. treasuries. In other words, it's selling dollars and buying yen in order to stabilize its own currency. Japan has spent tens of billions of dollars to do so. It needs to, says Catherine Dominguez, professor of economics and public policy at the University of Michigan. They are a large importer of a lot of goods, most importantly oil.

And oil prices are already up because of the Iran war. But Japan's selling U.S. bonds is not great for the U.S. because it lowers bond prices and raises yields. translation, higher interest rates for you and me. The U.S. buying yen alongside Japan sends a signal to markets, says Lee Hardman, a senior currency economist at the Japanese bank, MUFG. Given how important the U.S. is in the world and in terms of financial markets, that definitely helps to support the yen. The U.S. is also considering expanding a lending tool so Japan can borrow against its bond holdings, not sell them. It was obviously put forward by the U.S. tried to ease the risk of further selling in the U.S. Treasury markets.

There's another reason to keep the dollar from getting too strong against Japan's yen. Trade, says Catherine Dominguez of the University of Michigan. If the dollar strengthens, that hurts our exports on world markets and makes imports more attractive. Because exports would be more expensive overseas and imports will be cheaper. and imports will be cheaper here at home. Exactly the opposite of what the Trump administration is trying to achieve with its tariff policies. I'm Nova Saffo for Marketplace. Wall Street today, well, there's peace in the Middle East, I guess.

Don't take my word for it. Look at the markets. We'll have the details when we do the numbers. New week, new month, not a bad time to step back and do a... So, where are we right now, check-in? Nicole Servi is going to help us with that. She's an economist at Wells Fargo. Nicole, great to have you back on the program. Thanks for having me.

Let's do a little level set here, shall we? Before we get into the comings and goings of this economy, what's your broad sense right now of how things are going? I think things are going okay. It depends on which release and which way the wind is blowing on how I'm feeling. But in general, from an aggregate view, growth is holding up. The labor market looks stable. And it seems like, things are tregging along. All right, labor market in a minute, but let's disaggregate here for a second. And I want to talk to you about the thing we talked about last time we had you on, the bond market. The reference here, of course, is Chairman Warsh's press conference of last Wednesday.

He tried to talk to talk. The bond market was not buying it. How worried are you about how the market is receiving the chairman? Yeah, so to your point, you did see an interesting reaction in the bond market, one of our interest rate strategists over here called it a twist in the yield curve where you had your short-term rates come down and then your long-term rates rise. And I think what's going on there is you saw the market pricing out those expectations for the Fed to hike by the end of the year and then pricing in basically higher inflation over a long time horizon. So that is basically the market kind of telling us that they are not expecting the Fed to deliver on their inflation mandate, i.e. getting inflation back down to 2% anytime soon. And so that does make me a little bit

worried. There were some remarks that Kevin Warsh made during his press conference where he said, you know, rates have actually risen. And so what he was implying was that the bond market was doing some of the work for the Fed. I think some of the problems with that and what was evident in the reaction to last week's meeting is that the financial market is probably in bond markets in particular, they're only going to do the work for you if they think that you're going to achieve your 2% inflation target after all. They are worried a little bit about the Fed's credibility at this point in time. So let's go there for a second. And this is ground well trod, but Chairman Warsh is steadfast in his refusal to explain to the markets and to, you know, broader

American to pay attention to this stuff, which is you and me and probably like, you know, business journalists and economists. But but he will not, he says we're going to get inflation down. he will not say how he does it. What do you, is that a problem? I think it's a problem in the sense that if you just think about heading into this chairmanship for Kevin Warsh, it's like he's taking the floaties off. We've had this period of forward guidance for a very long time coming out of the financial crisis where the Fed would signal their intentions and how they would get there.

And we're taking off a floaties in the sense of we're not telling markets how we're getting there. And I think that is just hard. That is going to be a hard adjustment. The avenues that he's kind of, let's say, hinted to in terms of stronger productivity growth or outright raising the federal funds rate, those are both credible. It's just I think the market right now is struggling with the fact that we don't know which way the committee is going to lean. This is a perhaps inappropriate way to put this, but is he basically telling everybody to cowboy up? I think so. And I think the reason being, and this, if you look back over history, is this period of forward guidance or the structure that the Fed has had is actually pretty short in the Fed's long tenure.

But I do think that it's coming just off a period. It is a regime change in how markets interpret what the Fed is going to do. And so I think explicitly, yes, that is what the chairman is trying to say. And so it's going to be bumpy, right? Yes. Okay. Labor market. Jobs come on Friday.

Low hire, low fire. we've all heard a zillion different ways to describe this economy. What is your sense of the labor market right now? And what are you thinking about for Friday? Yeah. So if you look at how job growth has averaged over the first half of the year, it's been about 95,000 jobs added per month. And so we expect that in July we'll add somewhere around that. And we think that that's just enough to keep your unemployment rate steady at 4.2%. So again, not much indication in some of your higher frequency alternative data that show us that hiring is meaningfully picking up, but it's also not showing us the layoffs are broadening out either. And so we're stuck in this low, higher,

low fire environment for the foreseeable future. It is interesting to me that for a while, sort of late in Powell's tenure, there was all that tension between, who should we think more about inflation, we should think more about the labor market. And the labor market does kind of seem to have fallen out of the discussion. I agree. And I think some of that comes down to the positioning that Kevin Warsh put out during his very first FOMC meeting. And the statement, I don't think there was any mention of the labor market. And when you got the question about it, he kind of leaned into this idea of the divine coincidence where if you have inflation under control, then that means that the labor market and growth and your other factors of the economy will be steady. I believe that is the framework that Warsh is coming from is if we get inflation under control, all the rest will fall in line. Fingers crossed. Fingers crossed. Nicole, Servia at Wells Fargo. Nicole, thanks a lot. I appreciate your time. Thanks for having me.

Nicole and I talk about jobs a little bit right at the end there. Well, it turns out this is a big week for data about the American labor market. Joltz comes tomorrow. That's job openings. ADP's private payrolls report comes on Wednesday. Then first time claims for unemployment benefits on Thursday. Then, as I said, the July unemployment report on Friday. June, if you remember back that far, was kind of middling. just 57,000 new jobs created, not enough to get excited about really, but probably enough to keep

the unemployment rate steady. Now, data is one thing, what it's going to mean for the Fed is another, but the reality is that headlines and press conferences don't matter near as much as what people and businesses are feeling in their day-to-day. So Marketplace's Mitchell Hartman made some calls. After years of managing other people's manufacturing operations in Chicago, Jim Piper took a leap in April and bought his own. Worldwide Broach does precision metal cutting for industries like hydraulics and auto manufacturing. He's got six full-time employees, most of them skilled tradespeople who'd been with the previous owner for decades. It's something that's difficult to automate away or outsource overnight. He's confident he can build the business up. Demand is reasonably strong.

We have capacity in the shop that's underutilized. I just need the next order and perhaps another employer too. In Austin, Texas, restaurant owner Adam Orman has been having a rough time of it. Summer in Austin is slow. We've been doing a pay-what-you-will night since December and expanded that, and it definitely keeps us busy enough on Tuesday, Wednesday, and Thursday that we have a reason to have employees. Ormond co-owns two restaurants, Locadoro and Bambino, and has about 60 employees. And when staff turns over in the summer, we don't necessarily have to replace employees. When we have posted, we'll get 30 to 40 inquiries in the first couple of hours. In Stevensville, Maryland, Barton O'Brien's pet gear business, called Bay Dog, has seen demand slacken in the past year as cash-strapped consumers cut discretionary spending.

At pet stores, that means toys and accessories. At the end of the day, nobody needs a $70 dog life jacket. Still, O'Brien says the business is young. He's introducing new products. I actually just hired a new salesperson within the last couple of weeks. To help double down on the company's latest product launch, a harness and leash for cats. Cat is the fastest growing category within pet. And the fastest growing demographic of cat owners is Gen Z men, a promising target for Bay Dog's growth.

I'm Mitchell Hartman for Marketplace. You know that feeling when you're putting leftovers away and none of the containers you have match the lids that you can find? The job market is kind of like that sometimes. It's a matching problem, which makes finding the right match all the better. Here's today's installment of our series, My Economy. My name is Catherine Gordon. I am a remote freelance court reporter, and I live in Spokane, Washington.

So for those who don't know, a court reporter is the person either in the courtroom or remotely over Zoom sometimes in legal proceedings, who is in charge of the legal transcript and the production and safekeeping of that transcript. Back up. I've been a stay-at-home mom for about four and a half years. I wanted to help contribute to my family financially because even though my husband works full-time and he has a good salary, we still felt that crunch, that financial crunch, you know, and I just wanted to find a way to contribute, but I still wanted to make raising my kids a priority right now. So I needed to find something flexible.

When I started school for court reporting, I was six months pregnant. The program I did was online and self-paced. I was just like, I've got three months. I'm going to get through as much as I can. So from the time I started to the time I got certified was 11 months. Most people, when they think of court reporting, they think of the stenograph machine, which is the little typing machine, and they type really fast,

and they kind of have their own little steno language. Voice writing, instead of typing on a little machine, we have a little handheld mask that we put up. to our mouth, it is feeding what we say into our transcription software. So instead of typing out, everything that's being said, we're essentially using a combination of English and code words, or we call them code briefs, to keep up with everything that is being said. One that I use a lot is state rec, so that would stand for state your name for the record, which they almost always ask in a deposition. So that just cuts down on the amount of syllables that you're saying. Or for instance, if I was in a

trial, I would say leggy for ladies and gentlemen of the jury. I will get paid an hourly rate for actively being on the record. And then on top of that, I will get paid a certain rate per page of the transcript. And then on top of that, you will get paid extra if there's an interpreter, an expert witness, a videographer. I calculated it recently, and I'm averaging around $70 to $90 an hour. So the money is great. To do something that I've really just done all on my own, I'm doing it on my own as a freelancer. I did it when I was pregnant. I finished a program with two very small kids being the primary caregiver.

It's just kind of unlocked this, this sounds cheesy, but this new woman who's capable of things that I previously never thought that I was capable of. For me, as a mom, that is truly priceless. I'm kind of cool, too, actually. and freelance court reporter, Spokane, Washington. Take a second, would you? Tell us about your job or maybe your hunt to find one. I don't want a man for you. Marketplace.org is where you can do that.

Coming up. Appearance sells the first peach. Flavor sells the second peach. It's the third one that's the real test. First, though, let's do the numbers. Yeah, here you go. Down Dustra's up, 693. 1.3% closed at 53,178.

The NASDAQ advanced 540 points, 2.1%. 25,913. The S&P 500 up 110 points. 1.5%, 7600 on the nose. Tech stocks led the way. Amazon up 4.5%. Meta gained 6%. NVIDIA found close to 3% in the couch cushions.

Economic activity in manufacturing is spanned it in July. That's seven months in row. That's from the ISM, the Institute for Supply. Management. Industries reporting growth in July, apparelant leather goods, transportation, and computer and electronic products. Bonds up, yield on the 10-year Tino down 4.68%. You're listening to Marketplace. This is Marketplace. I'm Kai Risdahl. Big oil reported quarterly profits last week, tens and tens of billions of dollars in the past three. Count them three months, 90 days. That's for Exxon Mobil and Chevron and the like. And I'm reasonably certain we all know why. As has

happens when oil prices go up as they have been. Oil producers are incentivized to pump more crude out of the ground, which they have been doing in spades in the Permian Basin. Marketplace's Elizabeth Troval has more on how oil companies big and small are faring in West Texas and New Mexico. Regardless if you're a Permian-only operator like Diamondback Energy or a big international major like Chevron, there's one price lifting all boats out there. Andy O'Connor is with Morningstar DBRS. The West Texas Intermediate, or WATI Crudell spot price, averaged about $95.75 a barrel in the second quarter,

almost a $24 a barrel increase from the average in the first quarter. Employment and new oil rigs in the Permian Basin and other parts of Texas had been on the decline. But higher oil prices due to the war have reversed that trend, according to Carr Ingham, with the Texas Alliance of Energy producers. We'll see how long it lasts, but that's an extraordinary story in 2026, as a rig count in Texas and in the Permian, ceasing to decline, and not only flattening out, but turning north and going up pretty strongly in recent ones. And that drilling could boost production, somewhat, Ingram says.

You're not getting another million barrels a day out of the Permian or out of Texas in the near term. You might get a few hundred thousand barrels. a day over the course of a few months. Activity in the Permian Basin can only grow so much. That's because publicly traded companies are cautious. Stephen Cunningham

covers corporate energy for Argus Media. We're not seeing them picking up our rigs dramatically. That comes from a lesson the companies learned the hard way coming out of the pandemic when oil prices tanked. They're desperate to avoid a return to the boom-bust cycles of the bad old

days in the last decade. Capital discipline is key. Texas Christian universities, Tom Seng. The investors don't want to hear that they're increasing their drilling CAPEX tremendously in a pricing environment that's ridiculously volatile. Even if the war in the Middle East is dragging on longer than expected, prices are too volatile for making too many long-term investments. I'm Elizabeth Troval for Marketplace. Okay, random agricultural trivia time. fruit division. Georgia is the peach state. That's its official motto. We all know that.

The peach state, however, is number three on the list of most peach producing states. California is number one going away. South Carolina is number two. Then Georgia, Pennsylvania, and coming in fifth in the most recent data that we have, Colorado. But farming is tougher than usual in the American Southwest this year. The snowpack in the Rockies and a really fast spring melt mean western Colorado's peach growers are having to get by with less water. And even one epically dry

year can have long lasting effects. Rocky Mountain Community Radio's Carolineianas has more. Bruce Talbot is walking through his orchard, discarding peaches he doesn't think will sell. See, they'll pick both of those. Because you're, that color, orange

color, that's what they're looking for. Appearance sells the first peach, flavor sells the second. peach. So, but it doesn't taste good, they're not getting another one. His family has operated Talbot Farms for more than a century, and they're one of Colorado's largest peach growers. We have 200,000 trees-ish. I need to plant 5,000 trees a year. But this has been an extraordinarily challenging year for Western fruit growers. There was virtually no snowpack in the headwaters of the Colorado River, and what little snow there was melted off fast.

after record high temperatures. So Talbot started picking peaches a month earlier than usual. We've had some really tight years. 77 was tight, 2002 was tight, where it was nip and tuck on whether we would finish the season or not. Right now, there's not water to do that. And that'll have impacts well beyond this season. Peach trees take a long time to grow. Talbot usually waits until a tree's been in the ground for four years to harvest fruit. But this, This drought makes it hard to plan. I've already made my decisions for 27. I've made some decisions for 28 already. I can't turn on a dime.

In the past, farmers like Talbot haven't worried as much about water conservation because there was enough to go around. But now it's a bigger concern, because demand for water is rising. David Sterly, a research scientist at Colorado State University, who studies tree fruit, estimates that it takes about three feet of water per acre to grow peaches, or just under a million gallons. So they are barely water intensive, especially compared to the amount of precipitation that we tend to get here, which I think on average is about nine inches a year, and lately it's been about five or less. But he says most farmers think peaches are worth the water.

The way I try to think of that is basically if you're trying to calculate per gallon of water used, How much money can you make off of it? I think peaches are pretty high on that list. He says peaches can bring in anywhere from $10,000 to $35,000 per acre. That's more than you can make with forage crops like alfalfa, commonly grown in the Colorado River Basin. As Talbot puts it, peaches pay the bills. It's why he's willing to go to such great lengths to make sure his orchards survive this drought. We will probably be putting water in tanks, to be municipal water, and dig a basin around.

each plant and we're going like you would house plants and keeping them alive, if it all possible. In the longer term, Talbot knows that in the Colorado River basin, there will be less water to go around for agriculture as the climate continues to get hotter and drier. He's hoping his high-value peaches can withstand that seismic change, but the uncertainty around water supplies makes that much more challenging. This industry can absorb a higher cost of water than a lot of your other crops can. As long as it's there. If it's just not there, then this has to go away as well. Hope we never go that far. In the meantime, Talbot is hoping for monsoon rains to get him to the end of the peach harvest, but he's not holding his breath. In Colorado,

I'm Caroline Yanez for Marketplace. This final note on the way out today in which cause and effect lose their meaning. Elizabeth Troval was telling us earlier about high oil and gas prices because of the President's war on Iran and how that's affecting A, crude production in the Permian Basin, and B, oil company profits? Well, the president was asked in the Oval Office today about those profits, he said, and this is a quote, they are making too much money. Oh. Amir Babawi, Caitlin Ash, John Gordon-Noyekar, Steve Mollis, and Stephanie Seek are the marketplace editing staff. Kelly Silvera is the news director. And I'm Kai Risdahl. We will see you tomorrow, everybody.

This is APN. How many subscriptions are you paying for right now? From entertainment and storage to software and clothes, more and more of our lives now come with a monthly price tag. I'm Rie Maechre's host of Marketplaces podcast. This is Uncomfortable. And this week we look at how subscriptions took over, why they're so hard to quit,

and my companies keep finding new things to charge us for. I am very ready to change my name to Lance Plus. You want to talk to me, you'll pay a little bit extra. I'll have hair. It'll be wonderful. Be sure to listen to This Is Uncomfortable on your favorite podcast app.