{"id":2642,"date":"2026-04-29T05:56:09","date_gmt":"2026-04-29T09:56:09","guid":{"rendered":"https:\/\/alexandrakitty.com\/?p=2642"},"modified":"2026-04-29T06:14:19","modified_gmt":"2026-04-29T10:14:19","slug":"the-alibi-economy","status":"publish","type":"post","link":"https:\/\/alexandrakitty.com\/index.php\/2026\/04\/29\/the-alibi-economy\/","title":{"rendered":"The Alibi Economy"},"content":{"rendered":"\n

How Industries Use Crisis as a Profit Engine: An AK Dossier<\/strong><\/h2>\n\n\n\n
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Executive Summary<\/h2>\n\n\n\n

Every major disruption of the past six years, pandemic, war, supply chain chaos, rate hikes, climate shocks, has come pre-packaged with a corporate alibi:\u00a0We had no choice. Costs went up. The world is unpredictable.<\/em>\u00a0Meanwhile, the profit data tells a different story. In Canada alone, pre-tax corporate profits hit $644 billion in 2023, a\u00a054% increase<\/strong>\u00a0over 2019’s pre-pandemic baseline, with profit margins remaining above their pre-pandemic average in\u00a018 of the 21 largest non-financial industries<\/strong>. In the United States, corporate profits reached $4 trillion by Q4 2024, 2.3 times their pre-pandemic level. The pattern is not random, and it is not new. It is a playbook: manufacture or inherit a crisis narrative, deploy it as consumer permission to raise prices, and pocket the gap between what costs actually rose and what prices were charged.<\/p>\n\n\n\n

This dossier calls the playbook what it is:\u00a0The Alibi Economy<\/strong>, a system where every crisis becomes a pre-written excuse, every hardship headline becomes a margin opportunity, and ordinary people pay the difference.<\/p>\n\n\n\n

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The Pattern: What the Alibi Economy Looks Like<\/h2>\n\n\n\n

The mechanism is consistent across industries:<\/p>\n\n\n\n

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  1. A genuine shock occurs<\/strong>: war, pandemic, supply disruption, rate change.<\/li>\n\n\n\n
  2. Companies publicly emphasize cost pressures<\/strong>, using earnings calls, trade association statements, and media coverage.<\/li>\n\n\n\n
  3. Prices are raised: often well above the actual increase in input costs.<\/strong><\/li>\n\n\n\n
  4. When input costs later fall or stabilize, prices do not follow.<\/strong><\/li>\n\n\n\n
  5. Profits expand, margin ratchets upward<\/strong>, and the shock becomes the permanent new baseline.<\/li>\n<\/ol>\n\n\n\n

    Research from the University of Massachusetts Amherst traced price hikes at multiple companies directly to executives’ public statements indicating that the pandemic, Russian invasion of Ukraine, and supply logjams gave them “headroom to raise prices without significant backlash from consumers”. Corporate profits drove 53% of inflation<\/strong> during the second and third quarters of 2023, compared to just 11%<\/strong> of price growth in the four decades prior to the pandemic.<\/p>\n\n\n\n

    The term greedflation<\/strong> exists and is used by economists, but it does not fully capture the systemic, cross-industry, alibi-dependent nature of what is happening. Greedflation describes the outcome; the Alibi Economy describes the method<\/em>.<\/p>\n\n\n\n

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    The Sectors: Industry-by-Industry File<\/h2>\n\n\n\n

    Oil & Gas: The Original Alibi Artist<\/h2>\n\n\n\n
    Metric<\/th>Data<\/th><\/tr><\/thead>
    BP Q1 2026 profit<\/td>$3.2 billion (\u00a32.4 billion)<\/td><\/tr>
    BP Q1 2025 profit (same period)<\/td>$1.38 billion<\/td><\/tr>
    Year-on-year increase<\/td>More than doubled (+132%)<\/a><\/a><\/td><\/tr>
    Analyst beat<\/td>20% above consensus forecast of $2.63 billion<\/td><\/tr>
    Canadian oil & gas pre-pandemic margin<\/td>-5.4% average<\/a><\/td><\/tr>
    Canadian oil & gas 2023 margin<\/td>17.6%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    BP’s Q1 2026 results, its first financial report since the outbreak of hostilities in Iran, attributed the surge to “exceptional” oil trading activity and midstream operations. In plain terms: BP’s trading arm profited from the volatility itself, not just from higher prices being passed on. The company is simultaneously exporting roughly 100,000 barrels per day through the nearly-closed Strait of Hormuz while publicly framing the conflict as a supply threat. (Please see this article<\/a>).<\/p>\n\n\n\n

    The alibi is structurally embedded. Every geopolitical disruption in or near an oil-producing region triggers a narrative of “supply uncertainty,” which drives up spot prices, which widens refining margins, which inflates trading profits, all while consumers pay more at the pump and for everything transported by fuel. Oil and gas in Canada went from negative average margins before the pandemic to 17.6% in 2023, a swing that no cost-pass-through story can fully explain.<\/p>\n\n\n\n

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    Grocery Retail: “We Only Make $1 on a $25 Basket”<\/h2>\n\n\n\n

    The grocery industry’s alibi is perhaps the most brazen because it was delivered directly to Parliament. Loblaw’s CEO testified under oath that the company makes only “a $1 profit on a $25 basket of groceries”, roughly a 4% margin, framing this as evidence of restraint. That framing conveniently ignores that 4% on billions of dollars in revenue is enormous, that the margin had\u00a0doubled from pre-pandemic levels<\/strong>, and that profits remained at historic highs even as inflation slowed.<\/a><\/p>\n\n\n\n

    Canadian Grocer<\/th>Narrative<\/th>Reality<\/th><\/tr><\/thead>
    Loblaw<\/td>“Supply costs rose, we passed them on”<\/td>Net margin doubled from ~2% to ~4.1%; quarterly earnings up ~40% in some periods<\/td><\/tr>
    Sobeys \/ Empire<\/td>“Labour and logistics pressures”<\/td>Profits at historic highs, above pre-pandemic average<\/a><\/td><\/tr>
    Metro<\/td>“Global food inflation”<\/td>Same margin expansion pattern as peers<\/a><\/td><\/tr>
    Walmart Canada<\/td>“Input cost volatility”<\/td>Record global profits throughout the period<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    From 2021 to October 2024, rent prices in Canada increased 21.6%, but so did grocery profit margins. The major chains insist they only passed along unavoidable costs, yet analysis of their sustained margins long after input costs retreated proves that at minimum, the cuts did not follow. In Canada, petroleum refining profits rose over\u00a01,000% since 2019<\/strong>, while food manufacturing and grocery retailers both posted extraordinary margin expansions.<\/p>\n\n\n\n

    The alibi runs like clockwork: supply shock (COVID, war, weather) \u2192 price hike \u2192 public statement about “headwinds” \u2192 margin holds even when shock fades \u2192 repeat.<\/p>\n\n\n\n

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    Banking: Profiting From the Very Crisis They Diagnose<\/h2>\n\n\n\n

    Banks occupy a unique position in the Alibi Economy: they are simultaneously positioned as commentators<\/em> on economic hardship and beneficiaries<\/em> of it.<\/p>\n\n\n\n

    Bank<\/th>2021 Profits<\/th><\/tr><\/thead>
    Royal Bank of Canada (RBC)<\/td>$16.1 billion<\/a><\/td><\/tr>
    TD Bank<\/td>$14.2 billion<\/a><\/td><\/tr>
    Scotiabank<\/td>$9.95 billion<\/a><\/td><\/tr>
    BMO<\/td>$7.7 billion<\/a><\/td><\/tr>
    CIBC<\/td>$6.4 billion<\/a><\/td><\/tr>
    National Bank<\/td>$3.1 billion<\/a><\/td><\/tr>
    Big Six Combined<\/strong><\/td>$57.4 billion<\/strong>, a record at the time<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    During the inflationary period, banks offered depositors interest rates as low as 0.01% on savings accounts while charging borrowers at rates tied to aggressive central bank hikes \u2014 a spread not seen in the previous half-century. JPMorgan, Bank of America, and Wells Fargo publicly advertised savings rates as low as 0.01% while inflation ran at 9.1%. Banks told shareholders that “deposit betas”, how quickly they pass rate increases to savers, would remain “advantageous” for quarters ahead.<\/a><\/p>\n\n\n\n

    The alibi: “Inflation is a global force. Interest rate uncertainty is our challenge.” The reality: inflation and rate hikes simultaneously widen the gap between what banks pay depositors and what they charge borrowers, creating what the IMF<\/em> identifies as “gross exposures” that most banks hedge in their favour. Canada’s Big Six used record profits not to reduce fees or increase rates for savers, but to pay out $18.8 billion in bonuses<\/strong> at year-end 2021.<\/p>\n\n\n\n

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    Airlines: “Headwinds” All the Way to the Record Books<\/h2>\n\n\n\n

    The airline industry has perhaps the most sophisticated alibi infrastructure of any sector, operating through a permanent trade body, the International Air Transport Association (IATA), that regularly issues alarming cost reports which function, in practice, as pre-emptive justification for fare increases.<\/p>\n\n\n\n

    In 2025, IATA published a joint study with Oliver Wyman calculating that supply chain disruptions would cost airlines $11 billion in extra costs<\/strong>. The media dutifully reported this figure. What received less attention:<\/p>\n\n\n\n