Breaking: Egg Industry Colluded To Raise Egg Prices, Jury Finds
Plus: The story behind Big Oil's investments in clean energy investments.
Our full story on Big Oil is below, but first some breaking news.
An Illinois jury found today that America's largest egg producers and industry groups illegally rigged the market to drive up the price of eggs.
Their price-fixing scheme included exporting millions of eggs overseas to be sold at a loss to drive up U.S. prices around Thanksgiving and Easter.
More details from Law360 (paywall):
After about 10 hours of deliberation, the jury found that egg producers Cal-Maine Foods and Rose Acre Farms, trade group United Egg Producers and exporting cooperative United States Egg Marketers unlawfully rigged the egg market by coordinating measures including early hen slaughters, exports, cage space increases and bans on cage backfilling, which involved replacing ill or dead laying hens with new ones.
The verdict tees the parties up for a second trial phase, slated for the Wednesday and Thursday after Thanksgiving, during which the same jury will determine how much to award in damages to Kraft, Kellogg, General Mills and Nestle, who launched their antitrust claims nearly 12 years ago. [...]
The price-fixing scheme involved various initiatives that restricted hen, and thus egg, supply, and United Egg Producers wanted all members and the entire egg industry to participate, the food companies asserted. The trade group encouraged egg producers to prematurely slaughter still-productive hens and promoted 'early molting,' where producers caused hens to lose their feathers and temporarily stop laying eggs by removing feed and water, and keeping them in dark areas, they claimed.
This antitrust suit covered actions from 1999 to 2008—the egg industry has been fighting it for more than a decade.
But as we've documented, corporate profiteering by Big Ag continues to influence the price of eggs.
Watch our report from earlier this year:
Big Oil's Half-Hearted Clean Energy Entrance
In October alone, U.S. oil companies spent on fossil fuels four times what they’ve committed to clean energy.
By Eric Gardner, More Perfect Union
Exxon announced plans this month to enter the electric vehicle battery market by building a lithium mining facility in Arkansas. “Electrification is going to be a major component of the energy transition, and we bring highly relevant experience to the production of lithium,” company executive Dan Ammann told the New York Times, adding that the project would “enable the continued reduction of emissions associated with transportation.”
That’s not the whole story, though. The investment is presumably influenced by the Inflation Reduction Act (IRA), which the company tried to undermine and then supported after a series of fossil fuel-centric subsidies were included. And while environmentalists agree that lithium will be necessary to power electric vehicles—Exxon says its goal is to supply more than a million EVs with lithium batteries by 2030—Dan Becker of the Center for Biological Diversity pointed out to the Times that this represents “an infinitesimal fraction of what Exxon does, and most of what it does is dreadful.”
The IRA provided significant financial incentives for established energy companies to enter the clean energy market. Billions of dollars in subsidies for solar, wind, and hydroelectric development. But so far, Chevron and Exxon Mobil, America's two largest oil producers, are mostly doubling down on fossil fuels with billion-dollar bets—illustrating the limits of public incentives in enticing multi-billion dollar firms away from a proven business model.
The rocky transition to a clean economy threatens to be a real-time example of the "Innovator's Dilemma," one of modern memory's most influential business theories, with potentially disastrous consequences for the climate.
This theory, first coined by Harvard Business School professor Clayton Christensen, holds that dominant companies are often reluctant to invest in new technologies with unproven markets for rational reasons—chiefly, wanting to invest in products that please current customers and support their existing businesses. But that decision can eventually backfire as the new technology becomes mainstream and profitable, leaving the incumbents flat-footed.
Hence the dilemma. Doing everything that’s proven right—pleasing current customers and maximizing their profits—can put well-managed companies in a position to lose new markets and relevancy.
The Innovator's Dilemma was first articulated around the disk drive industry and helped explain why successful computer hardware companies of the 1980s were overtaken by fresh upstarts a decade later. Since Christensen first coined the term in a Harvard Business Review article in 1995—followed by a book two years later—the idea has been as ingrained in America’s business culture as quarterly golf outings.
Compared to the computer hardware giants of the 1980s, who had millions of dollars to spend researching new technologies, Exxon and Chevron are downright loaded. The two oil companies have posted profits of nearly $160 billion since 2020, but management has not made any major bets on renewable energy. Instead, the companies have focused on rewarding shareholders through buying back stock and reinvesting in the proven profitability of fossil fuels.
In October, Exxon announced it would acquire Pioneer Natural Resources for nearly $59.5 billion—cementing Exxon as the largest oil producer in Texas's oil-rich Permian Basin. Days later, Chevron announced it would acquire Hess Corp for $53 billion, expanding its oil drilling footprint to the South American nation of Guyana. The transaction is expected to add billions of barrels of offshore oil to the company's portfolio and generate $15 billion in tax benefits, a Reuters investigation found.
Combined, Exxon and Chevron are spending over four times more on those two acquisitions than what they have committed toward clean technology investments. Echoing the innovator's dilemma, outside of the lithium mine, the clean investments the firms have made are primarily in technologies ancillary to fossil fuels. Chevron invested $3 billion in "renewable" diesel fuel, while Exxon, potentially enticed by the IRA’s subsidies, purchased a relatively unproven carbon capture company for almost $5 billion.
As the Financial Times editorial board wrote following Exxon and Chevron’s acquisitions: “If oil companies are not ready to plow their returns into green energy themselves, for the sake of the planet, it will be up to markets to do it instead.”
But what if markets don’t?
The International Energy Agency forecasts that international investments in clean energy must double if the world is to meet net-zero climate goals. And so far, the market hasn’t shown itself up for the challenge. The stock market is supposed to be the perfect distillation of information; the value of a company’s stock theoretically encompasses its current and future returns.
This fall, a Danish wind turbine company lost nearly a quarter of its value after executives were forced to write down several offshore wind projects in America. Since 2021, major funds that track the clean energy industry are down roughly 40 to 60 percent.
Chevron and Exxon, meanwhile, have seen their combined value increase by over 80 percent.