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Beer Prices on the Rise

Written by Nickel - 14 Comments

Here’s a timely bit of financial news for all of you New Year’s revelers… Due to a shortage of hops and malted barley, beer prices are expected to increase substantially in the near future. According to a recent article in The Independent, hops prices have risen in the United States by as much as 600% in the past three months. A big part of the problem is the push for increased ethanol production in the U.S., which is causing more and more farmers to convert their acreage to corn.

The price spikes are expected to be greatest for smaller, craft breweries because the behemoths of the brewing industry (e.g., Anheuser-Busch and Coors) are locked into long-term supply contracts that provide them with temporary protection against the increased costs. So… While life’s too short to drink cheap beer, it looks like the good stuff is going to cost disproportionately more for the foreseeable future.

Published on December 31st, 2007 - 14 Comments
Filed under: Miscellany

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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14 Responses to “Beer Prices on the Rise”

  1. 1
    Brooke Says:

    Oh no! One of my few things I can still do cheaply…a night out. I guess that’s going in the budget!

  2. 2
    Saving Freak Says:

    Is someone in Washington going to get a clue and let the oil companies explore the oil we have in the ground? I am all for alternative sources of energy but lets fix the short term problem and keep working toward the long term problem. We are the only country in the world who refuses to use the natural resources within our borders. We could be over 90% energy independent if the politicians and environmental/communist nut jobs would just get out of the way.

  3. 3
    Patrick Says:

    Unfortunately, this has been a long time coming. The price of other food stuffs is on the rise as well. Corn and grain prices are rising, which in turn raises the costs of feed for chickens, cattle, and pigs. Add that to the rising fuel costs, and transporting those animals to the slaughterhouses and then to the grocery stores is also more expensive. It is an ugly cycle, and one of the reasons fuel costs contribute so much to inflation. Of course, or country printing out billions of dollars might have an effect too! ;)

    But the most important take away from this article – life is too short to drink cheap beer! :)

  4. 4
    Jason Says:

    Just another reason to give up alcohol in 2008! Of course, if this were the only reason I would also have to give up milk…over $4.00 a gallon now.

  5. 5
    Cheapster Bob Says:

    This is very temporary. The shortage is due to farmers dropping hops for corn due to the ethanol scam.

    Now that there is sufficient demand they will put out hops crops in droves seeking to cash in and the price will drop in 2009.

    Right now I am paying between 75 cents to 1.00 more then usual for my micro sixers. I’m cheap so have found myself slumming and going with Foster’s oil cans on occasion to save a penny.

    I’ll never hit skid row though. Crapweiser will never touch my lips I’ll stop altogether!!

  6. 6
    vh Says:

    I’m afraid the ethanol scam is gunna be with us for a while. For the (prob’ly long) duration, we can watch everything we really LIKE to eat (and drink) go right through the roof.

    Yours in awed admiration of Murphy’s Stout in cans with foamy-delicious-making widgets…worth every penny, and then some! –vh

  7. 7
    David Says:

    Maybe they can figure out how to power a car with beer, then prices should come down…;-)

  8. 8
    MITBeta Says:

    @Saving Freak:

    The problem is not “environmental/communist nut jobs”, but it is the politicians. With no one to really lead a renewable energy drive, we’re forced to use the worst crops available to supply some small part of our massive thirst for liquid hydrocarbon fuels. Corn is not very effective at producing sugar, and growing it for sugar has been pure madness for years. But government subsidies get in the way. I heard the president of a corn lobby say as much. The same is true for growing soybeans to make biodiesel. There are thousands of better oil producing crops, but in this country we grow corn and soy — lots of both.

    What we need is leadership from the top to drive innovations and policies that don’t rely on food products to produce motor fuels. There are lots of alternatives out there, but as usual we have fallen into taking the easy, feel good solution that probably does more harm than good when you look at all of the externalities.

    As far as drilling all over the US to meet 90% of our energy needs: I don’t know where you got that number, I’m not sure it’s true, but clearly there is also a large cost to pay for doing so. The cost is both financial and ecological. It’s clear that the majority of Americans are not willing to allow oil companies to drill ever square inch of the US, as evidenced by the fierce fighting on both sides about a park in a Alaska that the vast majority of Americans will never lay eyes on.

  9. 9
    deepali Says:

    It’s not likely that drilling our own oil reserves will solve much of anything. The cost for clean-up pretty much wipes out any benefit. How about a little less consumption on our part? That’s a good way to bring prices down and put crops to better use (ie, beer).

    Good thing I drink whiskey.

  10. 10
    Heidi Says:

    One more reason to brew your own beer.

    It’s not that difficult to grow hops – I have a very good friend who is a home-brewer that does it and his brews are fantastic.

    And I agree 100% – life is too short to drink cheap beer.

  11. 11
    Kirk Says:

    Home brewing is cheaper, but a pain to clean the bottles. I guess we need to search out happy hours with specials.

    Regarding the energy situation, we have the means to bypass oil already. I recently watched the documentary “Who Killed the Electric Car”, and it was disturbing. Basically, GM developed an electric car that had the juice (0-60 in four seconds) and could last 120 miles without a charge. No need for gas; no emissions; great idea. Of course, the oil industry blocked this process with the help of the government.

  12. 12
    RR Says:

    My top price is $6.00 a six pack: a buck a beer. When micro-brews are on sale for $5.98 or so, I’ll stock up. When it’s $8 a six pack, we drink something else.

    I haven’t noticed a rise at local pubs, but that could come along the way…

  13. 13
    Kimberly Says:

    I doubt craft beer prices will ever come down, but smaller breweries will come back into business as the hops prices stabilize. I don’t think the hops market is as affected by the ethanol thing as much as the barley market is. The problem with hops was that there were HUGE gluts of product for years, with warehouses stocked with several years worth of inventory. Prices were so low, that the growers stopped growing them. But you can be sure that now that certain varieties are selling for $24 a pound when they used to be under $4 a pound, farmers will be scrambling to produce hops no matter how much the corn is going for, and eventually the hops prices will come down to a reasonable level, though not to 2005-6 prices.

    @ deepali – Whisky is made from fermented grain, so it’s possible that it can be affected by higher raw material prices, though I suspect most of the costs for producing whiskey are tied up in process and excise taxes.

    RE: Ethanol scam – if people would just realize how much fossil fuel is used in the production of corn in the form of fertilizer they’d laugh. We’re using fuel to grow fuel!

  14. 14
    Minimum Wage Says:

    I see beer prices risin’
    I see trouble on the way
    Don’t hit the suds tonight
    It’s bound to cause you strife
    There’s beer prices on the rise

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