© 2009, J. M. Erickson. All rights reserved.

1. Cullen Hightower

Yesterday, Black Friday, consumers spent 3%¹ more than last year. All we heard on the news was how horrible for retailers the day would be. That folks were only going to browse. I think Mr. Galbraith is correct. The crowds even trampled a Wal-Mart employee to death in their rush to buy stuff, for crying out loud.

© 2008, J. M. Erickson. All rights reserved.

1. UPDATE: latest figures estimate that the increase may be more like 7%

The Theory of Rational Expectation in economics says that the economy will follow the expectations of the population. Are we expecting the economy to tank?

© 2008, J. M. Erickson. All rights reserved.

High beer prices are on tap, and global warming could be to blame.

The environmental crisis has hit suds-lovers where it hurts most–at the bar and in the wallet–as prices of grains and hops soar, activists say.

“When we’re trying to deal with young people, you have to define issues that are attractive to them, and this is something that’s caught their attention,” said matthew Silverstein, president of the Queens County Young Democrats, which hosted a “Save the Ales” forum recently on the impact of global warming on beer prices.

As global temperatures rise, radical shifts in weather and more parched lands are making it harder to grow grains and hops, activists and beer makers agreed.

Microbreweries are likely to be bit especially hard.

Well, let’s just ignore good ‘ol supply and demand and the falling dollar as factors in the rising prices. Notice the tenor of the article and what they’re saying.

First, global warming is being called an environmental crisis.¹ So you know that The New York Post is using global warming² as a premise. From there they make the assumption that hops production is down due to “radical shifts in weather and more parched lands.” Before you agree with them read the excerpt from the article below.

Second, Matthew Silverstein admits that they’re using young peoples interest in beer prices to bolster their arguments for global warming by defining issues that catch their attention. 

Most craft beer enthusiasts have been aware of this problem for quite some time. We homebrewers have been under hops rationing for over a year now and have been following closely the situation with Microbreweries. We’ve been aware of the supply and demand issue which is enunciated in the following Hop Union statement made in September 2007 (emphasis mine):

Excess production that was 2, 3 and 5 years old was selling on the open market and as a result brought prices down. Hop prices had dropped so low in recent years that in many cases they were lower than what it costs to grow them. For example: prices got as low as $1.70/lb. for pellets of Cascade. That is way below what it takes for a hop grower to cover his costs.

High-alpha hops and some aroma hops are going overseas – the high rate of the Euro is a factor. In the spot market for high-alpha hops, growers are not putting a price on them yet. They’re waiting to see how high the prices may go.

In the late 1990s and early 2000s the prices were depressed and growers were starting to throw in the towel, to either switch to other crops, or sell out to real estate developers. The ones who stayed in it and managed to survive without going under are pleased to be in this situation now, which is 180 degrees opposite from where it was about 10 years ago.

The demand for Cascades is up 30% this year alone. We are 300-400 acres short on Cascade compared to where we need to be. Cascade acreage was 1,003 in 2001, jumped up to 2,120 in 2003 (because one major brewer announced plans to use it, but then reversed course) and total Cascade acreage is now back near the same 2001-year-level, at 1,116 in 2006.

Prices are the highest they’ve ever been – and it’s beyond comprehension. Cascades were priced at $7/lb. three weeks ago and are currently being quoted at or near $10.00/lb. Willamettes went from $5.50 to $7.00/lb. and may also get to $10/lb.

Another article I read³ said that much of the hops and barley acreage has been converted to growing corn for ethanol.⁴ But now, with the hops prices so high, maybe we’ll see some acreage converted back to hops growing. It’s that pesky supply and demand.

© 2008, J. M. Erickson. All rights reserved.

1. In a news article, yet.
2. And you know they mean “Man Made Global Warming.
3. I can’t remember where.
4. Oh, and by the way, worldwide food prices are skyrocketing because corn is being diverted from the food supply to the energy supply while world food organizations are crying because folks are going hungry due to the increasing prices.

© 2008, J. M. Erickson. All rights reserved.