Biofuels Are Raising Beer Prices, Killing Your Buzz

BeerCollege students everywhere are starting to feel the push for alternative energy right in their own pockets. Those who enjoyed Bud Light may have to resort to “The Beast” just to make ends meet. The movement to plant more crops to help produce bio-diesel is taking precious resources away from barley production. With less barely being produced both in America and Europe it is having an effect on beer prices around the world.

In the last two years, the price of barley has doubled to $271 per ton as farmers plant more crops such as rapeseed and corn that can be turned into ethanol or biodiesel, a fuel made from vegetable oil.

As a result, the price for the key ingredient in beer, barley malt, or barley that has been allowed to germinate, has soared by more than 40 percent, to around 385 euros or $522 per ton, from around 270 euros a ton two years ago, according to the Bavarian Brewers’ Association.

Some current increases:

  • The U.S. – 3.8%
  • U.K. – Reports of 3.9%
  • Germany – A liter at Oktoberfest is now $10.90
  • Netherlands – Heineken expects a 7-8% increase

The cost of cleaner energy comes in many forms. First it is something as trivial as beer prices, but with so much pressure to produce more plant material to make this fuel, what is affected next? We already saw an increase in tortilla prices when corn production in Mexico was shifting toward biofuels instead of food products. Even the United Nations has released a report saying that by diverting production toward fuel generation it will drive the prices of some basic food commodities up.

You Can’t Have Your Cake and Eat it Too

There will always be something for people to complain about. Right now, it is the price of gas. In an effort to curb our reliance on oil we are pushing for an increased use of bioenergy, which in turn takes precious resources away from basic food staples and will increase the price. Then people will complain about that, and even more importantly, this higher cost will affect the people who don’t even use much gas; the poor who need to feed their families.

But don’t fear I have the perfect solution for this, brew your own beer. Check out that article and the three others, here, here, and here I have layed out everything you need to know to help you save money by brewing your own bear. Everything from the wort chiller and other equipment you will need to bottling it all up in the end.

 

Author: Jeremy Vohwinkle

My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.

14 comments
Rogue Leveling
Rogue Leveling

This was posted quite a bit ago now. You will now see that the numbers have increased.

WoW Gold Farming
WoW Gold Farming

Sadly the figures quoted in this article has risen even further in the UK according to national reports on January 15th. Homebrew kit anyone?

Brad
Brad

They can raise prices on my gas, they can raise prices on my milk . . . but by god they better leave my beer the hell alone! :-)

Robert "The Credit Card Debt Guru"
Robert "The Credit Card Debt Guru"

Interesting article. Randy is definitely right about how it takes more energy than the energy produced from the ethanol. Wow, that was an awkward sentence.

Rebel
Rebel

Hmmm, this gets me thinking about some investment strategies.

JadeEJF
JadeEJF

Hah! I read that story a while back, and thought it was entirely entertaining. I mean, I probably shouldn't be entertained by angry Germans, but... all I picture are some lederhosen-clad men banging empty steins on picnic tables :D

JM
JM

I wasn't really thinking in terms of just corn, but you are pretty much right, the biofuel industry is in its infancy. I should hope that its efficiency will steadily increase the more we figure things out. Also, I have heard that hemp is a really dense energy source, and grows like a weed...

As for farming subsidies, go to a supermarket in Japan if you want to see what its like without them. a liter of milk costs exactly double what 500 mL costs. Not like the good 'ol USA where you are rewarded for buying in bulk. Not saying either way is better. Just interesting to think about.

Traciatim
Traciatim

Here is yet another problem. Of the many sources to make Ethanol from plants corn is probably one of the worst you can possibly produce. Of course the USA picks that one to divert to ethanol, then they can starve Mexicans by driving up corn prices causing food shortages. Good ol' US of A.

Jeremy
Jeremy

JM, I agree that our addiction to oil is a big problem, but biofuels are the furthest thing from the answer. Just as oil is a precious limited resource, so is land, especially land suitable for growing crops. So all this is doing is shifting the burden without really solving anything. I think Randy points this out quite well with the information on ethanol production.

And Randy, that farm subsidies information is amazing, I haven't heard much about this before. Certainly something I'll have to read more about, thanks for the link.

Randy Peterman
Randy Peterman

The irony of ironies is that Ethanol takes nearly as much petroleum to produce as it saves. Of course that efficiency could go up over time, but a recent article I read pointed to a 1% petroleum reduction. What's really causing corn to be grown are tax payer funded subsidies. Check out Scottie Pippin's great interest in farming since retiring from basketball: http://en.wikipedia.org/wiki/Scottie_Pippen#Retirement

Art Dinkin
Art Dinkin

Aarrgghhh! Now your really scaring me! When they said it would require sacrifices to find alternative fuels, I never thought it would effect my golden liquid nectar!!

I guess we all have to do our part. :)

JM
JM

So if you were poor, would you rather go on a diet because you can't afford food, or be shipped off to iraq because that's where we get our gas from?

Personally, I'm not exactly poor, but I would rather pay twice or 3x more for a pint than continue to suckle the arab oil teat at the barrel of my cousin's marine corps issued rifle.

Webomatica
Webomatica

Heh, that's kind of tough to swallow as I enjoy a beer now and then. I think I may have to continue the practice I've recently started which is putting aside a beer or two from every six pack for the future.

Steve Austin
Steve Austin

Haven't been paying close attention; thought that the higher beer prices were due to me temporarily moving to a higher cost-of-living area. ;-) What I have noticed is that wine prices have been dropping, I suspect from grape glut in recent years, the advances in viniculture, and the systemic proliferation of vinification to biomes not previously conducive. (translation: wine supply seems to grow faster than wine demand)