Shortages Lead to Increasing Beer Prices

The growing energy crisis is starting to hit home in still more ways, this time where it really hurts. That's right... beer prices could double.

CNN reports that the price of beer is going up due to a shortage of commodities (such as barley) that go into the production of beer. What does this have to do with energy, you ask?

Farmers in Germany are growing less barley because they've converted their fields to growing crops that are used for biofuels. The same is happening all over the world as farmers shift production to more lucrative crops. In the U.S. many farmers have shifted their fields to corn, a dietary staple to be sure, but much of that corn is now going to produce corn-based ethanol for vehicle fuels, causing increased demand for corn. As students of economics, we know that when demand increases faster than supply, prices go up, and that is happening for consumers of corn and any product that uses corn (or corn-based products such as high fructose corn syrup).

Another CNN report further illustrates this problem for pasta makers in Italy, who are suffering from rising prices of wheat and other ingredients.