Why is beer more expensive than petrol?

September 1, 2005 10:26 AM

Why is beer more expensive than petrol?

Beer at the local off-licence is 197p a liter, petrol is 90p a liter at the garage, knock off the tax (-30pct for beer -86pct for petrol) and you get to about 140p for beer and 13p for petrol. Beer is welsh tap water mixed with mold, treacle and sugar and sold as stella; petrol is hunted for, drilled for, pumped out of the ground, shipped in supertankers, and then refined. How come beer is more expensive?

posted by priorpark17 to food & drink (15 comments total)

It takes oil to farm, process, bottle, transport and (although I know its a foreign concept to Brits) refrigerate beer.
posted by Pollomacho at 10:32 AM on September 1, 2005

Demand, I grew up swilling 12 dollar pitchers of beer. Despite the outrageous cost, let alone of mixed drinks, it never stopped me from imbibing.
posted by substrate at 10:37 AM on September 1, 2005

I think the answer is because they can. Yeh, there are production costs, but I doubt they're musch more than other types of food and drink.

People will spend more when they're on the piss, and alcohol products have strong brands and promotion.

Refrigerate beer?! I suppose you'd make ice cream fizzy as well! You wacky Yanks!
posted by lunkfish at 10:41 AM on September 1, 2005

Petrol only fuels transport. Beer fuels genius.
posted by PinkStainlessTail at 10:42 AM on September 1, 2005

Petrol's an atypical product. Nobody's making much of a profit on selling it retail in Europe (governments excepted). Gross margins are less than 5p per litre, and once transport and retail costs are taken into account net margins are negative (source). It's essentially a loss-leader to encourage forecourt sales.
posted by Leon at 10:57 AM on September 1, 2005

lunkfish...you've never had a root beer float...vanilla ice cream in root beer. The ice cream melts a bit and yes, gets fizzy. Delicious!

(note that root beer is a sweet, non-alcoholic beverage. It's called "beer" because it forms a creamy, lager-like head when poured. And "root" because it was original made from the sassafras root.)
posted by luneray at 10:58 AM on September 1, 2005

You miss a great deal of the real expense in your cost analysis.

1) Petrol as sold is very close to the form that it occurs in if you were to just go scoop it up in a bucket. Beer however needs to be brewed from a variety of ingredients which not only require labor to produce, but also further processing before they are usable. Thus there are many middle men who can profit in the supply chain leading to beer.

2) Packaging, marketing, distribution, storage, etc are all more expensive for beer than petrol. For example - If you buy your own raw ingredients in bulk and make your own beer you will save huge amounts of money. But if you buy your own crude oil and extract the gas and other fractions, you won't save much at all. Said another way - When you buy petrol, you just buy petrol. But when you buy beer you buy a fresh chilled bottle of beer at your favorite pub.

3) Portion size. If you wanted to buy petrol in 12 oz portions it would be vastly more expensive.
posted by y6y6y6 at 11:30 AM on September 1, 2005

Packaging and labor. Gas ('petrol' - you wacky euros!) is moved in tanker trucks. The first time it gets sold in quantities below the 1000s of gallons (liter - hehe SO CUTE) is down the street from your home. It's shipped in one single container, a tanker truck, which is re-usable and compared to the weight of the contents is non-existant. The movement of it can happen through pumps handled by one or two people post-refinement.

Your beer, on the other hand, is never shipped in a single container larger than a keg. While that keg is indeed reusable, it is several percent of the total full weight. It has to be handled by people and forklifts and never on the scale that gasoline is. It may or may not need to be refridgerated.

If you buy it in bottles (and not cans one hopes, you heathen) the weight added is even more significant. Also, those bottles cost money and the process of shoving that wonderful elixir into them, capping them and labeling them adds cost as well.
posted by phearlez at 11:33 AM on September 1, 2005

1. Gasoline is produced on a much larger scale than beer.
2. You only have to hunt, drill, and install the pump once for a particular reserve and then you are good to produce vast amounts of crude petroleum. Shipping and refining go about on a massive scale. With beer you have mix that "mold, treacle and sugar" in relatively tiny batches, time and time again. It simply costs more gallon for gallon to produce ethanol from fermentation: if it didn't, ethanol as a fuel would be a no-brainer.
3. Packaging. If you were willing to pull up to a pump and decant some beer into your own container from an underground tank whence it had been directly deposited by a huge tanker truck, it would probably be considerably cheaper.
4. Political subsidy. Global infrastructure is inextricably bound to petroleum, so the production of gasoline is subsidized in hundreds of different ways.
5. Market dynamics. Since gasoline in particular is a relatively uniform product across different manufacturers, at the consumer end it is subject to much more classical market dynamics - if someone starts gouging too much people will simply seek a different supply. Beer is a much more regional, brand-focused, fragmented market so an individual product is less subject to price minimization from market pressures.
6. Gasoline can be viewed as a byproduct of a lot of much more lucrative product streams, from plastics to pharmaceuticals. All of these cash cow products subsidize the cost of gasoline production. Beer production mostly just produces beer (as an interesting side-note, however, capturing valuable chemical coproducts of industrial ethanol fermentation and refining is one of the things that is driving better net energy returns and value in fuel ethanol production - an industry that is still creeping along and much dependent on subsidies, but still has a valid future in the spectrum of alternative fuels).
7. The way things are going, wait a while and the question may become moot.
8. On the plus side, I'm certain that as long as there are human beings around we will never run out of beer.
posted by nanojath at 11:51 AM on September 1, 2005

Adding to what others said: During case studies of local microbrews, they stated they can sell their product for less and still maintain profitability but their total sales would go down as most people who purchase their microbrews do so for the snob-appeal. They'd simply go to the more expesive beers and the Bud drinkers would stick to Bud because of the opposite-snob appeal factor. They'd end up in a dangerous no-man's-land.
posted by geoff. at 1:16 PM on September 1, 2005

Fuck, man, make yer own beer. A pal o' mine homebrews for about a dollar per gallon. Try buyin' gas for that!
posted by klangklangston at 2:34 PM on September 1, 2005

Since a Best Answer has been marked let me just ask, why do we Yanks call it gas? Petrol seems to be a better descriptive name given that it is in a liquid form. It is only ever briefly gas. Paging languagehat.
posted by geekyguy at 7:01 PM on September 1, 2005

I would also like to point out that unlike what most folks think, the profit margins on beer, particularly small batch brews (like from a microbrew) are horrifically slim. The amount of juggling that folks I know have done to keep their breweries open would make the average Barnum and Bailey clown weep with exhaustion.

Of course, folks like the A-B's, Coors, AmBev, SABMiller of the world benefit enormously from scale considerations. It's really sad to the craft beer lover.
posted by drewbage1847 at 10:13 PM on September 1, 2005

In New Zealand it is common to fill your own bottles from a tap at the liquor store.
This is indeed cheaper than buying packaged beer.
I'm sure a Kiwi will be along any minute to remind me what the bottles are called.
That said, I agree strongly with the brew your own crowd...
posted by bystander at 10:39 PM on September 1, 2005

http://www.etymonline.com/index.php?term=gasoline is the etymology. It's from gas because it's highly volatile, so one can imagine a chemist at the time fractionating it, and then calling it a "gas chemical." It was 1865 after all.
posted by apathy0o0 at 11:15 PM on September 1, 2005