Friday, June 13, 2008

Ethanol subsidies fueling an increase in prices?

In addition to the shortage of food globally that has been linked to the use of ethanol for energy, it looks like ethanol stateside is leading to an unintended (but not unexpected) consequence. In Minnesota, the state whose Rep. Collin Peterson, chair of the House Agriculture Committee, has led the charge for ethanol subsidizing, the price of popcorn has increased by double digit percentages:

Rising demand for corn for ethanol is one reason theater operators are paying more for popcorn, which typically accounts for nearly a third of their revenue. Some theater operators already have raised prices on popcorn and tickets, but so far others are swallowing the higher costs.

AMC Entertainment, Kansas City, Mo., which runs the AMC Mayfair 18 at Mayfair Mall in Wauwatosa, recently increased its popcorn price by 25 cents, to $4.75, $5.75 and $6.75 per serving, depending on size.

Marcus Theatres, the largest theater chain in metro Milwaukee and the eighth-largest in the country, has seen a 35 percent increase in the wholesale price of popcorn seed since last year, and popping oil and popcorn topping costs have increased in the double-digit percentages, said Bob Menefee, vice president of concessions. Marcus executives expect popcorn prices to more than double again in the next year, he said.

Economist Richard Gil has predicted that this increase in popcorn prices could spill over into increased ticket prices. Seeing as a trip to the movie theater has been an investment for several years now, moviegoers may be hurting.
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