Rising Nucleotides

Glenn Beck Fill-in Host Can't Hear

I think it was Monday, that I was listening to The Glenn Beck Program on Rochester's 50,000 watt news radio station, WHAM 1180 AM. And trying to work at the same time, which involves getting in and out of the truck, having the truck's mechanicals interfere with radio reception, and even driving into buildings that serve as effective Faraday cages. At any rate, I don't get to hear everything, by any stretch.

So, I got in the truck, and fill-in host Pat Gray was talking with a truck driver who had phoned in. Turns out that he hauls breakfast cereal, and had a theory (near as I could tell) that consolidation in the food industry had driven up prices since roughly the year 2000. Corn Flakes have become a standard example product, on account of high corn prices. It must be consolidation, though, since rising fuel and corn prices could not fully explain it, he said. Gray wasn't having any of that, since diesel is currently a few times as expensive as it was-- and so is corn. The driver explained that he was getting a fuel surcharge of 70 cents per mile (adding such a surcharge is customary, when fuel prices rise, rather than constantly changing the base rate), and that they can fit as many as 10,000 boxes of cereal in his trailer. Gray continually mis-heard this as fuel being up 70 cents per gallon in the last few years, which doesn't make any sense, and eventually dismissed the whole notion as tragically flawed math.

I, however, can hear-- at least when circumstances allow me to receive clear sound from my radio.

Unless this chap drives like heck, he's going to get at least 5 miles per gallon with his truck. Which means that his freight rate is being adjusted by the equivalent of at least $3.50/gallon, which is about how much fuel is up in the last few years. He no doubt has a 53 foot long 'dry van' trailer, which has a capacity of about 140 cubic yards, and can very plausibly hold 10,000 boxes of cereal. Which means that, even if the load is shipped 1000 miles, Kellog's is only paying, per box, an extra 7 cents.

If it's, say, a 24 ounce box of Corn Flakes, then we can roughly consider that to be a pound and a half of corn. A bushel of corn weighs 56 pounds, give or take. Even at the current "Holy cow, there's huge floods in the mid-west" price of about $8/bushel, the total cost of the corn in that cereal box is about 21 cents. Up from 8 cents, at a $3/bushel rule of thumb.

For a whopping 20 cents increase in the cost of your Corn Flakes, based on the two factors which are generally believed to be the problem. I don't know about the food industry consolidation theory, but I can do math-- and so could that other trucker.

Edited five minutes later, for uncharacteristic multiple errors.

Posted by Mitch at June 25, 2008 11:55 PM
You can find this entry in: Economics , Transportation