> A new pick-up truck that once cost $40,000 now runs to $100,000. A wooden fence post has gone from about $6 to as much as $19. A quarter-mile roll of barbed wire has doubled, from $60 to $130. Everything he uses day to day, he says, has jumped in price since the Covid pandemic.<p>I know why pick-ups have gone up in cost (though I don't think it's quite to 2.5x levels like suggested here since the pandemic), but wooden posts and barbed wire, it's less clear why those are so much more expensive now.
> it's less clear why those are so much more expensive now.<p>It's basically, because everything else has gotten more expensive. Labor + fuel + wear and tear on equipment + raw materials.<p>Inflation of a single thing, will have effects on anything down stream of that thing.<p>And then there is the "greed" aspect, though overstated, where a company will see that costs have gone up in other sectors, so they raise their accordingly. This has been claimed, but I'm not sure how much it actually happens.
>It's basically, because everything else has gotten more expensive. Labor + fuel + wear and tear on equipment + raw materials.<p>Don't forget taxes (tariffs) have also increased substantially. Even if a supplier isn't paying tariff's, if their competitors are they can often just raise their prices, or their prices go up due to the supply/demand shift.
The "greed" aspect is always bullshit <i>unless</i> there is a specific instance of market failure like monopoly power or collusion. This has definitely happened, so I'm not discounting it, but in those cases folks should just say the issue is monopoly concentration or collusion.<p>Saying "greed" comes from people who fundamentally believe economics doesn't exist, or don't understand it. Everyone in the economy is "greedy". Consumers want to pay the lowest possible prices, and producers want to generate the most profit. Nobody starts a business to be a charity, and businesses will always set their prices to maximize profits.<p>If prices have gone up, the question to ask is why. Is there not enough competition? Have input prices risen? Why are consumers willing to pay more? Saying greed is just a bullshit boogeymanization that politicians like to spout.
Logistics and labor.<p>People under-estimate the cost of logistics and transport. Every inch of travel for any input, component, or the final product has to be paid; and even a wooden fencepost typically moves between at least 5 different locations before reaching retail.<p>Let's use wooden posts as an example:<p><pre><code> 1. Forest. Trees are cut down into logs, and then transported to...
2. Lumbermill. Logs are cut to size, and then transported to...
3. Treatment plant. Without it, your fencepost won't last for every long, and then transported to...
4. Distributor location. And then transported to...
5. Store (e.g. Home Depot or whatever). And then you pick it up, or get it delivered to you.
</code></pre>
Every inch, every mile, you're paying for the energy, inefficiencies, and labor involved.
At the beginning of the pandemic all the mills cut production anticipating economic collapse that didn’t come. Prices spiked on high demand and low production.<p>Mills did ramp back up, but it’s unclear to me if they used it as a chance to do so slowly/preserve margins. Lumber never got close to pre-pandemic levels.<p>Tariffs probably also play a role here. About a quarter of US lumber comes from Canada, and barbed wire is just steel with a little bit of processing.<p>For products with little value add there’s not anywhere for the tax to be absorbed, and no real way for domestic producers to quickly scale up, even if they wanted to.
Generalized inflation affects everything. Energy prices have gone up, labor prices have gone up.<p>The people who sell the barbed wire and wooden posts presumably like to be able to eat, so they need to raise their prices to be able to afford groceries, etc.
I am starting to think that there might be lot less competition on free markets than we think. And many markets tend to be established with big enough players. So they have stopped competing. If new entrants try to come well they might be undercut or simply bought out.
I work with contractors and my family own a GC company. After Covid, construction material prices increased a lot due to multiple reasons like supply chain issues, and high demand from the housing boom. Lumber, fencing materials, and steel products were all affected. Although some prices have go down from their peaks, many never returned to pre-2020 levels, so products like fence posts and barbed wire are still expensive.
The pick-up thing is definitely true, and is also affecting the used market just as significantly
Because people who sell wooden posts and barbed wire use pickup trucks, among other things that have gone up in price.
> but wooden posts and barbed wire<p>Less clear? Check your tariffs.
<i>> but wooden posts and barbed wire, it's less clear why those are so much more expensive now.</i><p>I am seeing way more active paddocks of grazing cattle now as compared to a couple of years ago. The most likely explanation is that higher beef prices compelled more people to try and raise cattle, which resulted in them needing supplies required to raise cattle, and fences are one of those things you need to establish a secure paddock. The increase in demand for fencing supplies, without a corresponding increase in supply, necessities an increase in price.