Did you know that you are paying a fraction of a cent every time you open a can of soda (or other canned beverages)? Why? It is because Goldman Sachs and other financial players have maneuvered the price of aluminum. Each day, a fleet of trucks shuffles 1,500-pound bars of aluminum among 27 warehouses in the Detroit area with the purpose of lengthening the storage time. As a result many millions of dollars a year are added Goldman’s earnings, which owns the warehouses and charges rent to store the metal. This process also increases prices paid by manufacturers and consumers across the country. Unfortunately, the Fed appears to have no plans to require the banks to sell their storage facilities and other commodity infrastructure assets.
1. According to the article, one-tenth of one cent is added to each purchase price of canned beverages. Based on this, estimate how much you have paid to Goldman’s over the last year.
2. What is the estimate of how much this “merry-go-round” of aluminum has cost Americans in the last three years?
3. Based on the article, how much wait time has been added to aluminum deliveries to manufacturers of the cans?
4. What commodity is next up for “manipulation” and why is this expected?
Kocieniewski, D.(2013). A Shuffle of Aluminum, but to Banks, Pure Gold. The New York Times, July 20 (Retrievable online at http://www.nytimes.com/2013/07/21/business/a-shuffle-of-aluminum-but-to-banks-pure-gold.html?hp&_r=0&pagewanted=all)