Economics and The Future

sallow · Apr 29, 2014

Let us speculate, that due to regulation or what not, the price of pipe tobacco in the US suddenly spikes. I'm talking a large increase so a 50 gram tin of premium suddenly costs $75 to $150 and a pouch of Carter Hall sells for $35 to $50. Or say tobacco is made illegal in the US and the same thing happens due to no more supply.
What happens to the price of pipes?
1. The prices of new pipes drop, Dunhill and Castello exit the market and estate prices are out of reach.

2. The prices of new pipes increase because they are now even more of a luxury good.

3. Nothing, pipes have a collector value above their utility as a smoking instrument and prices remain much like they are.
The reason I am asking is because I am forgoing purchasing pipes now because I am cellaring so much tobacco. I have a serviceable and functional stable of a dozen or so pipes, but nothing really high end (say over $150). Am I making a mistake? Anyone care to forecast?

ravkesef · Apr 29, 2014

Given the current climate, I would say buy now – buy now – whatever your means will permit, buy now. The pipes, tobaccos, accessories, buy now.

sallow · Apr 29, 2014

I am buying now, and I'm not trying to be a fear monger. Another possibility is that in 2 years I can buy a Dunhill for $3. Any futurists out there?

weezell · Apr 29, 2014

Buy tobacco. You can always find something to smoke it in, and the price is not going to go down...

saint007 · Apr 29, 2014

I don't want to get too Political as I know it is a no no on this site. But, a spike in tobacco prices would really be a result of who is running the country since the spike would be artificial. Price of tobacco could actual go down if we adopted more of a Free Market mentality, say under a Libertarian administration.
The situation you described would be if this country stayed the same direction we are on today. In which case you are doing the smart thing is cellaring tobacco in anticipation of an artificial spike in the price. As far as the value of pipes, I don't know what the market share of the markers you mentioned consist of sales to customers in the USA. Prices do move with demand.
If it got that bad, I would move to my place in Costa Rica.

sallow · Apr 29, 2014

I don't know what the market share of the markers you mentioned consist of sales to customers in the USA. Prices do move with demand.

I hadn't thought of this since I'm an American and only think about what affects me, personally.
Pipes don't operate under perfect competition, I won't sell as many as I can manufacture at the market price. Castellos and Dunhills have their own niche and probably would not be affected by a change in US tobacco availability?

cobguy · Apr 29, 2014

Buy tobacco now and take the pipes from the Zombies as you shoot them!
Seriously though ... I would tend to agree with what you are currently doing.
+1 weezell

igloo · Apr 29, 2014

Buy the tobacco now as we are headed into the tobacco prohibition era of history .I can see it now walking through the legal Cannabis store and using a secret knock on the back wall to get my fix .

weezell · Apr 29, 2014

I can see it now walking through the legal Cannabis store and using a secret knock on the back wall to get my fix .

Sad...

mrenglish · Apr 30, 2014

Keep buying tobacco because that will be the first to go. As for pipes, not sure prices would go up but I think there would be a reduction in the overall amount of makers out there. The bowls might get smaller over time if tobacco prices jack up to extreme levels.
I would be less worried about pipes than tobacco.
That said, I keep buying pipes (shakes my fist at Smokers' Haven)!!

judcole · Apr 30, 2014

Pipe tobacco is not going to get any cheaper.

salmonfisher · Apr 30, 2014

It is just a matter of time til US tobacco prices match the extremely high prices in Canada and Australia.

Sin taxes are easy for governments to increase and they will certainly continue. Canada has increased these with no flack at all, as they have the facts to support them.

Buy buy buy, I can guarantee one thing...they certainly won't go lower.

woodsroad · Apr 30, 2014

Grow

petergunn · Apr 30, 2014

One could always hope for a global crash/depression to lower pipe prices, as for tobacco I'm just not that worried about spikes or taxes, maybe if we see a total ban but I kinda doubt that also.

woodsroad · Apr 30, 2014

Much higher tobacco taxes and draconian restrictions are in the very near future, no matter who is elected. The reality is that higher taxes are not really an ideology issue, it's a revenue stream. A Republican win in '16 may not change anything. A conservative win in the next cycle will slow the rise in taxes, and perhaps even halt it, but it will not reverse it. A Libertarian win is, alas, not bloody likely. Besides, the Executive and Legislative branches have lost/given up a great deal of power to the courts and the regulatory bureaucracy. Those machines will keep on rolling.
My solution is to stock up now, and make plans to start growing.
Pipes can wait (but can I? No.....)

brudnod · Apr 30, 2014

Perhaps the Canadians can weigh in on this since their taxes on tobacco can be quite higher depending on the Provence. It is projected that Canada will bring in $700 million in tax revenue this year. It would be substantially higher in the US (primarily because of population) and will not be effected by the political atmosphere since the revenue is so attractive. And the tobacco industry has had a significant reduction in clout over the past several decades (good?bad?). New pipes might go higher but the estate pipe market will remain; you just might not get a real good deal on a quality name brand pipe. Like many others have expressed here, I have been cellaring more than I smoke.

salmonfisher · Apr 30, 2014

Each province can levy higher taxes on certain items, tobacco n booze to name two. Province I am in borders on Quebec. 12 beer in my province sells for around $22 where in Quebec it sells for $13. Tobacco seem to have fairly cinsistant prices across the country. A pack of smokes (25) at a corner store sells for 10 to 12 bucks. McBarens Plum Cake 50 or 2 oz sells for $32.97 provincial tax included. The provinces have the moral high ground on booze n tobacco, not a thing the minority can do. So we either put up with those prices, quit or send our business stateside.
If every provincial government got everyone to quit smokes, they would only be able to sustain services n health care with increased taxes on income and on the services provided. A very slippery slope for sure.
Which reminds me, time to call Boswells n get more baccy lol

daveinlax · Apr 30, 2014

I'd be more worried about your employer and/or private insurance providers not covering or pricing smokers out than the government doing much. 8O

plateauguy · Apr 30, 2014

Just placed another TAD. I thought I had enough cellared, then decided that I didn't want to run out before I die. My wife has been instructed to put it in the coffin with me, that way I'll really go up in smoke. :nana:
Prices won't be going down. You might be lucky and hit a good sale, but I wouldn't wait. As far as pipes go, if you see a great buy, I'd grab it.
Maybe our sponsors can weight in on what they see in the future.

cobguy · Apr 30, 2014

Tobacco and Silver ... tobacco and silver ...
This has been my mantra for the past couple of years.
Since we are on Economy here is a great recent article on Silver:
http://www.silverseek.com/commentary/worlds-most-undervalued-asset-13135

Economics and The Future

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