What if?

Agriculture.com Staff 07/22/2008 @ 12:30pm

So now we know. . . $4 is the tipping point.

The tipping point for what? The point at which the price of gas finally begins to change the attitudes and behaviors of Americans. Remember when we groused about $2 a gallon at the pump, then $3? Aaahhhh, the good old days. Despite our grousing, we didn't change our driving habits much at all.

But $4 a gallon? Different story.

It's been interesting to watch things unfold the last couple months. I've read statistics about the raw number of miles driven in the U.S. falling 4 to 5%. It's the first time that's happened since 1942 and World War II. More folks looking to stay closer to home for summer vacations. Folks making fewer number of trips to the grocery store per week. City folk actually riding bikes to work.

Those are changes on the personal, micro economic level. But the changes on the macro economic level have been even more drastic and jarring.

What's happened to the value of used SUVs and pickups in the last couple months? On the flip side, how much more demand is there right now for fuel efficient, smaller cars, or hybrids? Like somebody flipped the light switch on.

How about housing values in far outer ring suburbs in metro areas all over the country? Those 45 minute to one hour one way commutes aren't quite so attractive anymore, are they? Again, look at the flip side. how much more in demand are homes for sale in those fortunate suburbs close to mass transit, like light rail?

My point is, things can and do change, sometimes in the seeming blink of an eye.

All this makes me wonder. What if new technology came along on new tractors and combines that produced drastically improved fuel efficiency? What about tractors and combines powered by hydrogen fuel cells? Electricity or solar powered??

What would happen to the demand for and value of two-, three-, five-, ten- or twenty-year-old tractors and combines? Would they lose value overnight, just like what's happening to SUVs?

Could be.

These questions are interesting to me as I've been tracking auction sale price data now for almost 19 years. Since mid-2004 and especially since November 2007, I've watched as auction prices have skyrocketed on all types of used farm equipment, especially older tractors and combines. Looking at the months ahead, my prediction is we'll see more of the same with used values continuing to hold strong or rise further.

But. . .

Our human inclination is to think what's happening to us now, at the moment, will continue on into the future. The price of corn has to keep going up, right? My house will never go down in value, will it? I'll always be able to find buyers for a good used SUV, won't I?

Maybe, maybe not.

Click on the links below to view tractor prices I've gathered for you.

John Deere 4430 tractors

IHC 1066 tractors

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