The Price of Bricks is Headed Up

You don't have to drive very far on The Ring Road circling the Cairo metropolitan area to realize that bricks are the key building material here.


In fact, if you watch one of these building going up over a period of time,


you will quickly see that brick, cement and re-bar are the raw ingredients.


 So let's talk about the price of bricks.  It displays the economic and political issues facing the Egyptian government in stark terms.  Like the other basic commodities involved in construction, brick manufacturing and transportation is energy-intensive.  Fuel costs have long been subsidized in Egypt.  As the government has poured subsidies into gasoline and diesel fuel to keep them around a dollar a gallon, cars have proliferated and demand skyrocketed.  The subsidies are killing the government.  

For several months, the Egyptian government has been trying to negotiate a loan agreement with the International Monetary Funds (IMF).  The IMF has a couple of conditions in mind that are holding up progress.  One is balancing the Egyptian budget.  (Good thing the U.S. doesn't want to borrow from the IMF!)  A big part of that is to be accomplished by ending fuel subsidies. 

The government just announced a fifty percent price increase for fuel oil supplied to brick and cement factories.  The brick factories promptly went on strike.  Now I have also heard that the price of bricks has escalated from 160 EGP per thousand to 600 EGP per thousand.  If true, that certainly reflects something other than a fifty percent increase in fuel prices.  But logic is uncommon here.  Whatever the cause, there are five million people here employed in construction - roughly the same number as in tourism.  Things may get a lot worse before they get better.