The ART Of Business

Twinkies, Fracking, and Globalization

The complexity of our world regularly reveals itself in both big and small ways.

One of the more recent examples of how seemingly disparate elements can smash into one another and alter reality surrounds guar gum.

Guar gum is one of those natural products that touch our lives and which most of us have no knowledge about, i.e. where it comes from and what it does.

Guar gum is the endosperm of guar beans. In layperson speak, this means that the gum results when the beans are milled. The end product is a free-form, white powder.

While guar beans are found in many parts of the world, well over 80% of global output comes from India and Pakistan.

Guar gum has many uses in our modern era, including within the food and energy sectors.

In food, guar gum kept pastries like Twinkies and other Hostess products thick and fresh.

In energy, guar gum is used to keep open the cracks in the Earth that are initially formed during the fracking process.

Over the past few years, as the shale boom took root, the demand for guar gum went through the roof.

In 2010, one ton was about $1 a pound. By mid-2012, it was $12.

This was particularly bad news for Hostess, as they sought to offset the meteoric rise in guar gum’s price by seeking concessions from their union employees.

Unfortunately, a deal was unable to be reached and Hostess shut it all down in December, to the dismay of millions like me.

The next time someone says to you that the world is getting more complicated, agree with them. The recent experience of guar gum would prove their point.

 

 

 

 

 

 

 

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