Less Driving During the Pandemic Drove Soda Price High


With less gas production it means the CO2 needed for sodas and beers is in low supply which leads to higher prices.

This summer, consumers might find beers and soft drinks to have a higher price than usual, as the cost of carbon dioxide goes up due to less driving, The Wall Street Journal reported.

Carbon dioxide, a byproduct of ethanol as well as a key ingredient for sodas and beers, is required by federal law to be mixed into gasoline to help it burn more cleanly. As the coronavirus lockdowns took place state by state, the demand for gasoline went down and ethanol plants were shut down.

Consequently, 40 percent of all industrial carbon dioxide across the nation was impacted, and carbon dioxide production fell by 30 percent this year.

“It’s a big concern,” said Vinnie Cilurzo, who owns Santa Rosa, CA based Russian River Brewing Co.. His company has been paying 25 percent more for carbon dioxide since last month.

Big companies such as Coca-Cola Co. also face a shortage of carbon dioxide. However, Coke’s spokeswoman said that the North American drop in carbon-dioxide production coincided with less demand for soft drinks, as restaurants and sports stadiums are now closed. “We do not foresee any concerns about supply at this time,” she said.

Bob Pease, president of the Brewers Association trade group, commented that brewers might soon seek to balance the cost increases by raising beverage prices, especially when states such as Texas, Georgia and Wisconsin are easing lockdowns and allowing restaurants to reopen. “This shortage could become critical in short order,” he said.

See the full report here.


Economics, Finance and Investing