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10.05.21

Surging natural gas prices are causing food and beverage shortages in Europe — Is the US next?

BY Ben Reiter

The rising cost of natural gas has led to warnings that European consumers should brace for shortages in pork, poultry, and carbonated beverages. The potential shortage stems from a lack of carbon dioxide that is used for processing meat and carbonating beverages and is often obtained as a by-product of fertilizer production. There appear to be numerous factors contributing to the high natural gas prices, including: increased demand as economies recover from the pandemic, Hurricane Ida causing production facilities to go offline, extreme cold and heat events that have depleted seasonal reserves, low wind and hydro production, and (at least in Europe) limited supply from Russia. While the US has also seen rising natural gas prices, they have yet to reach the heights that Europe is experiencing and North American gas producers appear prepared to ramp up production if prices remain high. However, natural gas storage reserves in the US are significantly lower than normal for this time of year, global competition for supply is increasing, and the cold winter months when gas demand peaks have yet to arrive. Even if natural gas prices don't directly disrupt food and beverage production in the US, consumers would be wise to prepare for potential disruptions to global food and beverage supply chains if the cost of natural gas remains high globally.

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Ben Reiter

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