Breweries scramble for CO2 amid shortage: 'A scary situation'

Bad news for beer drinkers. A carbon dioxide shortage is causing problems for brewers. CO2 is a key ingredient to make beer, and without it, some breweries are stopping production and cutting jobs. 

"I'm in daily texts, communication with my supplier," said Jacob Landry, the owner of Urban South Brewery in New Orleans. 

Landry says he's still able to get CO2, but he's paying triple the price for it. 

"This spike is having a big impact on our bottom line," Landry said. "Our supplier is trying to source it wherever they can. We can't get the quality we need out of our normal supply lines." 

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The problem stems from one of the nation's largest gas production hubs in Mississippi called the Jackson Dome. It's a natural source for CO2, and it's where many breweries get their supply from. 

John Raquet, the Chairman and Founder of Gas World, a leading news outlet covering the gas industry, says the dome is still producing CO2, but has elevated levels of other hydrocarbons that do not meet food and beverage standards for use. 

"It's causing a tightness in the market," Raquet said. "I think it is a crisis at the moment when you have breweries telling their staff you're going to be laid off because we're not getting supplies until September or October. 

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Night Shift Brewing in Massachusetts is the first brewery to announce it's cutting its workforce because of the shortage. 

The Jackson Dome is owned by the energy company, Denbury Inc. In a written statement to Fox Business, the company says:

"The CO2 produced at Jackson Dome has been and is being produced within all regulatory requirements, and the composition of the delivered CO2 continues to meet contractual specifications. Denbury and our industrial customers are well aware that the CO2 from Jackson Dome includes small amounts of other naturally-occurring components. Certain of our customers with specific needs, such as food and beverage grade requirements, are working to address processing issues that may exist in their distribution chains. We are assisting them in timely resolving these matters, as appropriate."

Landry says if the CO2 does not meet beverage standards, it has the potential to create off flavors in their beer. 

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But the shortage isn't affecting only the beer industry. 

"It's food processors as well," Raquet said. "Chicken, food freezing, food chilling, they use CO2 and dry ice. It's having a roll on effect." 

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Raquet says the quality concerns at Jackson Dome come at non-ideal time for the gas industry. Ammonia plants are another source for CO2 across the U.S, but in the summer, many of them go offline for maintenance work. 

"By the end of September, things should start to come back to normal," Raquet said.