Carbon dioxide is the fourth most abundant element in the atmosphere. In fact, there's far too much of it for the planet to handle. Unfortunately for beer breweries, which use the gas to carbonate and preserve their beverages, you can't just pluck CO2 from the sky. You have to buy it by the pound, and lately, the crucial gas is hard to come by. 

"We spent the last two months absolutely begging and borrowing for shipments of bulk CO2 from everybody and anybody who was willing to send a truck to fill us up," said Dan Bronson, the general manager of SingleCut, a New York-based craft beer brewery and distributor. "The top line here for us is that it's an existential problem."

The brewery is downstream of a nationwide shortage of CO2 that is impacting businesses from dry ice suppliers and welders to major conglomerates such as Tyson Foods and Kraft Heinz.  The gas has countless applications, from carbonating soda to creating refrigerants in fire extinguishers to knocking out livestock before slaughter. 

The causes of the shortage are not well understood by those dealing with it, but many agree that it goes back to the beginning of the pandemic, when demand for ethanol gas (which produces carbon dioxide as a byproduct) plummeted as Americans stopped driving. This disrupted supply, even as demand rapidly recovered, which created an imbalance that sent the price of CO2 per ton up 40 percent since the beginning of 2020. 

Bronson said SingleCut is operating with about 70 percent of its usual allocation of Co2 and that it hasn't gotten a shipment from its usual supplier in over a month. To make up the difference, the company is using nitrogen as a substitute to help preserve its beer, but transitioning to a different gas is not as simple as just calling up a new supplier. It requires technical know-how to convert a brewery to use nitrogen rather than CO2. For the moment, it also means buying nitrogen on the more expensive spot market. 

"We don't have large-format contracts of nitrogen," Bronson said. "We're buying everything on the spot market. So for all intents and purposes, we're buying it at a retail price, which is a huge hit to us." 

Long-term contracts were previously common practice, and for the most part, they allowed the company to not worry about whether the CO2 was coming or not. Echoing business people the world over who have faced unexpected supply shocks, Bronson noted that "previous to two months ago, this wasn't even a thought. It was nothing that even registered as a potential threat." Now it very much is, and the business has limited ability to just jack up prices given the highly regulated nature of its product. 

A big further up the supply chain, CO2 suppliers are similarly struggling. Erving Santana, manager for a branch location of CO2 supplier AWISCO in the Bronx, said it's been difficult to figure out which customers should get first dibs on a limited supply. 

"Because of the shortage, we're not getting enough to fill all of these orders," he said. "We've had to prioritize who is going to get it, and we don't necessarily know how to allocate the small amount of resources that we have." Because the business specializes in welders, he added, the location has tried to take care of its biggest welding customers first, but that has become difficult as more buyers scramble to get what they need. 

Nearby Apple Ice Bronx, a dry ice supplier, has also been forced to ration its product. Michael, a customer service manager who wished to keep his last name anonymous for privacy purposes, said healthcare-related customers are at the top of the list. "First we go to hospitals and any type of medical companies," he said. "Once we know we got them covered, then we ask everyone else if they can use regular cubed ice rather than dry ice."

This means food and beverage companies are second priority, and some have been unable to wait for their usual suppliers to catch up.  "We're doing the best we can and trying to distribute to everybody, but we've lost a lot of business," Michael said. 

The ice vendor said one reason for the shortage is that successive heat waves have increased the demand for dry ice during weather-induced power outages. Once the weather cools down, he added, the demand pressure could let up a bit.  

In addition, scheduled summer maintenance at fertilizer plants, which produce CO2 as a byproduct, is exacerbating the shortage. As those plants ramp back up, that could be another avenue for alleviating the shortage. Ethanol production is also ticking back up, which could mean more CO2 is coming down the pipeline. 

For Bronson, figuring out how to address the shortage is essential to the business surviving long-term. "It's really what our business has been focused on for the last two months, coming up with long-term mitigation strategies," he said. "It's been a major cost for the quality of life of our team and for our bottom line."