The Midwest is largely underwater due to heavy snow melt and torrential rain. As a result, the U.S. CO2 supply is likely to take a big hit.
CO2 supply may get washed out
Reported first by Reuters, the production of American ethanol has dropped more than 13% and prices have spiked, all as a result of the widespread flooding throughout the U.S. Midwest.
Ethanol is key to the CO2 supply because multiple plants recover carbon dioxide gas from ethanol production as a byproduct— one that is large enough that it supplies a large percentage of commercial needs.
Carbon dioxide gas is used for a variety of every day industrial and consumer products for things like fire suppression, soft drink carbonation, controlled atmosphere packaging and storage, fumigation, oxidation and pH control, and even pest prevention.
The state of CO2
So far, ethanol plants in Iowa, South Dakota, and Nebraska have slowed production or shut down entirely until the flooding subsides, operations can resume, and roads and railways can reopen to allow for shipment and transportation.
If the plants remain offline and the transportation lanes washed out, we’ll experience a temporary spike in price with the drop in supply until production can catch back up.
While importing carbon dioxide is an alternative, ongoing political trade disagreements and lower international supplies will likely prevent a quick remediation to the U.S. CO2 supply.
So what happens next?
A situation like this is typically on a day-by-day status. A dry spring will obviously allow for a faster clean-up and a quicker injection of new gas production into the national CO2 supply. If more rain hits the Midwest however, the situation will worsen, impacting the CO2 supply as far out as May, June, or further.
We’ll keep you updated as the situation changes.
A note from Zephyr
Business aside for a moment, Zephyr’s thoughts are with everyone currently impacted by the flooding in the Midwest. We not only have partners located in these areas, but like many of you, our staff also has friends and family currently dealing with flooding in their neighborhoods. Our hearts go out to those affected by this.
Source:
Reuters
