Craft breweries shutting down due to U.S. carbon dioxide shortage

Craft breweries across America have been on the front lines of businesses facing higher material costs because of inflation.

Now, many are confronting a shortage of a key ingredient: carbon dioxide, the gas that gives beer its crisp, effervescent taste.

And one brewer has already said it plans to shut down a key manufacturing plant and lay off workers as a result.

Night Shift Brewing, in Everett, Massachusetts, just outside Boston, cited the CO2 shortage as the reason it is suspending operations at its longtime facility and outsourcing to nearby locations instead.

"Come October 1, we won’t likely have jobs for many of this team," the company said in a statement on Instagram.

It's a slow-moving crisis that became worse this summer as reports emerged that the carbon dioxide sourced at Jackson Dome in Mississippi, one of the nation's largest gas production hubs, had been contaminated.

Even before that, breweries were facing higher costs for raw materials like aluminum and barley as a result of inflation, said Chuck Skypeck, a technical brewing projects director at the Brewers Association, the 6,000-member trade group that represents America's independent brewers.

And carbon dioxide supplies were already tight because pandemic shutdowns forced many key suppliers offline, a disruption they still have not recovered from, he said. The summer is also a pressure point in the supply of carbon dioxide as key facilities go offline for scheduled maintenance, he said.

"There’s been spot shortages across the country since the beginning of the pandemic," Skypeck said.

But the sudden halt of supplies out of Mississippi appears to have exacerbated the situation for some struggling brewers beyond the point of recovery.

"Our members are coming through two-and-a-half years of Covid shutdowns and other supply chain issues and inflation, so it's just another blow in a long series of challenges they’ve had to face," Skypeck said. "Some members have thrown in the towel."

In an email, Sam Rushing, president of Advanced Cryogenics, a firm that consults for the carbon dioxide industry, said a possible shift in the geology of the region near Jackson, Mississippi, has released contaminants like sulfur compounds into gas wells.

In a statement to NBC News on Thursday, Denbury disputed that any contamination had occurred.

"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," it said.

"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.”

Katie Stinchon, executive director of the Massachusetts Brewer's Guild, told WBTS-TV in Boston that a dozen or more breweries are experiencing the same shortages as Night Shift.

"And those are just the ones that I know of,” she said.

But the problem appears to have reached beyond the Northeast. Skypeck said he's heard from Brewing Association members in virtually every part of the U.S., saying they are now tight on carbon dioxide supplies.

"I think it's just the start," Skypeck said.