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Supply shock - UK carbon dioxide price quadruples

Graham Watson

3rd September 2022

A classic of the genre, with the quadrupling of carbon dioxide prices having lots of interesting economics implications, largely because of the derived demand for carbon dioxide.

We've been here before - previously, the government stepped in to subsidise fertiliser production - but two of the economy's largest fertiliser producers have temporarily ceased production because of the extent to which energy costs have risen, and as a result CO2 is now £4,500, up from around £1,000 last week and £200 last year.

One of the UK’s biggest chicken producers has warned food security could again be under threat.

More here from the Financial Times - UK’s top chicken producer warns on spiralling CO₂ costs

The article reinforces the importance of carbon dioxide as an essential input into the manufacturing of many different products - it is used in the poultry and pig industries as well as brewing, carbonated drinks production, food packaging and refrigeration.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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