Los Angeles (AP)-- Fire tore through the Pepsi-Cola bottling plant in Riverside, California yesterday evening. The cause of the fire is thought to be accidental, although terrorist involvement has not been ruled out. Investigators are focusing their efforts on a labeling machine in the north-west corner of the complex.
Analysts predict that the fire will cause the already soaring price of soda to hit record highs when trading resumes tomorrow. Prices could go above the $40 per case level that was last seen after last month's sugar refinery bombing in Riyadh. For consumers, this would mean that cola could skyrocket to the previously unheard of price of $2 a liter.
One industry official cited the price hikes as an example of the so-called "disaster premium" on soda. "If another large event like a distribution center bombing or a sugar field fire occurs, the disaster premium on a case of soda would climb to about $8 a case. Depending on the time needed to stabilize the market, prices as high as $50-$60 a case could become a reality."
Californians will be hit especially hard by any price increases. According to nationwide price surveys, the average price for a liter of cola is $1.19, while Californians pay an average of $1.39. Industry insiders say that the price difference is a result of California's more stringent "summer blend" regulations combined with a bottlenecking of soda distribution centers.
"California hasn't seen a new soda distribution center built since the 1970's," activist Scott Unclo of Californians for Soda Accountability said in an interview Tuesday.
The sky-high prices of soda have increased the calls by activists to reduce dependency on sugar-based beverages and switch to "green" drinks such as fruit juice or water. "Americans consume twice as much cola as the rest of the world; we have reduce our consumption of such unhealthy beverages," said Unclo.
There have been calls recently on capitol hill for beverage reform as well. "We have unnecessarily endeavored to treat the symptoms and not the core problem for far too long," said Senator Robert C. Byrd (D-W.Va.) in a speech to the Senate last week. "A serious beverage efficiency program, bolstered by the promotion of juices and other clean home-grown thirst quenching sources, provides a compass point for a U.S. beverage strategy."
Proposed solutions seem to be divided by party lines though. Democrats are promoting alternative beverages, while Republicans seek to lessen dependence on foreign soda by drilling for fructose in Alaska.
(crossposted in desidiosus)