Law of Supply and Demand Fueling Refrigerant Crunch

While suppliers are promising that R-134a will be available, concern still exists in the market that it will be in short supply and therefore expensive.

The issue of a shortage of R-134a refrigerant first reared its head last fall in the U.S., though the situation had been building for some time.

As a result of increasing demand and a hiccup at one of the largest R-134a plants in the world, concern over supply and pricing has increased in tandem.

A statement from Du Pont goes some way to explaining that company’s R-134a supply situation.

“Due to a combination of the growth in global demand, and operational issues in 2004 at a major manufacturing facility, a significant production shortfall has occurred. This has constrained our ability to build inventory entering 2005, and although our production facilities are fully utilized and we are making as much product as we can, we expect the shortfall to continue in 2005.”

While Du Pont is just one of several major suppliers, including Arkema, Honeywell, and Ineos, Du Pont’s situation nonetheless served to exacerbate a problem that has led to U.S. pricing that has nearly quintupled since September.

In Canada, while concern is mounting, the prime season has yet to arrive and so shortages have not appeared.

This does not mean that the effect of concern over shortages has not been felt north of the border.

Reports that pricing has increased are already starting to flow. A 10-kg container that might have cost a business $90 in 2004 is already reportedly costing $265 or more. The concern over price is only part of the issue. Passing the cost onto the consumer may provide some difficult consumer relations; having to refuse the job because refrigerant cannot be obtained is much worse.

As a result of a mild 2004 air conditioning season in Canada, however, on-hand stock of R-134a appears to be at slightly higher than normal levels at this point in the season, as many shops used as little as half their expected volume last year.

According to a Du Pont spokesperson, speculation on the cause of the industry-wide shortage has gone from the sublime to the ridiculous, including blaming aliens for having absconded with refrigerant supplies.

Actually, more down-to-earth reasons are really at the root of the supply crunch.

The entire R-134a issue is the result of a number of coincidental factors. As jurisdictions worldwide phase out R-12 service, R-134a has come into greater demand. Additionally, worldwide vehicle production has increased, putting pressure on existing plants to supply the refrigerant. It is also useful to realize that R-134a has uses beyond refrigeration, including foam expansion and aerosol propellant.

Furthermore, other than one facility in China, new production plants have not been built in years.

Plus, in Europe, existing plants are reportedly preparing to make the switch to producing other refrigerants that will meet rules mandating lower global warming potential of refrigerants.

While the European Parliament backed a total ban of R-134a on all new cars’ air conditioning systems as of 2014, with a phase-out period starting from 2011 instead of 2009 as proposed by the Parliament’s Environment Committee, it is still sticking to a commitment to use R-152a instead, though this may change. There are proponents, for example, of carbon dioxide-based systems. Design work for both types of air conditioning systems is underway.

In the short term, though, the potential for a shortage of R-134a is expected to continue. Accordingly, the Mobile Air Conditioning Society has cautioned service providers to ensure that they not assume that alternatives for R-12 system retrofits will be approved for R-134a-designed systems.