Surging oil prices are beginning to impact various industries, and Americans should anticipate increases in bottled water costs, according to analysts.

Middle East Conflict Drives Up Oil Prices

Conflict in the Middle East is disrupting the oil industry and impacting consumer goods. The disruption affects regions that typically carry about 20 percent of the world’s oil and liquefied natural gas. Brent crude oil prices have risen by over 50 percent since the start of March, and higher energy costs are expected to quickly translate into increased plastic production costs.

High Bottled Water Consumption in the U.S.

Nearly nine in ten Americans purchase bottled water, with almost one in five relying on it exclusively, according to 2024 industry data. Analysts predict “at least a five percent increase on plastic bottled drinks in general” for April. Further increases are possible if oil prices continue to climb.

Global Impact: Price Hikes in India

Drinking water prices in India have already risen by approximately 11 percent, driven by higher energy costs. The price of packaged drinking water has increased to 20 rupees per liter after plastic packaging material costs jumped by more than 70 percent in recent weeks, according to Angelo George, CEO of Bisleri, India’s largest bottled water company.

U.S. Market Resilience and Potential Increases

Domestic Ethane Production Offers Some Buffer

The U.S. primarily produces its own ethane, a key component of plastic resins, which may shield it from immediate and dramatic price increases seen in India. Kenneth Gillingham, a professor of economics at Yale University, suggests there might be “a slight upward pressure” on U.S. bottled water prices, but not as substantial as in India.

Plastic Production Costs are Rising

Despite domestic production, experts note that global polymer price increases will inevitably affect plastic bottle prices in the U.S. Matt Slutzker, a principal analyst at Wood Mackenzie, reported price increases of over 30 percent for food and beverage bottle-resin between late February and now.

Timeline for Price Increases

Experts anticipate consumers will see price increases in April, as most plastic converters faced price increases in March. These price hikes could last throughout the peak consumption season in the summer. Similar price increases occurred following the Russia-Ukraine war in 2022, taking approximately one to three months to fully register.

Industry Warnings from Major Producers

Coca-Cola and PepsiCo, two of America’s largest bottled water producers, have already warned of increased consumer prices in their corporate filings. PepsiCo cited “continued volatility in…commodity, packaging and other input costs,” while Coca-Cola pointed to “unfavorable changes in economic conditions” and “high rates of inflation.”

Long-Term Outlook and Demand

Some estimates suggest a 30 percent increase in bottled water production costs. Even after the situation stabilizes, it will take time for production and distribution levels to return to normal. Anticipation of future costs could also lead companies to proactively raise prices and consumers to increase their purchases, further driving up demand and prices.

The key factor influencing future price changes is how long energy prices remain elevated. Prolonged pressure on plastic and packaging costs could lead to higher bottled water prices as summer demand increases, with any relief lagging until supply chains fully reset.