Propane shortage continues to impact Midwest residents
By Ryan Crossingham,
Many areas in the Midwest are suffering from the second propane shortage in the last six months due to unusually consistent cold temperatures this winter. The inability of propane companies to keep up with propane demand has caused deliveries to slow and prices to soar to unprecedented levels.
Regional farmers experienced a severe propane shortage during their corn harvest season in 2013, in which they struggled to dry their corn after a wet fall season.
The current shortfall in fuel has left residents ranging from rural residents to poultry and hog farmers looking for ways to conserve their supplies.
Alike what happened during the prior shortage, governors and regulators in approximately 33 states have relaxed transportation regulations to attempt to speed up deliveries as temperatures across the region remain at a frigid level.
The United States Department of Transportation has issued an hour of service waiver for February for the Midwest and part of the Eastern United States.
ONEOK NGL, LLC, a gas pipeline company, recently filed paperwork with the Federal Energy Regulatory Commission stating that they will be reversing the flow of their pipeline which flows from Kansas down to Oklahoma.
They are hopeful that the reversal of their north to south “North Line 5” will increase the numbers of barrels that the company can ship to their storage supplies in Conway, Kan.
There were many factors that contributed to the shortage, one being wet weather last fall that forced producers to dry their crops to prevent them from spoiling. The crops were also larger than anticipated and took place in a much shorter period of time, causing an increased demand for propane.
Another factor was the early start to winter, which led to the need of households to begin heating their homes earlier, and for a longer period of time.
On top of that, a temporary shutdown of a prominent propane pipeline, which carries 40 percent of Minnesota’s propane from Canada to the U.S. didn’t help either. The pipeline was out of action for about three weeks from late November to mid-December for maintenance, which further disrupted propane supplies at perhaps the worst possible time.
Adding even more fuel to the crisis was the fact that U.S. exports of propane were way up from the year prior. Exports of propane began in 2012 and by January 2013 were at 168,000 barrels per day. By October, exports had jumped to 408,000 barrels per day, according to the U.S. Energy Information Administration.
Given these factors the national supply of propane was depleted at a much faster rate than could be projected.
According to the National Propane Gas Association, more than 660,000 farmers use propane for irrigation pumps, grain dryers, standby generators and other farm equipment. Their use of propane is essential fuel for crop drying, flame cultivation, fruit ripening, space and water heating and food refrigeration.
February weather conditions haven’t helped the cause. Temperatures in the Upper Midwest saw temperatures that ranged from 50-60 percent below normal during what is typically already a cold time of year in the region.
Due to the demand for propane earlier in the fall, the Energy Information Administration reported a 35 percent decrease in available propane supplies at the end of November. That is equivalent to a shortage of 19 million barrels.
The shortage of supply has been reflected in prices around the region. At the end of January, North Dakota was ranked as the state with the third highest expensive propane cost at $4.569/per gallon.
North Dakota trailed only Iowa at $4.709/per gallon and Minnesota at 4.610/per gallon.
Trends are showing that expenses are slowing as early February prices of propane in North Dakota came in at $3.893/per gallon, but is still $1.59/per gallon more expensive than a year ago at this time.
Even before any supply crunch, propane has always been an expensive heating fuel. The Energy Information Administration (EIA) predicted before the winter season that Midwestern propane-fueled households would pay more than double the heating bill than that of natural gas heated households.
Due to the rising heating costs NDSU Extension Services are encouraging homeowners to look for ways to make their homes more efficient to heat.
In a recent press release, Ken Hellevang, an NDSU Extension agricultural engineer, mentioned one way to cut cost is to practice zone heating.
Zone heating is keeping some areas of the home warmer and others cooler, which can reduce heating costs due to heat loss being related to the temperature difference between indoors and outdoors.
Believe it or not, spring will come sooner rather than later, and for Midwestern residents and their wallets, it can’t come soon enough.