Propane shortage drives up pricesThe wet corn harvest last year and subzero temperatures this winter have caused a serious propane shortage that’s pushed up wholesale prices around the Midwest, causing pain for suppliers and consumers alike.
By: Alysee Shelton, Duluth News Tribune
The wet corn harvest last year and subzero temperatures this winter have caused a serious propane shortage that’s pushed up wholesale prices around the Midwest, causing pain for suppliers and consumers alike.
Some propane companies have said this is the worst shortage they have seen in years. A reported 25 states are facing the deep shortage. Demand has been boosted by the combination of record freezing weather at the start of this year and a late, wet, record corn harvest last October and November, when large quantities of propane were used to dry out crops. Propane stocks have been drained, and prices in the region are the highest since at least 1990.
“Propane supply is very tight right now. I haven’t seen a shortage this bad in years,” said Joe Stariha, co-president of Como Oil and Propane. “It’s a big problem in the Midwest; this is not good.”
Mark Kolquist, one of the owners at Harbor City Oil and Propane, said his company has to turn to other cities for propane.
“We used to get it here in Duluth, but we’ve been traveling to other cities such as Minneapolis to get propane,” Kolquist said. “We’ve had trucks waiting in line for 10 to 12 hours just waiting to get propane.”
Mike Rud, president of the North Dakota Petroleum Marketers Association, offered little hope for relief in the near term.
“I don’t know what can be done,” Rud said. “I wish I had some good news for someone on this issue.”
Along with the wet corn from last year, the cold weather has piled on demand, creating a crunch on the supply lines, Rud said.
“As these cold snaps keep dragging out, it puts more and more crunch on the supply line,” Rud said.
“We’ve been behind the eight ball for about three months now,” he said.
The rise in wholesale prices forces distributors, like Como Oil and Propane and Harbor City Oil and Propane, to raise their own prices just to keep up.
“Wholesale prices for propane went up over 125 percent within two weeks,” Stariha said. “Each day the prices go up drastically.”
As of Wednesday, the price per gallon of propane was $3.49 in parts of the Northland, and prices are expected to jump again today to more than $4 per gallon, said Will Norman, co-president of Como Oil and Propane.
Distributors are advising customers to cut back on propane use where possible.
“All customers can do right now is conserve as much propane as they can,” Kolquist said. “It’s the best thing to do right now.”
Como Oil offered tips on how people can be more energy-efficient. People are advised to invest in a thermostat timer that lowers the temperature when you are not home, change or clean furnace filters monthly, turn down water heaters 5 degrees, keep vents and air returns clear of obstructions and visually inspect tanks for leaks.
Propane differs from oil in that the federal government does not maintain strategic reserves of the fuel, so in situations of high demand, the government is limited in the relief it can offer.
“There are no strategic stockpiles around the country like there are for crude oil,” said Roy Willis, president and CEO of the Propane Education and Research Council. “It’s all in the private sector. Getting that replenished is a logistical challenge and that’s what we’re facing now.
“What the industry is doing is literally working round the clock to move propane from where it is, in the large storage facility in Texas, using trains and trucks, pipelines and barges to where it is needed. That’s what’s happening now.”
Norman said the situation is not only tough for consumers, but the logistical bottleneck of trucking in fuel from other regions also has squeezed the drivers charged with transporting it.
Harbor City Oil and Propane’s Kolquist said despite the uptick in demand and price, customers aren’t being denied propane.
“Customers tanks are still getting fueled,” Kolquist said. “No one is going cold yet. People can still get propane.”
Forum News Service and Reuters contributed to this report.