Plenty of propane in U.S., just not in Midwest; officials on lookout for price gougingMillions of Midwesterners face the threat of not being able to buy enough propane to heat their homes and businesses at a time when the country has more of the fuel than ever. The propane just is not where it needs to be, the Propane Education and Research Council reported this week.
By: Don Davis, Forum News Service
ST. PAUL - Millions of Midwesterners face the threat of not being able to buy enough propane to heat their homes and businesses at a time when the country has more of the fuel than ever.
The propane just is not where it needs to be, the Propane Education and Research Council reported this week.
Minnesota's attorney general this week also warned of propane price gouging as the Upper Midwest faces a shortage and record-high costs.
Late in the week, Upper Midwest propane users got a couple sparks of good news.
First, Texas Gov. Rick Perry told Midwest governors in a conference call that he would suspend trucking rules that restricted transportation of propane from Texas to areas of the north experiencing propane shortages and high prices.
Second, the Obama administration announced it would release more heating assistance money for people who cannot afford propane and other fuels.
The propane council announced Thursday that it will investigate specifically why the shortage occurred and what can be done to prevent it from happening again.
"At a time when U.S. propane production is at an all-time high, PERC wants to know what can be done to ensure that propane can be quickly and affordably put to use here at home, even during times of extreme weather," the council said in a statement.
Politicians and the propane council reported that two main problems appear to have caused the propane shortage, and accompanying record-high prices, beyond high demand for the heating fuel due to cold weather: transportation problems and rising propane exports.
Transportation woes have slowed movement of the fuel to the Upper Midwest, the area with the most serious issues and that most relies on propane. A Canadian propane pipeline explosion last weekend cut some supplies, but western North Dakota and Canadian oil booms also take pipelines and rail cars out of the propane supply chain.
On Thursday, Minnesota Gov. Mark Dayton and other governors won Perry's commitment to suspend some rules that limit Texas propane being trucked to the Midwest. Dayton's office reported the rules would be suspended for "several weeks" and the issue will be revisited.
Dayton also is encouraging railroads to make more cars available to transport propane.
Wisconsin Gov. Scott Walker used President Obama's Thursday visit to his state to discuss the propane crisis.
The propane council reports that transportation is important because most storage for the fuel is located outside the Upper Midwest, where the fuel is needed during unusually cold weather that is expected to last at least through mid-February.
Also, the council reports, propane is being exported at a time it is needed at home. Politicians are leaning on Obama to redirect some of the fuel to the Upper Midwest. Last year, more than 20 percent of American propane was exported, compared to 5 percent in 2008.
Concerns about price gouging
Minnesota Attorney General Lori Swanson told the state Executive Council, which Friday proclaimed a propane emergency situation for 30 days, that people leasing propane tanks may be especially at risk for price gouging.
Companies that lease tanks to Minnesotans demand that they be the sole source of fuel purchases, Swanson said. That means those companies may charge as much as they want.
Swanson and Commerce Commissioner Mike Rothman said their offices have received several calls about the situation.
A 1957 state law gives propane sellers the right to demand that only they supply the fuel for tanks they own.
Gov. Mark Dayton said that issue would appear to be ripe for the 2014 Legislature to tackle.
Swanson said that Minnesotans with the money may buy their own fuel tanks and buy propane from anyone they want.
Rothman said that propane prices that were about $1.50 a gallon before the crisis have in some places gone above $6.
"The situation is not going to ease up," Rothman said, with continued cold temperatures expected to keep demand for heating fuel high.
The Executive Council, composed of the five statewide elected officials, unanimously voted to extend a state of emergency declaration Dayton issued Tuesday for the next 30 days. A governor can only declare an emergency for five days. Dayton said he could call the council back into session in a month if the emergency continues.
The declaration gives Dayton the ability to take actions, such as using National Guard troops or to open armories as shelters for people who have no heat.
After the council meeting, Dayton met with aides about the situation and decided he will have daily telephone conference calls with propane industry leaders and people in his administration. It also was decided to open a propane hotline on weekends; originally it was to be open only Monday through Friday.
The hotline received 550 calls since it opened Thursday. Officials said calls included those concerned about high prices and some who needed financial assistance.
The hotline is for Minnesotans with questions or concerns about the propane situation. It could involve people who have run out of propane and cannot get more and need a warm place to stay. The state is working with local authorities on the situation.
The commissioner said 250,000 Minnesota homes, mostly in rural areas, are heated with propane. His staff could not say how many businesses, farms, schools, hospitals and other facilities use propane.
Director Kris Eide of Minnesota’s Homeland Security and Emergency Management said that the state Emergency Operations Center's propane emergency could overlap with "the typical flood preparations" that will begin soon in anticipation of spring floods.
More federal aid
The Obama administration on Thursday gave states more funds to help low-income residents who cannot afford paying for heating fuel.
Minnesota will receive $15.8 million more and Wisconsin $14.2 million in additional funds.
The extra federal aid came a day after Democratic Sens. Amy Klobuchar and Al Franken of Minnesota and Tammy Baldwin of Wisconsin asked the administration for the money to help those affected by high propane prices.
“As more cold weather bears down on Minnesota, it’s absolutely critical that families are able to heat their homes and stay warm,” Klobuchar said.
Baldwin added: “Rural homeowners across Wisconsin are experiencing crisis conditions due to the propane supply shortage and resulting price hikes in the Midwest.”
Franken said that with colder temperatures predicted, again, he will keep monitoring the situation.
Reports from some areas of northern Wisconsin on Thursday indicated prices were around $5.75 a gallon, more than $4 higher than normal. Similar price spikes were reported in parts of Minnesota.
Propane is used by many rural residents in the Upper Midwest because natural gas pipelines generally only serve those in cities. However, propane also is used in places other than homes and businesses, including heating construction projects.
Minnesota legislators advise their constituents to take advantage of state aid.
“In the wealthiest nation on Earth, no one should ever have to worry about whether or not they can afford to keep themselves and their families warm during these cold winter months," Reps. Tom Anzelc of Balsam Township, Carly Melin of Hibbing and Jason Metsa of Virginia said in a statement. "Minnesotans look out for one another, which is why we offer programs to provide financial assistance for those who have fallen on hard times."
Other forms of assistance may be available through county social service programs, community-based organizations and nonprofit agencies.