Propane costs rise as suppliers scramble to meet demand
By Archie Ingersoll Forum News Service and Amy Chaffins firstname.lastname@example.org
As the price of propane climbs to historic highs this winter, suppliers in the Midwest and elsewhere are scrambling to meet the needs of residents looking to heat their homes.
Last Tuesday, the executive director of the North Dakota Propane Gas Association could offer little hope for a price decline anytime soon.
“I don’t know what can be done,” Mike Rud said. “I wish I had some good news for someone on this issue.”
In the past week, the per-gallon price of propane for residential users has jumped at least 70 cents, sending prices in the Fargo-Moorhead area into the range of $2.70 to $3, said Gary Jochim, operations manager for Petro Serve USA, a propane supplier in Moorhead.
In Alexandria, Cenex LP Gas and Petroleum Products is selling propane for $4.89 per gallon.
“That’s the highest it’s ever been,” said Lane Kalina, general manager at Cenex. “We had a big grain drying season, then it got cold right away and we went right into home heating season.”
Kalina said they’re not filling customer tanks to the general 400-gallon capacity. Instead, they’re limiting it to 150 gallons.
“It’s a supply issue and mainly now we’re hoping with warmer weather the price comes down. Customers are not too excited about $4.89 propane, so we’re just trying to keep everybody going.”
Cenex offers a budget plan for its customers and the company is honoring its contracts when customers bought propane for $1.49 per gallon this past summer.
“I hope it warms up soon. That’s the only thing that’s going to make a difference right now,” Kalina said.
‘HISTORICAL SHORTAGE’ “This is historical,” Jochim said. “Guys who’ve been around in the propane industry for 40 years are just flabbergasted.”
The shortage started in October when many farmers around the Midwest harvested their corn at the same time, which strained the nation’s supply of propane, a fuel used in drying crops.
“It was the perfect storm. Every state had wet corn,” Jochim said.
The sudden demand from farmers followed by unusually cold weather around the U.S. left propane suppliers playing catch-up.
“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.”
Jochim said Petro Serve has had to go farther to find propane, which increased shipping costs and prices for residential users who are paying about a dollar more per gallon than last year. At this point, their only hope for relief is a stretch of warm weather that would ease demand before spring arrives, he said.
Also factoring into the high price is the need for propane in countries such as Mexico, China and Japan. “As a result, a lot of the propane that we normally would see in the United States is being exported,” Rud said.
25 STATES AFFECTED Nationwide, more than 14 million households use propane to heat their homes and fuel their appliances, fireplaces and outdoor grills, according to the Propane Education and Research Council. The current shortage has affected about 25 states, including North Dakota, Minnesota, Iowa and South Dakota, Rud said.
In Minnesota and North Dakota, heating assistance funds are still available this winter for low-income families, officials say.
Carol Cartledge, director of the state’s economic assistance policy division, said 24 percent of North Dakota families, many in rural areas, heat their homes with propane. She said heating assistance expenditures are up 13 percent this winter, but it’s unclear how much the cost of propane has influenced that figure.
Anne O’Connor, a spokeswoman for the Minnesota Department of Commerce, urged propane users to take steps to conserve fuel, keep track of their tank levels and allow for delivery time.
“Don’t wait until you’re almost out to order,” she cautioned.
STATE OPENS PROPANE HOTLINE The state has established a hotline for Minnesotans with propane problems or questions.
Propane is in short supply, which pushes prices to record-high levels. Gov. Mark Dayton has declared a state of emergency.
The hotline is 9 a.m. to 4:30 p.m. Monday through Friday at (651) 297-1304 or (800) 657-3504. Experts from the state Commerce Department are staffing the hotline in the Minnesota Emergency Operations Center.
About 250,000 Minnesota homes use propane fuel for heat, with businesses and farmers also using it. Most of the homes that use propane are in rural areas.