Propane in short supply
Aug 27, 2014 at 2:40 PM
A “perfect storm” of several events hitting at once for the propane industry continues to have millions of Americans suffering a propane shortage across 24 states.
“It was a perfect storm for our industry,” is the phrase from Craig Wood, president of the Ohio Propane Gas Association. Wood also runs the industrial division of Sandusky-based O.E. Meyer, which sells propane.
Last fall, a bumper crop of grain in the west was harvested late in the season. The crop was extremely wet and required a lot of propane to dry. Most propane was shipped west so the crops could be processed. There was no time because of the lateness in the season for the propane industry in the east to replenish stores for winter heating.
Then the Cochin pipeline, a major source of transporting propane between the United States and Canada, was shut down to undergo maintenance.
“And then we ran into this record cold,” Wood said. “That brought us to low supplies”
Wood has never seen supply so low.
Low supply and high demand translate to customers paying higher prices for the propane they need to heat their homes and livestock barns.
Propane prices are going above $5 per gallon. When supply is good, it can normally be purchased at about half that cost.
Gov. John Kasich declared an energy emergency in Ohio about three weeks ago.
That allows some regulations, such as limiting the amount of hours drivers are allowed to be on the road to be lifted to allow drivers to keep the limited existing propane supply moving. The governor said he also is asking the federal government to temporarily lift regulations.
Texas, which has a healthy supply of propane, is allowing drivers from Ohio to export the fuel.
That, however, takes a lot of time because fuel tankers can only transport 10,000 gallons at a time. It also comes with high transportation costs.
Propane distributors are also being hit with higher costs. They have 10 days to pay for a shipment.
“That can be hard, especially after accepting a shipment of 10,000 gallons,” Wood said.
Smaller distributors nationwide are having a hard time making those higher payments, and for some it threatens to put them out of business.
The one factor that could help break the propane shortage is for the weather to warm up. Mother Nature does not seem to have that in her forecast, with cold temperatures expected to continue.
O.E. Meyer is making sure its customers have enough propane to keep warm; so far no one has run entirely out. Other propane distributors, unfortunately, cannot say that, Wood said.
O.E. Meyer is doing that by not filling customers’ propane tanks full. They are limiting deliveries by partially filling customers’ tanks and then making more stops to those same customers.
“That way we protect our propane supply” Wood said.
So far it is working.
The company made sure it shared the strategy with customers.
“We communicated with them, “Here is what we are doing and why.’ We have to share in this together to get through this,” Wood said. “They are not a customer, they are part of our families and part of our community. We don’t want this to harm the industry or our customers”