Propane in short supply

Gas companies try to balance dwindling product
Melissa Topey
Feb 17, 2014
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”

Comments

Contango

Re: "..I see where you did not contest my thoughts on Plutocracy."

With whatever terms or however you wish to define the nomenklatura (Political ruling class).

I would use either the terms corporatism or fascism to largely describe our current economic system.

See: The Iron Triangle of -

Bureaucrats, special interests and politicos.

pntbutterandjelly

@ "Contango": Ah HA! We agree again! (How sweet it is!) I too don't have a finite "ism" by which to attempt to corral a term or phrase that we are discussing and watching unfold. It may well be a new form never before thrust upon humanity. However...it is NOT Democracy. (See how easy it can be to agree!), (Now we are making progress.)
Thank you,
PB&J

Contango

Re: "it is NOT Democracy."

True. It was founded as a representative republic.

Limited govt. and free markets work for me.

To use a sports analogy:

Return the govt. to being strictly a referee and let the players and the coaches play the game.

IMO, ain’t nothin’ gonna change until ‘possibly’ after the sovereign debt crisis, which is currently in the process of being formulated by central banks worldwide.

Peninsula Pundit

You do realize, of course, that 'Limited' Govt and 'Free' Markets' is 'Corporatism' defined.
To return to the sports analogy, it would be more like:
Tie the referee up and have the teams join forces and rob the spectators.
Out of curiosity, what course of action do you believe individuals should take, once the sovereign debt crisis arrives?

Contango

Re: "'Corporatism' defined."

Absurd.

Sovereign debt crisis prep:

Diversification of assets as best as possible - real estate, gold, cash, stocks, bonds, et. al.

If you think that it'll be a Mad Max event: gold, grub and guns.

Peninsula Pundit

Judging by the rise in gold prices, guns and MRE /survivalist sales, it looks like the popular opinion is your latter scenario.

wetsu

Although a bit chippy at times, this is the best thread I have seen on the Register web site in a while. Keep your feet on the pedal, guys, just don't kill each other.

Contango

Re: "popular opinion,"

Doubtful. Might read it as counterintuitive.

Like during the CA gold rush in 1849; the REAL money was made selling the shovels, picks, clothing, et. al to the prospectors.

Coram Deo

The United States is the #1 EXPORTER of propane in the world. So why the shortage? From the Motley Fool article below propane is being shipped in massive quantities to Asia (mostly Japan), Norway and South America (mostly Brazil). They want to crack the Chinese market and probably will. This crisis has touched our family as we heat by propane and our cost per gallon has doubled. We are currently looking in to alternative heat sources as a supplement like a wood stove add-on. The EPA as I type is trying to outlaw the use of wood stoves. The perfect storm seems to be hitting the poor and middle class and it's not hard to see a global agenda here. I don't have an answer for this because I loathe burdensome regulation but it seems to me if we are the #1 EXPORTER of propane then there should be enough propane set aside in each state that this unprecedented shortage would not happen again. Who is watching the watchers?

http://www.fool.com/investing/ge...

Contango

Suppliers were expected to be prescient regarding this unforeseen amount of cold weather?

Yea, let's put the govt. in charge. lol

"If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand”

- Milton Friedman

Coram Deo

I don't expect suppliers to predict the weather, however I think they knew a lot sooner about the shortage and could have warned us a bit more earlier than they did. We were sitting on less than 15% tank during the days of subzero windchills of -20 and -30 below with the only explanation from our supplier that they were not sure if they could even supply us (we were told to conserve which we did) and no other supplier would sell any propane unless you were their customer. I'm a limited government, free market type of person but my only recourse was to contact our District Rep for help. Sitting in a cold house is a great motivator. Yes, no way to predict the harsh winter (but hey it's Ohio), a pipeline down for maintenance...okay, got that. Farmers needed more propane to dry crops? Maybe. But if we are the #1 propane exporter in the world how do we domestically have this kind of shortage? I follow your comments often and agree with you probably 90% of the time. We agree on more issues than not but is there not one mechanism in place within the propane industry (or government)that monitors supply levels for a safe winter? Just asking. We've used propane for over 30 years and have never run into such a dilemma. Anything you can share would be appreciated.

Contango

Re: "I think they knew a lot sooner about the shortage and could have warned us a bit more earlier than they did."

Speculative. You don't know.

Where was the DOE?

Aren't those highly paid bureaucrat 'geniuses' supposed to be on top of stuff like this?

pntbutterandjelly

@ Coram Deo; I feel your pain, hear your angst and applaud your thought processes. "We" (you and I and the voters of what's left of our Democracy) are the watchers. And...too often we are "just watching". (Know what I mean?)

pntbutterandjelly

A "Global Economy" is (and will be)a natural progression and evolution of humanity (like it or not). It is how tribes banded together to form colonies and colonies banded together to become city states and city states morphed into countries (natural progression). A Global economy is NOT the issue. The issue is, "Who and how many will have a say in its policies and thus the control." A Global Economy gives untold opportunities to those who are _ell-bent for control of the masses in lieu of the masses' needs. Global Economy gives rise to Global Plutocracy. "That" will be "New World Order".

Contango

Re: "Global Economy gives rise to Global Plutocracy. 'That' will be 'New World Order'."

IMO, you're giving bureaucrats the unnecessary benefit of rational thought, when incompetency will do just as well.

“Never attribute to malice that which is adequately explained by stupidity.”

- Robert J. Hanlon

Peninsula Pundit

You just don't appear to be getting what PB&J is saying.
It's not bureaucrats,guy, it is corporate officers.
I'm really having a hard time believing you are as thick as you write.
I do not know PB&J, but what he is saying is as plain as the nose on your face, once you open your eyes.

Peninsula Pundit

PS: You may as well attribute your closing quote to yourself.
Hanlon stole it from others, including Heinlein, whom I originally thought you were quoting.
http://en.wikiquote.org/wiki/Rob...

Contango

Re: "closing quote,"

Or, Goethe. Thanks.

Knew it wasn't original with him.

Regardless, the sentiment is what is important.

"Beware, lest you lose the substance by grasping at the shadow."

- Aesop

Contango

Re: "It's not bureaucrats,guy,"

Again: Why do the majority of the wealthiest counties in the U.S. surround DC?

Peninsula Pundit

That lobbying money has to be spent somewhere.
You can't spend it all on improvements to your home or vacation chalet.
That has been the downfall of many a politico on both sides of the aisle.

Contango

Re: "That lobbying money has to be spent somewhere."

They ain't all U.S. corp. dollars. Unions, not-for-profits, foreign, et. al.

Also, tax dollars.

Those bureaucrats don't work for free.

The Big Dog's back

pooh, go back and sit in the corner.

pntbutterandjelly

C U all later,
PB&J

pntbutterandjelly

Quote: "To ignore the obvious is to veil the truth." -PB&J (2-17-14)

Dr. Information

Wonder if the same genius's who don't understand the shortage are as outraged with the salt shortage nearly everywhere.

Peninsula Pundit

I'm even more enthralled that you believe that is a 'natural' shortage as well.
Salt pours off of a 4 foot wide conveyor belt 24/7/365 from not one, but two salt mines within 50 miles of this area.
Salt is used on roads what? 3-5 months a year?
And there's a shortage?
You figure it out, you're so smart.

Dr. Information

Im not the one complaining Einstein.

Peninsula Pundit

Not enough sense to do so, I surmise.

Dr. Information

Just watch a 5 minute segment on NBC 2 night ago. The salt isn't coming out fast enough out of the mines to keep up. The stuff they had on backup, all gone and gone quick. Again, keep ranting about things you do not know about.

tk

I don't know how many of you depend on propane for your heating and cooking but we do and it makes me very mad that we can't get the propane we have prepaid for because the company can sell it at inflated prices to those who didn't prepay.

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