International Demand And Cold Weather Strain Midwest Propane Supply
Propane prices are reaching a record high at the same time that cold weather is boosting demand throughout the Midwest.
The crisis coincides with a late harvest and an unusually cold winter affecting most of the country. Families and business owners are struggling to keep propane tanks filled due to the increased price and supply rationing.
Alex Jackson, director of development for KRCU, lives in rural Olive Branch, Ill. He was out of hot water, heat and cooking gas for nearly three days. When United Propane Gas finally came to fill up his tank, they only filled it halfway due to rationing. Jackson paid nearly three times the normal cost of propane.
“We understand that there is a crisis for the propane and that the rations are very understandable for trying to distribute this out with all the cold weather that’s been going on,” Jackson said. “But, the price and the fact that they are doubling and going on tripling the price on the customers, you know, that is what we can’t take. The most the propane has ever gone up to is about $2 a gallon. So, for it to go up to $4 is a little extreme.”
Due to heavy rainfall last season, the supply of propane has been shorted by a late harvest that increased demand from farmers who needed to dry a large amount of grain before storage. The abnormally cold winter all over the country has also added to the problem. It’s a perfect storm for a propane gas crisis according to energy economist, Michelle Foss.
“It’s combined into an unusual mix for this one product which is normally a very sleepy product in the United States,” Foss said. “And this is just kind of a very unusual thing to see this happen. I mean you’ll have ups and downs of propane prices, but nothing like this year. This has been kind of an unusual thing.”
According to Foss, the propane market in foreign countries is much larger than in the United States. Domestic consumers must now compete with these foreign markets that use propane on a daily basis for cooking and heating purposes.
“Propane is a much bigger domestic fuel outside of the United States than inside the United States, especially in Latin America which is where most of the sales are,” Foss said.
Midwest political leaders are taking action against the alarming crisis. Missouri Governor Jay Nixon announced on Monday that he will provide $15 million dollars to help low-income Missourians who are facing rising propane costs. The funds come from the federal Low-Income Home Energy Assistance Program. Illinois Governor Pat Quinn declared emergency action last week to make it quicker and easier to transport fuel in from other states.
“These actions will quickly bring more propane and heating oil into Illinois to help make sure families can safely and affordably heat their homes during this historic cold stretch,” Governor Quinn said in a press release.
Missouri Senator Claire McCaskill requested the Commodity Futures Trading Commission investigate propane price gouging.
“There is propane around the country and they’re still exporting propane so the questions we’re asking is ‘Is there gouging going on here? Is there manipulation going on here and why isn’t there a requirement that the surpluses of propane that exist around the country that they are moved into location so that these families are not trying to make the very difficult choice as to whether or not they can eat or stay warm?’” McCaskill said in a press statement.
McCaskill’s colleague, Senator Roy Blunt of Missouri, reacted differently, stating that making short-term waivers of bureaucratic impediments is the solution.
Representatives from the Missouri Propane Gas Association plan to ride out the storm as best as possible and have more propane in stock for next winter. They advise customers to find other resources for heating, but remind them to be safe and never overload electrical outlets when using space heaters and other forms of heating.
Propane supplier MFA Oil advises customers to sign agreements with their provider to protect against price hikes in the future. Industry leaders believe the crisis will be over soon and encourage every propane consumer to conserve as much as possible.
Meanwhile, Alex Jackson simply hopes he can keep his house warm for the rest of the winter.
“Hopefully it won’t last long and we can get a full tank at a decent price soon,” Jackson said.