Home Indiana Agriculture News Tight Midwest Propane Supplies Running Up the Cost

Tight Midwest Propane Supplies Running Up the Cost

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propane tight supplies

Howard Jones-CeresThe price of propane delivered to Indiana farms has risen recently as sharply as the temperatures have dropped, and one Hoosier calls the situation “ugly.” Propane has risen steadily since late last year, but in recent days the price has jumped so much that customers are faced with double the cost of just two months ago.

Howard Jones is the Vice President of Energy at Ceres Solutions and explains the problem is regional supplies.

“The U.S. propane stocks are a touch below normal, but it’s worse than that in the Midwest,” he said. “There’s just not enough supply in the Midwest so we have to travel many states away to get propane and bring it back into our market.”

He says there are a number of logistical factors creating the short supplies.

“Some pipelines have gotten reversed and are hauling other things, rail can’t move fast enough, and a lot of times it’s just infrastructure, just enough trucks to be able to move propane from point A to point B. obviously when they’re going that much farther to get propane it takes 2 or 3 trucks instead of the one that could normally service you on a local basis.:

Of course the extreme cold is playing a big role in propane demand.

“Absolutely,” said Jones. “At this time of the year grain drying is obviously not going on. We had a pretty big grain dyer year. We’ve had a lot colder than normal winter, and a lot of it is just heat degree day driven as far as usage goes this time of year.”

Jones told HAT the good news is they are keeping up with demand by limiting the amount they deliver to each customer.

“Midwest propane retailers are all limiting deliveries. We’re doing everything to make sure people don’t run out. The gas is there, we’ve just got to go farther to get it and we are keeping up.”

Those trips to pick up propane are now extending out to 500-750 miles, and Jones says it may not be long before they’re driving 1,000 miles to stock up.

Governor Mike Pence took steps to help make more propane available for heating in early January when he issued an emergency proclamation waiving statutes that limit the hours of service for propane transporters in order to help suppliers better meet market demands. On January 17, he extended the order which will now remain in effect until January 31, 2014.

“As fellow Hoosiers feel the impact of recent propane shortages and near-record low temperatures, I urge the people of Indiana to conserve their own propane supply as much as possible, to reach out to their neighbors, and look out for each other,” Pence said Thursday. “With the shortage and weather conditions expected to continue, I also urge the federal government to exhaust all possible means to assist and help alleviate the supply issues currently faced across the Midwest.”

In addition, in order to keep more propane available for residential customers, the Indiana Department of Transportation (INDOT) trucks will use diesel fuel instead of propane through March 1, 2014.

Pence also said, “My administration has been in close communication with the propane industry and will continue to monitor developments and take all actions available to help Hoosiers make it through this crisis.”