The Quiet American Propane Crisis

propane-pricesIn the midst of an American natural gas boom, a harsh winter, and the temporary closure of the Cochin pipeline, has caused a bit of a propane crisis. This has led to propane prices skyrocketing and a group a bipartisan lawmakers asking the White House to provide relief.

Currently the U.S. stock of propane is at around 30.8 million barrels, which might sound like a lot, but compared to the same time as last year the stock it’s a whopping 45% lower. With low stock and high demand caused by the extreme cold weather this winter, prices of propane are up about $2 a gallon more than at this same time in 2013.

Ranchers and farmers in the mid-western United States are being hit particularly hard by the propane shortage. Already unseasonably wet weather in the mid-west postponed the harvest, leading to a huge loss of income. Then winter came early this year, and has not let up, leading to record low temperatures and snowfall which results in even higher heating bills. And finally the Cochin pipeline, which carries 40 % of Minnesota’s propane from Canada to the U.S., was receiving maintenance for about three weeks from late November to mid-December, cutting off the propane supply and causing costs to rise. Last summer, propane prices hovered around $1 a gallon; in late January prices peaked at more than $5 a gallon in some places.

With propane costs doubling and no end in sight for the cold weather Senators John Thune, R-S.D., Dick Durbin, D-Ill., and Rob Portman, R-Ohio have urged the Agriculture Department, Health and Human Services, the Small Business Administration among others to respond to the ongoing crisis. There have been results; The Transportation Department has issued emergency declarations that allow propane tank drivers to drive for longer hours in an effort to increase deliveries in states where propane shortages exist.

Oddly enough, experts point out that propane production has been increasing in recent years, even leading to some record monthly surpluses prior to the crisis. So what happened to the surplus? Two words; snow and cold. Due to the wet weather, five times as much propane was used in an effort to dry corn and salvage the crop during the recent harvest. Hence the five-fold price increase.

American propane exports exceeded 400,000 barrels a day for the first time in October. Then there was the winter weather that caused an increase in demand earlier and longer than expected. So, with harsh weather and massive exports it actually is easy to see how the surplus went away very quickly.

This perfect storm of events has shown vulnerability in the American propane market, and represents an eerie foreshadowing on the impacts of our vulnerable reliance on fossil fuels. While prices have eased somewhat since peaking, analysts have predicted that high prices are here to stay. Imagine if this happened to gasoline prices?

Source: USAToday | KSTP

Andrew Meggison was born in the state of Maine and educated in Massachusetts. Andrew earned a Bachelor’s Degree in Government and International Relations from Clark University and a Master’s Degree in Political Science from Northeastern University. Being an Eagle Scout, Andrew has a passion for all things environmental. In his free time Andrew enjoys writing, exploring the great outdoors, a good film, and a creative cocktail.

 

 

Andrew Meggison

Andrew Meggison was born in the state of Maine and educated in Massachusetts. Andrew earned a Bachelor's Degree in Government and International Relations from Clark University and a Master's Degree in Political Science from Northeastern University. In his free time Andrew enjoys writing, exploring the great outdoors, a good film, and a creative cocktail. You can follow Andrew on Twitter @AndrewMeggison