Propane: No one wants another 2014

SALEM, Ohio — When the winter of 2014 started, no one expected what would happen by the middle of January. No one.

Combine a wet fall in the Midwest (lots of farmers drying corn), severely cold temperatures, and shipping woes by train, and you get a propane shortage.

As a result, the price of propane doubled to more than $4 per gallon in the Midwest, and it remained high for several weeks.

Double whammy

Duane Stateler, a pork producer in McComb, Ohio, said the winter of 2014 is one that will live in his memory. There were two reasons: an outbreak of the Porcine Epidemic Diarrhea Virus (PEDv) on his farm, and the propane shortage. Stateler and many livestock producers didn’t see either coming.

Stateler said he finished drying corn and filled his propane tanks in December. In a normal winter, the fill-up lasts until at least the beginning of March.
But then the year of the “polar vortices” hit the Northeast.

Stateler’s fill-up that was supposed to last until March… well, that didn’t happen. He started running low by the middle of January.

Stateler said just by chance, he decided to check the tank and what he found scared him. Those nights with temperatures below zero had taken their toll on the propane supply — he was nearly out.

The farmer called his supplier. That’s when a feeling of panic started to hit.

There wasn’t much to get. A major pipeline that moves propane from Canada to the Midwest was down for maintenance during part of the 2013-2014 heating season, and the rail lines were slowing, and the demand surpassed the supply.

Then prices skyrocketed.

Counting the minutes

Stateler said he got to the point of counting how long the furnaces ran and how long they stayed on and was thankful when they would turn off.

Every morning, his chores included a march to the tank and see how much was left.

“I experienced it once, and I don’t care if I ever experience it again,” said Stateler.

He said his farm and others that he knows got through it and never ran out.
But, he said it was an anxiety he still feels today — and it grows even though the tanks are full like they were at this time last year. It’s not knowing what is ahead this winter that concerns him.

“Everything is full right now. The same as it was last year,” said Stateler.

Speaking up

The first thing Stateler did when he realized he was not alone in the propane problem was to contact the Ohio Department of Agriculture. They helped facilitate it so that livestock producers and residences were prioritized to get propane — not enough to fill up tanks, but enough to get through the cold spells.
Ohio Gov. John Kasich issued a statewide Energy Emergency Declaration Jan. 20 to expedite propane shipments.

The declaration allowed shippers, with a valid commercial driver license, who were transporting propane or heating oil, to drive more hours than they normally would.

Stateler didn’t ask where the gas came from or how it got moved so quickly — all he knew was that it was needed.

Switched to electricity

Stateler said one way he conserved propane use was by turning on heat lamps in January that stayed on until April.

He said the propane supply was a problem, but the price was also a concern to the farm’s bottom line.

However, once Stateler penciled out the cost of the electricity for the BTUs being produced by the heat lamps, the electricity was cheaper.

“It was just one of those years,” said Stateler.

Propane prices

Stateler said he paid between $4.50 and $4.80 a gallon for propane last January, after paying around $1.50 a gallon in the fall.

According to Peakoil.com, residents living in rural areas and in the Midwestern U.S. spent about 54 percent more last winter on propane than in 2012-13.

Triggered legislation

The wild ride in propane prices was noticed by U.S. Senator Rob Portman. He and other senators went to work on creating legislation that will help prevent it from happening again this winter.

The bill which was introduced by Portman, R-Ohio; Al Franken, D-Minn.; and Tammy Baldwin, D- Wis., is set to become law after being passed by the House and Senate Dec. 11.

The portion of the bill that is set to become law would give propane distributors additional tools to get their product to consumers when supplies are high and prices are low. Making this fix will help the propane industry curb price spikes, and prevent another propane crisis like the one that hit families and farms across the Midwest last winter.

The legislation will also improve propane supply and price information, coordinate responses to shortages, study the need for regional propane reserves, and help farmers purchase propane storage tanks.

Current prices

The good news is that the price of propane did come back down in 2014. Stateler said the latest price was around $1.89 when he topped off after drying corn late this fall.

“Right now, I should have enough to get us through the first week of March,” said Stateler.

But he urges everyone to stock up before January hits again this year. He said he knows of farmers who added tanks just to ensure another winter doesn’t wreak havoc on the propane supply and their bottom line.

This year, propane suppliers didn’t wait until winter to remind propane users to prepare for the weather ahead.

Roy Willis, president and CEO of the Propane Education and Research Council, has been very vocal about getting propane consumers to fill their tanks as soon as possible to avoid any weather-related difficulties this winter.

And the push to fill tanks early has paid off, according to 1st Choice Energy Service, a division of Agland Co-op.

Most of their producers made their orders early and consumers have made sure their home tanks were topped off before the really cold air arrived.

Those early orders, combined with the shale boom in Ohio and Pennsylvania, have resulted in cheap propane prices — good for both farmers and consumers.