Perfect storm creates propane shortage for many


By Curtis Wildfong • Last Updated 9:54 am on Friday, January 31, 2014

Because of a record corn harvest in the fall and freezing temperatures this winter, a high demand for propane has led to a shortage of the heating fuel. (Daily News/Curtis Wildfong)

 

As temperatures continue to plummet in the Midwest, so does the availability of propane for heating homes and businesses.

Local propane providers, as well as users, are working diligently to try to conserve as much of the now coveted fuel.

“There’s definitely a shortage this year,” said Mike Petersen, owner of Petersen Oil in Greenville.

Pipelines from the southern part of the United States and shipping trucks can’t move the product north fast enough for the region of the country experiencing extreme lows in temperatures.

As a result, companies and users are trying to stretch out the usage of available propane, allocating the amount of fuel provided to customers.

Petersen Oil has restricted its tank fills to 60 percent instead of the normal 80 percent, which allows for expansion inside the tank, “in hopes to stretch out supplies,” Petersen said.

Marc Foerster, vice president of business development for Crystal Flash in Greenville, said his customers shouldn’t see a change in service, but for those who do not have a capped price, the costs for propane are on the rise.

Tom Blumberg, Gowen resident and owner of Hounds of Von Blumberg Kennels & Co., said he just received 200 gallons of propane in his 1,000-gallon tank, which was down to just 15 percent capacity. He said he hopes to stretch it out for a few weeks, but is unsure if that’s possible.

“I don’t know what we’re going to do,” he said. “That’s our only heat out there. We have no other way of getting heat out there. That’s our income.

“If we lose our heat, then pipes can start to break and all that,” he added.

Blumberg said he’s lowered the temperature slightly in the building and is limiting the space he heats, shutting down a greenhouse housing plants he says he’s sure to lose now.

“It’s hard to keep up with the temperatures out there,” he said. “We shut down everything we can.”

Companies like Petersen Oil are going to great lengths to obtain the much-needed fuel as temperatures continue to hover in the lower teens.

And because the shortage of propane is region wide, what would normally be a trip three hours away to restock inventory has now turned into a nationwide scramble for propane. Petersen said he has trucks currently headed for Texas to purchase the fuel.

It’s a measure he’s never taken in 25 years in the business and said it’s because the shortage is so widespread, which is why resources from the south can’t keep up with the north’s demand.

But the reason for the shortage goes back further than when temperatures dropped.

Petersen said the issue really began last autumn after a late corn harvest — which also set record highs for production — meant corn dryers, which use propane, ran longer. The fall corn harvest, which is normally wrapped up in mid-November, lasted into December.
In typical years, propane providers stock up on the fuel between harvest and the winter, preparing for the cold. But Mother Nature took little notice, dumping snow on the area far sooner than it had in recent years.

“Normally we have a three-or-four-week span between harvest and winter,” Petersen said. “This year the demand never ended. We really started out short on supply and never really caught up. The infrastructure can’t move the product fast enough. On top of that, it was an early winter and a cold winter and that meant an increase in demand in home heating.”

Foerster said Crystal Flash also had to “dip into” reserves for the increased demand for propane for corn dryers and residential customers are now using up to 15 percent more this winter than in the past. He said Crystal Flash has prepared for such high demand by contracting for propane year round and spreading its purchases across several suppliers.

There are normally two options to obtain fuel. One is what’s called contract product, which companies store in facilities, and the other is “spot market” product where producers buy and sell excess fuel stored from the summer.

Crystal Flash mostly contracts and builds reserves, something Foerster says are “a rainy day fund of sorts.”

“That’s exactly why we do this,” he said.

Petersen said it’s preferred not to deplete contract product, but “we’re going through those reserves faster than normal.” And for spot market fuel, well, “that is gone,” he said. “I’ve been in the business for 25 years and I’ve never seen this.”

Gov. Rick Snyder earlier this month issued an executive order, declaring a state of energy emergency in the state due to the temporary shortages of heating oil and propane.

“The extreme cold and hazardous winter weather of the past week continues to impact our communities,” Snyder stated.

The executive order suspends state and federal regulations relating to hours of service for motor carriers and drivers transporting heating oil and propane within Michigan, enabling these individuals to exceed the number of hours and consecutive days in which they can operate a commercial motor vehicle to try to get propane to users.

“This executive order will ensure there is enough heating oil and propane in the coming days and weeks to protect the health, safety and welfare of Michigan residents and visitors,” Snyder stated.

As users wait for more propane to heat their homes and businesses, those providing it to them are waiting for higher temperatures.

“At this point the weather is really working against us,” Petersen said. “Warm weather is really the only relief we’re going to get.”

With temperatures expected to stay below freezing for at least the next week, it is anyone’s guess as to when that relief may come.

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