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As temps drop, so does supply

Last updated: February 01. 2014 9:03AM - 169 Views
By - bpaschal@civitasmedia.com - 37/451-3341



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Belinda M. Paschal


bpaschal@civitasmedia.com


MIAMI COUNTY — Propane is in short supply across the nation and local businesses are feeling the crunch. As demand exceeds supply, business owners find themselves having to ration the crucial heating fuel to customers.


The shortage coincides with the recent spate of arctic weather in several southern and midwestern states, including Ohio, where business owners are struggling to keep tanks filled due to price jumps, slow deliveries or supply cutoffs.


“We’re having to short-fill some customers and put people off longer than we’d like to,” said Kevin Mote, owner of Kevin Mote Petroleum in Laura, which delivers propane under Moulton Gas Services.


To cope with the dearth of propane, Mote said his company currently is not accepting new customers, instead trying to supply the 600 or so county customers they have. “We’re doing some short fills like delivering 200 gallons or even 100 gallons. Most people have a 500-gallon tank,” he said.


Propane is the main source of heating fuel for 10 percent of Miami County residents, according to U.S. Census data, and Mote said this winter’s extreme weather has brought more fuel use than in the past. “People are using more than 25 to 50 percent more propane this year than in previous years,” he said.


Mote cited several reasons for the shortage. “There’s a lot of things that have happened that has made the perfect storm, including the product being exported, maintenance on pipelines and refineries that produce propane, the extreme cold weather.”


Add to that the rising cost of propane and it is indeed a perfect storm — a perfect winter storm.


Propane prices have been on the upswing, hitting record average prices in the past week, according to data from the U.S. Energy Information Administration. On the average, residential propane prices were around $3.78 on Jan. 27, compared to under $3 at the same time last year. A story by the Associated Press said the national average price for a gallon of propane spiked this week to a little over $4, up from $2.96 from the previous week.


With the commonly used fuel in short supply, Ohio Gov. John Kasich on Jan. 18 issued a statewide Energy Emergency Declaration to expedite shipments of propane. The declaration temporarily suspends restrictions on deliveries by tanker trucks that supply propane dealers, allowing drivers to be on the roads on weekends and eliminating limits on consecutive days of work.


In addition, Kasich is asking the federal government to take steps to speed up the shipments of propane and heating oil coming into Ohio from out of state.


Kasich’s declaration has helped get what propane is available to its destination faster, said Steve Haines, energy operations director for Trupointe Cooperative, Inc., which has its corporate office at 215 Looney Road in Piqua. The business serves approximately 7,000 home, commercial business and farm accounts between Wapakoneta and Georgetown, Haines said.


Extending the number of hours drivers can be in their trucks helps reduce the chance that they’ll run out of time before making a delivery. However, trucks are driving longer distances to make deliveries, which still decreases the number of deliveries they’re able to make in a day, Haines noted.


“Trucks are going greater distances to get to us. There’s propane coming into Ohio by truck from Texas, Mississippi, South Carolina, as fast as they can, but compared to a few years ago, where it may have come out of Monroe (Ohio), the truck could have done 2-3 loads a day, now it can only do one load a day,” Haines said. “The biggest challenge we’ve had is the delay in transportation.”


Haines agreed with Mote’s “perfect storm” statement pertaining to the reasons for the shortage. “Much of the challenge is infrastructure-related. Changing economics have come into play and pipelines are not shipping as much propane as they used to,” he said. “Then you throw in throughout the Midwest a big corn crop that carried some moisture, so there was a large ag event that played into it.”


Haines is referring to the abundant but wet grain crops that required massive amounts of propane in order to be dried prior to storage, as noted in a statement by the National Propane Gas Association (NPGA), that demand reduced propane inventories throughout the area.


At the same time, the NPGA stated, infrastructure realignments inhibited the transportation of propane. The Cochin pipeline, which provided 40 percent of the product used by Minnesota suppliers, was shut down for repairs. This triggered a chain reaction causing suppliers to go further out to load their supply.


Finally, as winter storms hit much of the country, demand for residential, commercial and agricultural heat soared, but fuel already was in short supply.


This confluence of events has prevented regional inventories and the existing pipeline and terminal infrastructure from recovering, the NPGA said.


Despite the short-fills and delivery delays, both Mote and Haines said customers have been understanding if concerned.


“Most are very understanding with what we’re doing. Obviously, there’s a lot of concern, especially since it’s just February and we’ve got a lot of winter to go. There’s fear in people’s minds also,” Haines said.


“I’m deeply concerned myself. It’s the most challenging period I’ve been through in my 15 years in the energy business, which includes Gulf Wars, hurricanes and other types of supply destruction problems.”


Belinda M. Paschal may be reached at (937) 773-2721 or follow on Twitter @TheDailyCall.


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