Propane Shortage Means Increased Prices for Customers

4 years 6 months 13 minutes ago Tuesday, January 21 2014 Jan 21, 2014 Tuesday, January 21, 2014 10:00:00 AM CST January 21, 2014 in News
By: Andie Lowenstein, KOMU 8 Reporter
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COLUMBIA - Sub-zero temperatures mean propane is in high demand all across the Midwest and Northeast and suppliers are having a difficult time keeping up.

Propane supplies took a hit during the "Polar Vortex" winter storm causing prices to skyrocket.  More than 14 million American families use propane to fuel furnaces. According to the U.S. Energy Information Administration, national propane prices averaged $2.86 per gallon last week, up 17 percent from the same time last year. In Missouri, prices are up 32.8 percent this January as compared to last year.

According to the Missouri Propane Gas Association, the challenges in delivering propane for customers for the winter season started in October. Large amounts of corn and grain crops were being harvested throughout the Upper Midwest. Usually, the harvest progresses in stages through the region but in late 2013 the harvests happened simultaneously over a wide area. That was a large, wet crop which demanded massive amounts of propane in order to be dried for storage. That demand took a toll on propane inventories throughout the region.

Additionally, the Cochin pipeline, which provided 40 percent of the product used by suppliers in Minnesota, was shut down for repairs which pushed the suppliers further away to get their supply.

Propane terminals in the Midwest and some in the East are on allocation, which means they are provided with a certain amount of propane that they can buy each day. The high demand is pushing oil companies to look outside Missouri for additional propane.

"We're doing our best to keep our customers supplied with product, that's the most important thing right now," said Tom May, director of marketing at MFA Oil.  "We're also working with our associations to come up with plans to try and get more energy assistance funding released for the consumers that are out there that require energy assistance."

"We think this is almost like a one hundred year flood and a combination of things that has created a perfect storm to affect propane distributors and customers," said Steve Ahrens, executive director for the Missouri Propane Gas Association.

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