Propane supply pinch means higher prices, colder homes
BY CARRIE NAPOLEON Post-Tribune correspondent February 12, 2014 11:02PM
Kim Puska doesn't know if the last tank of propane she bought will last the rest of the cold weather. Her price-per-gallon nearly tripled, | Carrie Napoleon/For the Post-Tribune
Hoosiers trying to cope with the propane shortage can find helpful hints on a new Purdue Extension website. The site contains tips to help users conserve propane gas and use it more efficiently in heating their homes.
Among the tips are placing rugs on bare floors, humidifying the air, turning down or shutting off the heat in unused rooms, and reducing the use of kitchen fans, bathroom fans and other ventilating fans, which pull air out of rooms. Leaving a fan on too long will result in more fuel being used to heat the home.
The website is at https://ag.purdue.edu/extension/eden/Pages/Propane-Conservation.aspx.
Updated: February 13, 2014 2:02AM
When Kim Puskar opened her most recent bill for propane gas, she nearly choked.
Puskar lives in unincorporated north Lowell and uses propane to heat her home. Her current bill for 303 gallons of the fuel was $1,501, a whopping $900 more than her bill for the same time last year.
“It’s a humbling experience when you get a bill like that,” Puskar said.
In a normal winter a full tank will last the whole season, she said. This winter the tanks are lasting only four to six weeks.
Bills to fill the propane tank outside her home have been creeping up ever since December. As a self-employed insurance agent, Puskar said she earns too much to qualify for any type of financial assistance to cover heating costs but she does not earn enough to afford her skyrocketing heating bill.
“It cripples me,” Puskar said.
Puskar is not alone. Propane prices across the state and throughout the Midwest have been soaring as supplies dwindle.
Scot Imus, executive director of the Indiana Propane Association, described the scenario as a “perfect storm” of circumstances. He has been appealing to state legislators to raise awareness and sound the alarm to federal officials to take action to stop the crisis before it worsens.
In January, Imus wrote a letter to state legislators detailing the factors leading up to the crisis and what it means for the 10 percent of Hoosiers who use propane to heat their homes — people like Wanda Bostick of unincorporated Crown Point.
Bostick said she has taken steps to insulate her home and only keeps her thermostat at 60 degrees, but still she worries she will not have enough propane to heat her home for the rest of the winter.
Bostick qualifies for energy assistance but the tank of propane the program provides, which usually lasts the whole winter, is gone. She received help from the Cedar Creek Township trustee to fill the tank a second time, but it is already down to 40 percent.
“What am I going to do when it gets low? How am I going to fill it again?” she asked.
Imus said there will be no quick fix to the supply shortage and subsequent price spikes.
A late corn harvest in 2013 followed by cold, wet weather resulted in strong demand for propane from farmers. Midwest propane inventories dropped 2 million barrels the week ending Nov. 1, the largest single-week stock draw in 20 years.
Imus said prices also are affected by difficulties in moving propane around the country.
One of two pipelines supplying the Upper Midwest with propane was out of service for almost a month. Then weather-related rail disruptions further hampered the Midwestern supply.
Weather has been an obvious factor in driving up demand. Since Oct. 11, Midwest propane inventory levels dropped by 12.8 million barrels compared to 7.3 million barrel for the previous five-year average for that period.
Finally, record high exports of propane despite strong production in the U.S. are putting even more pressure on supply.
“We exported 4.3 billion gallons of propane last year compared to 800 million gallons just five years ago,” Imus said.
Suppliers are being forced to travel to Texas to pick up propane. The longer travel time and wait at the terminals to be filled — 48 hours, in some cases — have prompted suppliers to self-rationing propane to customers. Imus said instead of filling tanks completely, some suppliers are limiting home deliveries to 150 gallons and shutting off nonessential clients, such as businesses who fill customers’ smaller, portable propane tanks on site.
Chuck Albright, manager at Midway Rentals in Cedar Lake, said he is still able to get propane for his 1,000-gallon tank, but only in limited quantities.
“They cut our fill to 400 gallons. Of course, the price went up,” Albright said, adding right now it is running around $6 a gallon. So far he is not concerned about availability. The shorter fills mean the supplier is making extra trips to his business. He’s confident he will have enough product for consumers who fill their tanks at Midway but he says it’s unlikely the prices will come down any time soon.
“If the weather continues like this it’s going to get even worse. Weather dictates everything,” Albright said.
Simon Bowman, spokesman for Amerigas, replied via email that the company is rationing deliveries to customers in a select few service territories. He said the company delivers propane to more than 2 million customers in all 50 states.
“We are working hard to alleviate these supply issues and ensure that all of our customers are taken care of,” Bowman wrote.
Indiana Attorney General Greg Zoeller wants to ensure consumers are taken care of as well. The office last week issued a news release saying it would assist consumers whose propane supply is 10 percent or lower and are either having trouble contacting their supplier or can’t find an alternative supplier.
“The extreme winter conditions and market forces have created substantial problems for Hoosiers who are trying to keep their families warm, but also for the industry trying to meet the needs of their customers,” Zoeller said.
The U.S. Energy Information Association says the average price for a gallon of propane in Indiana soared during January from $2.96 to more than $4.
Since Dec. 16, Zoeller’s office said it has received 290 consumer complaints related to the propane shortage. It also has the power to investigate consumer claims of price gouging.