Propane shortage causes price hikes

A propane shortage across northwestern Ohio and in 23 other states is forcing rationing and has doubled the fuel’s price among some area retailers. For 100 gallons of propane — a 10- to 14-day supply in extreme cold — someone could spend nearly $360, or about $180 more than last fall.
The worst still may be ahead with more extreme cold in the forecast. Temperatures are predicted to sink below zero in three of the next 10 days. Highs over that period will be in the low 20s.
“This is just the tip of it. I think it’s going to get so much worse,” said Gary Veith, operations manager for Schilling Propane in Upper Sandusky.
“Customers are using a lot more (propane) when it’s windy and cold like this than when it’s 30 degrees.”
Propane is used as home heating fuel primarily in rural areas where there are no natural gas lines.
Schilling is filling customers’ tanks to half-capacity. Some other area retailers are filling them only to 30 percent.
Timm Patterson, owner of Propane Inc. in North Baltimore, is limiting his deliveries to 100 gallons per house. Normally, a household would get a bigger delivery, like 300 gallons, he said.
But rationing can work for only so long. A hundred gallons of propane might heat a home for 10 to 14 days in extreme cold, he said.
If brutally cold temperatures persist, Propane Inc. may have to switch from an orderly delivery system to one that responds to only the most needy customers, Patterson said.
Propane retailers have been suggesting customers use electric heaters. Prism Propane in North Baltimore also has urged customers to turn down thermostats to 64 degrees.
Prism, which is filling customers’ tanks to only 30 percent of capacity, has found an additional supplier in Texas to supplement its propone supply, Prism Chief Operating Officer George Walton said Friday. But the propane shortage has left so many retailers in so many states taking the drastic measure of trucking propane from out of state, that qualified trucking companies can be scarce.
Walton was able to line up one outfit to haul propane from Texas, and on Friday he was trying to find a second hauler. When the fuel is trucked from far away, a hefty transportation charge must be paid.
The fuel scarcity has melted some competitive boundaries among retailers. Prism and Cherry’s Propane Service, in Ottawa, and Erie Shore Propane, in Fremont, have agreed to share propane when one runs out and the other is able to spare it, Walton said.
Veith, of Schilling, said his company is sharing information with competitors about where to find propane. But it won’t share its fuel.
“We have to take care of our customers,” he said.
Attempts to reach Suburban Propane, Cherry’s Propane Service and Erie Shore Propane for comment were unsuccessful Friday.
Propane Inc. is getting about a third of its normal propane supply, Patterson said. Its supplier is traveling up to 1,000 miles to southern states to buy propane, he said.
“There’s no place too far to drive now,” Patterson said.
He has 900 customers in 15 counties in northwestern Ohio. His retail price on Friday was $3.19 per gallon for his customers. Non-customers could buy it from him for $3.49 to $3.59 per gallon, he said. A year ago, Propane Inc. was charging $1.89 to $1.99 per gallon, Patterson said.
Some other area retailers are charging from $3.25 to $3.80 per gallon, or about double what they charged last fall.
Prism Propane’s 3,600 customers in Hancock, Wood and neighboring counties are faring better than many other propane users in the Midwest and East. They are paying $1.69 to $1.99 per gallon, Walton said. A year ago they were paying $1.59 to $1.70 per gallon for propane.
All the area propane retailers said they have budget payment plans that help customers spread the cost of the fuel over the whole year. Homeowners use propane mainly in the winter.
What irks Veith and Walton about the propane shortage and resulting price spikes is that it seems they were avoidable.
“We’re shipping propane across the (ocean) and we’re not taking care of our own (people in the United States),” Veith said.
Propane is being exported to China and Middle Eastern countries, he said.
In fact, it’s a record year for propane exports. Seven times as much propane is being exported this year as in past years, Walton said.
Other situations have contributed to the propane scarcity in the Midwest and the East.
More than the usual amount of propane was used to dry an abundant and unusually wet grain harvest.
Also, flow in a major pipeline, which runs south and east from Canada into Chicago and northwestern Ohio, was reversed “to accommodate other products going in the opposite direction,” Walton said.
The North American oil boom appears to have crowded out propane from other pipeline and rail routes.
“Some of the pipelines that historically have brought more gas into this part of the country, some of the pipeline capacity was reallocated to other products … one example, shale gas,” Walton said.
In addition, oil refiners wanting access to cheap mid-continent crude are using railroads to overcome pipeline bottlenecks. Propane has been pushed aside, Walton said.
Wilin: 419-427-8413 Send an E-mail to Lou Wilin


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