IBJNews

Propane costs soar amid winter supply squeeze

Back to TopCommentsE-mailPrintBookmark and Share

David Holdread ordered gas one week after his stepson and found himself paying twice as much.

The Knox resident buys liquefied petroleum gas, a form of propane, from Starke County Co-op to power his space heater and water heater.

"My stepson called last week and it was $2.69 a gallon," he told the South Bend Tribune. "I called yesterday and it was $4.75 a gallon."

Ken Wagner, who handles the LP/Petro division of the co-op, said that propane terminals in the Midwest have distributors on allocation right now and it is difficult for companies to get propane.

"We don't know what we are going to get until they load the truck," he said. "Then they tell us the cost."

Because of this, many distributors in the Midwest are limiting the amount of propane they deliver to customers. And the Indiana attorney general's office is urging Hoosiers to conserve the amount of propane used to heat their homes.

Starke County Co-op is currently limiting its deliveries to a maximum of 200 gallons in an effort to make sure there is enough to get customers through the end of the month.

To try to alleviate the need, the co-op's suppliers are going to Conway, Kan., to pick up loads, and they might also be going to Belvieu, Texas, on Monday.

"This is unusual," said Scot Imus of the Indiana Propane Gas Association. He explained that events have come together to make the "perfect storm." And it started in the autumn.

A wet harvest season meant that farmers in the Midwest used large quantities of propane to dry corn. That combined with supply disruptions—including one pipeline being down for nearly a month—made supplies tight in November. Levels hadn't returned to normal before the polar vortex hit.

About 10 percent of households in Indiana still heat with propane, Imus said. But it is also used in many agricultural and industrial operations to run forklifts, feeding operations and transportation fleets. So, not only does the low supply potentially endanger human life, but he thinks it could have an economic impact if cold temperatures persist.

Last weekend, the U.S. Department of Transportation issued an emergency declaration for 10 Midwest states, including Indiana and Michigan. The order allows longer driving times and working hours for commercial truck drivers delivering propane and heating oil. Nationwide about 30 states have similar waivers.

AmeriGas, which supplies propane to customers in all 50 states, has received calls from people who can't get enough propane from other sources, said Simon Bowman, a spokesperson for the company. While AmeriGas is limiting supplies in some pockets of the country, it is not doing so in Indiana.

"There is propane to be had," Bowman said. "It's just limited and unfortunately, that is affecting price."

Wholesale prices—the prices distributors pay for propane—have gone up 60 percent in the past year, he said. "It's difficult for us and it's difficult for customers."

He wasn't sure how long the situation might last.

Imus said that exports of propane are a huge factor in the current supply issue. He thinks the domestic cost will have to go up in order for the exports to stop.

"If we were paying international prices, we wouldn't have this crisis," he said. "Higher prices may be difficult to swallow, but it will make more product available. One hopes it's in the short term."

Wallace Tyner, an agricultural economist who specializes in energy economics and policy at Purdue University, agreed.

"We have gobs of propane because of the shale oil production," he said. "Under normal conditions we have an abundance, but the infrastructure is not equipped to handle this kind of weather."

The good news, he said, is that terminals should rebuild inventories fairly quickly once the cold weather is gone.

"Understand that this is likely to be relatively short-lived," Tyner said. "Our local weatherman is calling for warmer temps in mid-February. If he's right, I think this crisis will blow over by then. So, don't fill your tank for next winter now. Wait until later."
 

ADVERTISEMENT

  • ripp off
    i called yesterday to get 250 gallons of lp from amerigas they said sure at 6.18 a gallon now who can afford that that came to 1545 buks i say they r nuts never paid that before in my life what a bunch of jokers this office is in kokomo indiana dont buy amerigas
  • I agree "gouging"
    I believe that you have to look up a level and blame the suppliers, not just the dealers. In my area, there was not that much corn drying going on last fall. We've had cold spells before and I don't ever remember paying this much for LP. Probably the highest I ever paid was around 3.50 per gallon. GOUGING AND HI-WAY ROBBERY, YES
  • Gouging
    I don't believe their excuses it is pure GREED! MY son has 5 boys and a wife and they want $1000 for 150 gals. What are they suppose to do when they can't afford it? Freeze! These dealers are just like everyone else when the times get tough screw the public as best as you can.

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Those of you yelling to deport them all should at least understand that the law allows minors (if not from a bordering country) to argue for asylum. If you don't like the law, you can petition Congress to change it. But you can't blindly scream that they all need to be deported now, unless you want your government to just decide which laws to follow and which to ignore.

  2. 52,000 children in a country with a population of nearly 300 million is decimal dust or a nano-amount of people that can be easily absorbed. In addition, the flow of children from central American countries is decreasing. BL - the country can easily absorb these children while at the same time trying to discourage more children from coming. There is tension between economic concerns and the values of Judeo-Christian believers. But, I cannot see how the economic argument can stand up against the values of the believers, which most people in this country espouse (but perhaps don't practice). The Governor, who is an alleged religious man and a family man, seems to favor the economic argument; I do not see how his position is tenable under the circumstances. Yes, this is a complicated situation made worse by politics but....these are helpless children without parents and many want to simply "ship" them back to who knows where. Where are our Hoosier hearts? I thought the term Hoosier was synonymous with hospitable.

  3. Illegal aliens. Not undocumented workers (too young anyway). I note that this article never uses the word illegal and calls them immigrants. Being married to a naturalized citizen, these people are criminals and need to be deported as soon as humanly possible. The border needs to be closed NOW.

  4. Send them back NOW.

  5. deport now

ADVERTISEMENT