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Propane shortage hits Indiana sellers, customers hard

Associated Press
January 29, 2014
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The national shortage of propane gas is causing the owner of McCoy's LP Gas Co. and his customers to lose sleep.

"I am losing money daily, and my customers are suffering because I can't find the gas that they need," said Steve McCoy. "This has been a family business since 1946. This has never happened before. I'm losing sleep over it, and there's nothing I can do about it."

An estimated 500,000 Hoosiers, mostly in rural areas, rely on propane to heat their homes.

Other Muncie and central Indiana propane dealers are rationing their inventories to help supplies last and transporting propane here from as far away as Mississippi, Kansas and South Carolina, The Star Press reported.

One of McCoy's 400 customers is the rural Muncie household of retired gear cutter Philip Watson and his wife, Becky, whose 500-gallon, backyard propane tank that fuels their furnace is down to about 9-percent full.

The couple and their son, David, a laid-off cabinet maker, are conserving as much as possible: turning the thermostat down to 60 degrees, running three kerosene heaters during the day and operating four electric space heaters at night.

The couple bought a space heater — an infrared cabinet model resembling a fireplace — at Walmart after finding empty shelves at three other big-box stores.

"We went to several places and all we found were empty shelves because everybody is in this predicament, not just us," said Becky Watson. "We are not alone."

David Watson said it fell to 50 degrees in his bedroom early Tuesday morning, causing him to lose sleep.

The last time Becky Watson called McCoy's, she said she got a voice message urging her to call her congressman.

She said she phoned U.S. Sen. Dan Coats' office in Washington and was transferred to the senator's office in Indianapolis, which told her, "The senator is aware of the situation."

Becky Watson blames the propane shortage on "corporate greed."

According to Scot Imus, executive director of the Indiana Propane Gas Association, one reason for the shortage is an increase in U.S. propane exports into the world market.

In 2013, more than 20 percent of total U.S. propane was exported, up from 5 percent in 2008.

"That enraged me," Watson said. "Everything is being shipped out. Who pays the brunt? It amounts to corporate greed."

She said she was referring to the big oil companies that produce propane from crude oil refining, not to dealers like McCoy. Propane is also produced from natural gas processing.

Imus also attributes the shortage to prolonged arctic temperatures; the shutdown of the Cochin pipeline for repairs; and the need for massive amounts of propane to dry the large, wetter-than-normal harvest of corn and other U.S. grain crops last fall.

Imus' advice to people like the Watsons is to "conserve where you can: shut off rooms you are not using; use blankets and towels on drafty doors and windows; dress in layers; turn the thermostat down as low as possible; watch your hot water usage; just be conservation-minded and don't wait until the last minute to call your propane dealer if you're about out of product."

Though the Watsons live in an old farm house on Sciscoe Road between Muncie and Prairie Creek Reservoir, they say they already have done everything possible to conserve energy, including installation of double-pane windows, insulated doors and insulation elsewhere in the house.

McCoy said he's never seen anything like this, including a triple spike in prices, in the four-plus decades he has been a propane dealer.

"We have to pay up front for the gas," McCoy said. "That's never happened before. I have to come up with $50,000 to get a load of gas. I don't have $50,000 to pay up front to get a load of gas. Basically, customers are running low or running out. I'm at a standstill. I don't have any answers."

Imus says a lot of Hoosier propane dealers are struggling like McCoy.

In October, a tanker truck of propane would have cost a dealer $14,000 on credit. "Now a load is $50,000 to $60,000, and many are demanding cash up front," he said. "It's also a problem for consumers, who last fall were paying $2 per gallon and now are lucky if they only pay twice that much, he added.

"Obviously, propane gallons are hard to find in the Midwest," said John Bauer, president of AgBest in Muncie. "We are going as far as Mississippi, Kansas and South Carolina to access gallons to supplement the few gallons we're getting here out of Midwest terminals."

Other Indiana dealers are "high-tailing it to Texas," he said.

Gov. Mike Pence has signed a proclamation to exempt semitrailer tanker drivers hauling propane from hours of service regulations, citing "long lines at propane terminals throughout Indiana, slow travel due to bad weather conditions, and longer driving distances" that have caused truck drivers to drive more and/or wait in line.

Hours of service regulations limit the average work week for truck drivers to 70 hours to ensure they have adequate rest.

AgBest, which normally transports propane to Muncie from terminals in Indiana and Ohio cities, is rationing its inventory to loyal customers. "We're not in a position to take on new customers," Bauer said.

Brian Donahue, of Donahue Gas, Muncie, likens the propane shortage to the Arab oil embargo in 1973, when the members of the Organization of Arab Petroleum Exporting Countries proclaimed an oil embargo.

Donahue, which, like AgBest, serves about 1,400 propane customers, has enough gas "to take care of our current accounts. What we are doing is rationing, limiting allocation," Donahue said. "My regular-route customers are OK."

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  • Insanity
    "Gov. Mike Pence has signed a proclamation to exempt semitrailer tanker drivers hauling propane from hours of service regulations"...So when a propane tanker goes off the road and wipes out the neighborhood, it will suddenly be "safety is #1", all over again. A dollar late, naturally.

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