Propane shortage may be waning, but price concerns aren’t going away

SALEM, Ohio —  The propane supply is rebounding, but it is going to cost consumers.

U.S. propane inventories are nearly 44 percent lower than a year ago, and, according to the U.S. Energy Information Administration, the average U.S. price for propane hit a record two weeks ago, up $1.05 to $4.01 a gallon.

That shortage has left home owners and farmers feeling the effects.

Related: Tips for using propane heaters for hog operations

Producer point of view

Duane Stateler, a pork producer in McComb, Ohio, has a sow nursery and two finishing barns at his hog operation. He said this year has been more difficult than usual, with the coldest temperatures he’s seen in 20 years, and an outbreak of porcine epidemic diarrhea virus in his barns.

Stateler filled his propane tanks in the middle of December, and expected the supply to last until March — in a regular winter.

Five weeks after the fill up, however, he thought the cold weather was probably taking a hit on his propane tank, so he checked his supply.

He wasn’t expecting what he found.

By the third week of January, he found nearly empty tanks. His barns were using 140 gallons of propane a day.

“We have never used this much propane since 2009,” said Stateler.

He admits he increased the temperature in the barns a few degrees due to the outbreak of PEDV, but still didn’t realize that much propane had been used.

Stateler called his propane supplier and learned they weren’t delivering to non-residential tanks.

“I didn’t handle it well. It was out of character for me,” said Stateler.

He was able to get enough propane to make it a few weeks and at the end of January, the tanks were filled with 400 gallons.

Stateler said when he filled his tank in December, it cost $1.79 a gallon. On Jan. 23, he had to pay $3.49 a gallon, for 400 gallons.

His last order of 1,000 gallons cost $3.99 a gallon.

Stateler is unsure what the increase in propane costs will mean to his bottom line.

“We’re definitely spending more in propane,” said Stateler. “It will be awhile before we know how it all ends.”

He said he is most worried about how long the increased prices will take to drop.

“It took four years last time to get back down once they were up,” Stateler said. “We don’t get to set price, we just have to pay it.”

Poultry

Jim Chakeres, executive vice president of the Ohio Poultry Association, said some poultry producers have experienced issues with getting a supply, but organizations like the Ohio Pork Producers Council and Ohio Farm Bureau have worked with state and local agencies to get them the propane they need to keep facilities heated.

He said the supply situation is easing, but the concern is now shifting to price. Like Stateler, he doesn’t think producers know how big of an impact the prices will have on the bottom line.

Higher demand at harvest

Dale Arnold, director for energy development at the Ohio Farm Bureau Federation, said the tight supplies can be attributed to this year’s corn harvest.

He said 2013 proved to be a cold and wet harvest ,which resulted in three times as much propane being used to dry down crops, more than any year in the last five years across the entire Corn Belt.

When the weather changed and the Midwest entered winter, supplies couldn’t get replenished with the constant stream of storms.

Ohio Gov. John Kasich signed a proclamation in January suspending propane and fuel oil truck drivers’ driving time limits, which has helped speed deliveries.

Arnold said 40 percent of the homes in southeast Ohio use propane to heat their homes, because a natural gas infrastructure doesn’t exist in the region.

Another area hit hard was northwest Ohio, especially the counties of Williams, Fulton, Henry, Defiance, Putnam, Paulding, Van Wert and Auglaize, which use propane for home heating and livestock care.

Propane supplier

Ed Harra, president of the Marietta-based Green Valley Co-op, said they have managed to keep their propane customers in supply, although they have had to go several states away in order to pick up the propane. That translated into a higher price because of the freight charges.

“This has been a really unique situation through the Midwest and northeastern part of the United States,” said Harra.

If the weather gives the area a break, Harra said customers can get their tanks filled and things should rebound near the beginning of March.

If customers were able to lock in prices last fall, they are continuing to be honored.