It seems many people familiar with the propane supply situation are cautiously optimistic that this year the state may be able to avoid the shortages and high prices that created a crisis for some homeowners heating with the fuel last winter.
Last year, the propane price started with contracts for just $1.45 per gallon before the heating season. That price wound up over $4 per gallon with the supply stretched very thin by late winter. Prices are currently hovering around $1.70 per gallon.
In June, the New Horizons Co-op offered prepaid contracted propane at $1.69 per gallon. The major local supplier obtains its propane supply through the larger CENEX Cooperative. New Horizons plans to continue to offer contracted propane with various payment options through August and into September with a price based on the current market price.
Last year’s shortages and high prices are often described as “the perfect storm” by those familiar with the situation. First, a high-moisture corn harvest had farmers ordering more propane for corn driers than they had in many years. Then, before the local supply could be rebuilt, one of the longest cold winters in recent memory set in, driving home-heating usage above normal levels. As if this wasn’t enough, pipelines were shutdown for maintenance. Even the propane supply itself, stored in caves in Kansas, was much lower than normal because suppliers had taken advantage of a high-demand export market and sent much of what might have been normally stored overseas.
The resulting shortages and high prices had everyone from homeowners to suppliers to county and state officials scrambling to make sure the crisis could be averted.
Lots of things look better this year. Most importantly, there seems to be a focus on making sure the propane is there and being delivered. Early reports are that the caves in Conway, Kansas are being filled at a faster rate than at this time last year, according to New Horizons CEO David Neal.
Neal is cautiously optimistic about the propane situation so far this year. He noted that reserves in the caves in Conway were substantially built up during the month of May, but the amount going into storage there slowed in June. However, caves in Belleview, Texas have recently been filled and Neal believes this may send more propane to Kansas for storage.
The New Horizons CEO remains optimistic that the supply will approach or exceed the five-year average in the Kansas caves.
Another significant factor is that both state and federal governments are monitoring the situation and setting up contingency plans. A governor’s group is involved in planning for propane delivery.
At a more local level, Crawford County Human Services, Crawford County Emergency Government and the Crawford Public Health Department are working on the situation.
Roby Fuller, an Economic Support Specialist at Crawford County Human Services, said that some people who qualify for heating assistance are receiving assistance for the first time ever for summer fills.
The summer fill program requires qualified homeowners to contribute $50 and heating assistance will pay $300 to the vendor. People with inquiries about the summer fill program or other heating assistance are urged to call 608-326-0248.
Because of the increased costs of propane and natural gas this past winter, the county’s heating assistance program is down to just $204 heading toward September. Of course, this does not include the special summer fill funding.
For Fuller, who manages the heating assistance program, it has been “a very crazy year,” that saw a huge amount of money spent.
To date, of the 924 households in Crawford County that applied for heating assistance 847 were served by mid-July. The heating assistance year will end in September. The new heating assistance season will start on October 1, 2014 and new funding will be in place. In 2013, the total in the county served for the entire year was 812—so there was a definite increase with the more severe winter. Heating assistance in the county is based on the last three months of income.
Like others, Fuller was very pleased with action of the state government during the propane crisis.
“I think the state was very proactive,” Fuller said in noting that there were a couple of extra allotments of funds from the state and federal government to help the counties deal with the situation of increased prices and a prolonged winter.
“The state advocated very well for us,” Fuller said. “They kept a handle on it and made sure we had the funds to deal with the situation.”
In total, the county dispersed $398,209 in regular benefits to the 847 qualified households in the county. Human Services also paid an additional $59,448 in special “crisis money” to 101 households.
Benefits are available to any household with an income under about 180 percent of the federal poverty level. For three months of income on which the county bases assistance, that is less than $6,171, for a family of one or less the $8,073 for three months for a family of two or less the $11,871 for three months for a family of four.
Crawford County Director of Emergency Government Roger Martin is also feeling more confident that the situation the county faced last year can be avoided by better planning. He believes the state governments, as well as the federal government, are watching the reserves more closely going into the fall season.
“Unfortunately, there’s not a lot we can do locally,” Martin said. “We can’t supersede state laws or regulate private business.”
Martin believes it’s up to the states and the federal government to make sure the reserves are adequate going into the heating season.
What can be done locally is providing help to those who find themselves without heat.
“To the best of my knowledge although people had issues, they were able to get through the winter,” Martin said. “There was help available and the emergency declaration by the governor helped provide some flexibility in getting more propane into the state. We were able to make sure nobody fell through the cracks.”
The director of emergency government readily acknowledged that a lot of the local effort to avoid a heating crisis was people helping other people, which he described as “typical of Crawford County.”
Martin emphasized that for the county agencies to help they have to be notified of the situation.
“If you need some help, make a call and we’ll make sure you are safe,” Martin said. “People can call our office or Human Services or Public Health. We need them to call or we need their family or friends to call…a lot of times it’s friends and neighbors calling us.”
New Horizon’s Neal indicated that co-operative is filling tanks earlier this summer to build up allocation rights with the pipeline supplier and put as much propane as possible into the area’s supply. Suppliers allocate more propane during the high demand winter season to suppliers like New Horizons and CENEX, who have bought larger amounts for summer fills in the off-peak season.
New Horizon’s is getting 95 percent of its propane supply from an Enterprise pipeline terminal in Dubuque through CENEX. Enterprise rewards customers for the amount they buy in the off-season by crediting them with future allocations when supplies get short in the heating season. Last year, this kept the local cooperative in a good place for obtaining supplies in a tight market.
Despite more focus on the propane supply situation by almost everyone involved from midwestern governors to federal agencies and local suppliers, there is still concern about obtaining adequate supplies at affordable prices this winter. For one thing, the U.S. continues to export record amounts of propane, according to Neal who follows the situation closely. Large amounts of propane are being sold in Europe and South America. Recent developments in the Ukraine are also affecting imports. One dispute, in Ukraine involves the Russian supply and trans-shipment of natural gas. As those supplies are threatened, the U.S. is being called upon to supplement any threatened natural gas supply with propane.
“It is interesting to see how events on the other side of the world can impact us in Gays Mills, Wisconsin,” Neal noted.
In addition to the record exports, another threat to the propane supply is the loss of the COCHIN Pipeline, which has brought propane from Canada into Minnesota, Iowa and ultimately Chicago in the past. That pipeline has been reversed and is currently being used to send natural gas into Canada for use in extracting oil from the tar sands area there.
Despite some of the worries, there are some bright spots on the horizon for propane users, according to Neal. A new rail terminal in Hixton, Wisconsin near Tomah is being built by CENEX to receive and handle propane shipments arriving by rail. It is expected to be operational by mid-fall. Another bright spot is more petro-chemical companies are using butane and ethane, rather than propane, in their processing now than previously.
Ultimately, propane availability and price in the winter of 2014-15 will depend on the winter weather more than anything and whether farmers need large amounts for drying corn as they did last fall. For most everybody involved, it’s a game of wait-and-see. However, most everyone agrees there’s a lot more focus on the propane supply this year and that should help the situation.