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Tue February 11, 2014
Propane users struggling in light of high prices and brutal winter
Missouri residents and farmers who buy propane using the market price have suffered as prices have increased to unusually high levels in recent weeks across the Midwest.
With another month of projected cold weather ahead, Missouri Farm Bureau President Blake Hurst says it is a tough situation for many farmers who pre-bought a year’s supply of propane, but ran out due to cold weather conditions.
“As severe as it is now, it’s going to be much, much worse as we get into February and March,” said Hurst. “People run through their contracts and they use all that they booked in last summer or last fall, and then they’re just buying it on the market.”
Missouri Propane Gas Association Executive Director Steven Ahrens says the association is encouraging conservation on the part of propane users to help alleviate its price until warmer weather sets in.
“Anybody who can conserve right now is doing it,” said Ahrens. “It’s interesting, I’ve talked to a number of folks who are mentioning that they are cooking their meals on crock pot rather than using their gas stove. So, every little bit helps, and we’re trying to get more propane into the system that’ll help on price.”
Hurst contends there are factors that make propane conservation a more difficult task for farmers running into propane issues.
“The problem is, if you have a barn full of small chickens, you have to keep them warm enough or they’ll die,” said Hurst. “It’s the same thing we find in our greenhouse business. If we turn down the heater, it slows down their (the plants’) growth, they won’t be ready, and we’ll lose the contract. You don’t have the ability to lower your use of propane in the short term very much.”
Ahrens points to the high demand of propane versus its low supply in the Midwest as the generator of these high propane prices. He says the Missouri Propane Gas Association is putting forth its best effort to increase the supply of propane in the Midwest.
“We’ve been working very hard with national organizations to try to get more propane into the system,” said Ahrens. “The Federal Interview Regulatory Commission issued an order over the weekend to require one of the major producers of propane to put more propane in their pipeline. That will be heading up through terminals in Missouri, Indiana, and Ohio.”
Although it has been rough on farmers and low-income residential users of propane, both Ahrens and Hurst believe prices and supply should return to more normal levels, it is just a matter of how long it will take.
“We think propane’s price and supply will return to normal, it’s just a matter of how fast,” said Ahrens. I don’t think anybody can tell at this point.”
“I think the propane issue will right itself, but it’s going to take a while,” said Ahrens. “This is the worst I’ve seen in my 30-year career.”
Ahrens says the Department of Energy will release inventory numbers on Wednesday, and those will help determine the price and supply of propane for the near future.