Perfect storm of factors makes propane supply dangerously tight

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A propane shortage across the Midwest has sent prices soaring and left dairy farmers worried about when their next delivery might come — not to mention how much they’ll pay for it.

The National Propane Gas Association (NPGA) says several factors are to blame. In addition to recent bouts of extremely cold winter weather, a near-simultaneous, wet corn harvest in the Upper Midwest last fall required vast amounts of propane to dry the corn before storing. Typically, these harvests come in waves, but not last year.

In fact, the U.S. Energy Information Administration, a division of the U.S. Department of Energy, says that Midwest propane inventories dropped more than 2 million barrels during the first week in November of last year — the largest single-week stock draw in any November since 1993.

But that’s not all: Apparently the pipeline which delivers ethane and propane from Canada to the Upper Midwest was out of service for maintenance from late November to December 20. And then rail transportation disruptions due to weather and other factors curtailed deliveries into the region.

Finally, growing propane exports played a role in the shortage. More than 20 percent of domestic propane was exported in 2013, NPGA says.

Propane Newspaper accounts in Michigan and Minnesota show prices are nearing $4 per gallon, up from $1.79 before the supply crunch. Calls for investigations into potential price gouging are popping up at the local, state and national levels, as well. Meanwhile, numerous governors have declared states of emergency and encouraged residential customers to turn down their thermostats.

No can do in the barn, dairy producers say. Larry Schmidt, a dairyman who farms near Trenton, Mo., recently was quoted in a local cable news story as having spent $700 on propane last month to heat the barn and the cows’ water. 

"It’s going to be a lot worse next month,” he said.

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