Shaken by polar vortex, U.S. braces for propane supply glitches
The millions of Americans that use propane to heat their homes, dry crops or keep livestock warm expect another tough winter this year as a fragmented supply network of pipelines, trains and trucks struggles to keep pace with spiking demand.
Last winter's brutal cold forced supply rationing across large swathes of the country, pushed prices to record highs and dented farming productivity as distributors struggled to get fuel to customers.
As a result, skittish consumers are buying more fuel this year and buying it earlier; many have ordered more storage tanks to stockpile fuel. The nonprofit Propane Education Research Council is launching a $5.5 million television and online ad campaign in September urging customers to secure supply ahead of winter.
At stake is not just winter heating supplies and higher bills for 10 million U.S. households, but Midwest crop and poultry output that relies on the $50 billion propane industry to survive. Although propane accounts for less than 2 percent of all energy used in the United States, it is the main fuel source in rural areas without access to natural gas pipes.
Weather forecasters do not expect a repeat of the extreme weather dealt by the polar vortex last winter, and wholesalers say they can guarantee supply. Indeed, government data show fuel stockpiles in the Midwest, where shortages hit hardest last year, are nearly 10 percent higher than this time last year.
But another bumper crop-drying season is also expected this autumn following what is expected to be a record corn crop, which could eat into propane reserves before winter even starts, suppliers and their customers said.
"Last winter was a living hell for us," said John Zimmerman, a turkey, corn and soy farmer in Southern Minnesota who uses propane to dry crops and heat his turkey barns. Zimmerman, who was forced to ration propane supplies last winter, has since added 5,000 gallons of storage to his 20,000-gallon store, but he remains wary.
"There is still a problem with distribution," said Zimmerman, who reckons that Minnesota turkey farmers saw a $25 million increase in heating bills over the past year. "We are still on the edge and this could happen again."
Despite stockpiling efforts, propane users will find themselves at the mercy not just of a rickety supply system at home that relies on door-to-door deliveries, but of competition for infrastructure with the much bigger oil and natural gas markets amid a shale production boom.
Oil and gas are given priority over propane, a by-product of oil refining and natural gas processing, in pipelines, trucks and trains because demand for those fuels is consistent throughout the year.
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