Propane Prices Continue to Rise: What's Behind the Hike?
(BATTLE CREEK, IA) 30 states are now facing propane shortages and all of those states including Iowa and South Dakota are taking steps to get propane into customers' tanks.
It's safe to say when it gets cold outside heat is your best friend. But during the middle of January when Midwest temperatures dropped to the single digits and below, propane was few and far between, leaving some folks afraid they'd run out.
The Iowa Propane Gas Association says the domino effect started in October with the closing of the Cochin Pipeline, which provides about 40% of Minnesota's supply.
Around the same time farmers around the Midwest started to harvest grain. This year's crop was very wet and required massive amounts of propane to dry the grains before they could be stored.
Canadian imports to the Northeast were also impaired by rail re-routing which forced Minnesota and Wisconsin to get their propane from pipelines in Iowa.
And now the weather is keeping truckers from getting the propane into parts of the Midwest and East coast.
Which is why many farmers like Walt Bones, the former Secretary of Agriculture for South Dakota stocked up.
"As a farmer, we were concerned here at our place if our corn had come in wet and we were going to have to dry it, we were real concerned about the availability of propane," said Bones.
He wasn't alone. The IPGA says that demand reduced propane inventories throughout the area. And Hank Jessen from Johnson Propane says because the U.S. has become a major exporter of propane across the world, a quarter of U.S. production is going overseas.
"We went from having a low supply to a really low supply when bad weather hit," said Jessen.
Jessen says he hasn't taken on any new clients -- 92 of them have called asking for propane but Jessen says he plans on taking care of his current clients until the shortage starts to diminish.
He says many people will jump from company to company in search of the best deal which could be a mistake in the long run.
"You need to find a supplier or marketer that you're comfortable with that offers services that can adequately take care of you and offer programs for you and then stay there because they are the ones that are going to take care of you when you need them," he said.
Like right now when propane supply is low and prices are skyrocketing.
A typical tank you'd see outside of a house for heating purposes is about 250 gallons. A month ago a tank that size would cost about $200 to fill up. Now it's anywhere between $700 to$ 900 and Jessen says that hike in price is out of his hands.
"Our prices since about the 17th of January have been changing about 2 to 3 times an hour so depending when a supplier, a marketer would buy his product and bring it into his plant makes a difference on when he's selling it and what for. Our prices are passed on to us from a supplier to a producer so it's really no control, it's a pass through cost," said Jessen.
Hank Jessen is in touch with political leaders about the shortage. While we were doing our interview with him, Iowa Governor Terry Branstad called to talk about the next steps.
At the federal level, the Department of Transportation has issued a regional order letting propane truck drivers work extra hours.