An unprecedented jump in propane prices (doubling within a couple days last week) has some rural Iowans wondering if they'll be able to pay their heating bills this winter. State and federal leaders have vowed to get to the bottom of the LP-gas price explosion.

Propane prices hit $5 per gallon in some areas of Iowa, according to a special survey by the Iowa Department of Agriculture. The statewide average rose to a record $4.18 a gallon on Thursday January 23. A day earlier the same survey showed an average of $2.61 per gallon. A year ago, propane cost $1.39 a gallon, according to weekly data collected by the state ag department.

PROPANE PAIN: Heating homes and livestock buildings with LP-gas has doubled and tripled in cost this winter. Propane prices in some Iowa locations now exceed $5 per gallon. Such prices are unsustainable for families, farmers and businesses. Iowa officials, like those in many other states, have taken action to address the situation.

A wet corn harvest this past fall reduced propane supplies and the industry hasn't been able to replenish them as the nation has been hit with a much colder-than-normal winter, says Harold Hommes, a market analyst at the Iowa Department of Agriculture. An estimated 350,000 homes and businesses in Iowa use propane.

Iowa Gov. Terry Branstad and U.S. Sens. Chuck Grassley and Tom Harkin have requested an investigation

Grassley and Harkin asked the Federal Trade Commission last week to look into whether "the price increases are legitimate or manipulated in any way to the consumers' detriment."

Soaring propane prices are being blamed on market conditions -- an extremely cold December following a fall when a lot of corn had to be artificially dried with gas drying. January followed with intensely cold weather. Hommes says LP-gas companies have struggled to replenish diminished propane supplies. But, he adds, market forces don't fully explain the rapid price increase.

Iowa isn't the only state struggling with high propane prices. Hommes says 24 states, including Iowa, have relaxed hours that truck drivers can deliver propane. The U.S. Department of Transportation followed suit, suspending restrictions on propane haulers for several Midwest states, including Iowa.

Retail propane prices have continued to rise this week in Iowa

On January 27 the Iowa Department of Ag issued a press release stating: "Our report shows that retail propane prices have continued to rise relative to our special report of Thursday, January 23. However, since completing this report, indications are showing that wholesale propane prices may be beginning to fall and that would not yet be reflected in the attached numbers. The Department is considering doing a special propane price report again this week to determine if retail prices are starting to fall later in the week."

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Hommes adds, "Since our Thursday, January 23 report, retail propane moved from $4.18 to $4.71 or an additional $0.53 higher. Somewhat fewer retailers are limiting quantities than last Thursday. In fact, we've noticed a reversal whereby even qualified customers are asking for only minimal quantities on the assumption that lower values may be coming. 

"There seems to be a marked turn of events which are and will bolster supplies to Midwest and Northeast U.S. destinations," says Hommes. "The measures also appear to be putting dramatic downward pressure on values today. We appreciate the Iowa retailers who have worked with their customers through this extremely volatile time in the propane industry."

Branstad, Reynolds send letter to President Obama urging action on propane shortage

Iowa Gov. Terry Branstad and Lt. Gov. Kim Reynolds on January 27 sent a letter to President Barack Obama urging the administration to take action to help ease the burden the propane shortage is putting on Iowans and other Midwesterners.

Branstad and Reynolds write: "We write to share our concern regarding the shortage of propane fuel across the Midwest, including Iowa. With the lack of supply and increased demand during recent cold weather, propane prices have drastically increased. This has negatively impacted Iowa families, businesses, and agricultural producers across the State of Iowa."

The letter continues, "We urge the U.S. Department of Transportation to expand the exemption to the hours-of-service regulations to ease the movement of propane fuel to customers in states facing shortages. We would also welcome actions by the U.S. Department of Energy to reduce regulatory barriers to expedite the shipments of propane via all modes of transportation, including rail and pipeline. In addition, we urge you and your Administration to examine current propane market forces and consider exercising your authority outlined in 42 U.S.C. § 6212 to ensure there is a sufficient domestic supply."

Working with Texas officials to get more propane shipped to Upper Midwest

The letter sent to President Obama comes after Gov. Branstad and Lt. Gov. Reynolds worked with Texas Gov. Rick Perry and Lt. Gov. David Dewhurst to ease restrictions in Texas, allowing for greater propane supply to be shipped to states in need.

Iowans who may need aid from the Low-Income Home Energy Assistance Program, or LIHEAP, should contact their local LIHEAP community action agency or the Iowa Department of Human Rights at 515-281-0859.