Fuel Industry, Lawmakers Want Answers on Propane Issues

Propane distribution and supply issues cause headaches across the U.S.; Propane Education and Research Council announces plans to probe cause

Published on: Feb 3, 2014

Propane industry group says it doesn't understand shortages either
The Propane Education and Research Council says it is interested in exploring the causes behind factors related to the supply shortage.

"At a time when U.S. propane production is at an all-time high, PERC wants to know what can be done to ensure that propane can be quickly and affordably put to use here at home, even during times of extreme weather," the group said.

To do that, PERC says it will examine:

Transportation Infrastructure: The December shutdown of the Cochin pipeline in the upper Midwest coupled with the reversal of another Midwest pipeline that previously transported propane contributed to that region's tight propane supplies. As supplies from natural gas and crude oil increase, so has competition for pipeline access and resources.

"Measures must be taken to ensure that the proper infrastructure is available to move propane from large national storage facilities to local propane retailers, especially in the winter," PERC said.

Storage: The majority of the large propane storage facilities are located outside the Northeast and Midwest where most propane is used. Increasing local storage capacity in these regions would enable quicker response to increased demand but often requires overcoming local political and perceptual hurdles.

Exports: The U.S. is producing ample propane supply, but more is being shipped overseas than ever before. In 2013, more than 20% of U.S. propane production was exported, up from 5% in 2008. Increased exports have made a large portion of these stockpiles unavailable for domestic use.

States can help
PERC is also urging governors in affected states to consider declaring an Economic Injury Disaster, which would trigger loan programs to enable propane retailers to replenish propane supplies.

"The good news for propane is that the long-term supply picture is positive, the logistical and transportation challenges we're experiencing today can be overcome, and spring is on the way," PERC says. "As extreme weather subsides, prices should stabilize and the market should reflect that abundance."