Several years ago, 2013, I believe, the price of propane skyrocketed. It happened because of a confluence of improbable events occurring at once.
We had our coldest winter in 130 years.
In 2013, more than 20 percent of the U.S. propane was sent abroad, up from five percent exported in 2008.
Then too, there was a late fall that increased demand for drying corn which helped to create a nationwide shortage.
Another contributing factor was the shutdown of the Cochin pipeline, which provided 40 percent of the product used by Minnesota suppliers. It was shut down for repairs.
Finally, to top everything off, a pipeline carrying propane to Minnesota was reversed and now transports ethane to the Gulf Coast, helping to further the shortage.
This calamity of events triggered a chain reaction causing suppliers to go further out to load their supply. Rail re-routing also impaired Canadian imports to the Northwest. This forced Minnesota and Wisconsin retailers to get their propane at the pipelines in Iowa, increasing demand in the state. The further the trucks had to travel to pick up and then deliver to suppliers, the higher the price went. At one point, the cost of propane locally was more than $5 per gallon.
What happened next was predictable. In the face of such high demand, propane carriers ran short. Some companies were put out of business. The U.S. Department of Energy reported that cold weather led to record-high natural gas storage withdrawals, as well as propane. It was the most significant drawdown in the 20-year history of the survey, and it was the second time that year the record was broken.
Out of this came some realities and changes. One of the problems discovered (by the public, anyway) was that propane isn’t stored in vast quantities like heating oil. There is no emergency excess to tap into in a crisis like the one that occurred.
That’s why I am in favor of recent action taken by U.S. Senators Amy Klobuchar (D-MN) and John Thune (R-SD) who introduced bipartisan legislation to provide for more accurate monitoring and reporting of national propane stocks.
This action will reinforce an existing Klobuchar-Thune law that provides for emergency action in the event of critical heating fuel shortages.
The legislation (S. 1972) would require the Energy Information Administration (EIA) to include propane export volumes in the data it publishes relating to U.S. propane inventories. This would give those providers of propane a chance to monitor the national inventory. If needed, legislative action could be taken to slow down continued growth in propane exports.
In a news release Klobuchar stated, “As temperatures begin to drop and propane prices rise, red tape shouldn’t limit a family’s ability to keep their homes warm. Our bipartisan bill would help governors act quickly to address propane and fuel shortages and ensure that every family has access to heat this winter.”
Thune’s comments were also added to the news release.
“As winter approaches, it’s always important to take every necessary precaution to prepare for the possibility of drastically low temperatures,” said Thune. “By altering the Energy Information Administration’s reporting and forecasting to include the significant impact of exports in its data, we will be able to improve fuel inventory forecasting to ensure better fuel shortages are quickly and efficiently addressed, so home heating is not at risk during extreme cold.”
Klobuchar and Thune crafted the 2014 Reliable Home Heating Act, which became law. This legislation grants governors the authority to provide relief from motor carrier rules in the event of a declared emergency.
Most importantly, the law requires the Energy Information Administration to provide early warnings to governors if the inventory of residential heating fuel (propane, natural gas, and home heating oil) falls below the most recent five-year average for more than three consecutive weeks. The proposed changes in the new law would modify EIA reporting and forecasting to include export data.
It’s nice to see senators cross aisles and work together. In this case, it even warms the heart, if you know what I mean.
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