Propane price spikes this winter have hit people hard

Charlotte Nelson, of rural Pease, wonders what she will do if the propane she contracted through pre-buy some months ago runs out and she has to pay $4 to $5 per gallon, which would be more than double her pre-buy price.

Nelson’s concerns are shared by many others in Minnesota and beyond in the midst of spiking propane prices this winter

Jim Boyle / Star News Dan Newton of Lakes Gas in St. Michael filled a propane tank in Elk River on Tuesday. The cost of the fuel has gone up about $2 per gallon in this region, giving rise to residents, propane suppliers and government officials who are looking into what can be done to help.

Jim Boyle / Star News
Dan Newton of Lakes Gas in St. Michael filled a propane tank in Elk River on Tuesday. The cost of the fuel has gone up about $2 per gallon in this region, giving rise to residents, propane suppliers and government officials who are looking into what can be done to help.

brought on by a number of factors. They include a combination of extra propane demand during last fall’s corn harvest, followed by a prolonged stretch of colder than average winter weather.

“I’m afraid of the cost,” Nelson said. “If I run over what I prepaid, I can’t afford it. If I had to buy it at $5 a gallon, I don’t know what I’d do.”

Nelson, who is elderly and on Social Security, has already lowered the thermostat in her kitchen, she said this week.

“I’m being a little more careful now,” she explained. “I don’t have an insulated house. It’s an old house and it gets cold. I’m not as comfortable as I’d like to be.”

Jim Lindgren, in Glendorado Township, about 9 miles west of Princeton, has seen his propane bill rapidly rise this winter and is now pondering the effect of not having arranged a pre-buy contract for this winter. He said his bill for 144 gallons of propane this past November was $260. He purchased the same amounts the next two months but the bill for December was $486 and the bill in January was $660.

“We keep our thermostat between 65 and 69 degrees,” he said.

The cold also added a second whammy: His sewer line froze up in January and it took him eight days to thaw it.

“It’s been a rough winter,” Lindgren said.

Closer to Princeton, retiree Frank Hartmann had thought he had bought enough propane in September through a $1,000 pre-buy contract, paying $2 per gallon at the time. But on Jan. 1, he had to ask for another propane delivery and was able to get 150 gallons at a little over $4 per gallon, costing him about $600.

Hartmann said he is doing what he can to reduce his use of propane and uses an electric blanket to help keep warm at night.

Hartmann added that he called Gov. Mark Dayton’s office to talk about the high propane costs. During the call, Hartmann mentioned a nephew who installs pipelines who had told Hartmann about a pipeline that had been carrying propane south from the Dakotas but has now been switched to carry oil instead.

Hartmann asserted that if it’s a distribution snag contributing to the propane price spike, then there are plenty of train tanker cars that could be pressed into service to haul the propane.

 

Government 

takes action

Dayton and other state officials have taken action lately to make sure that if someone can’t find a supplier to bring them propane, they can call the recently installed Minnesota Emergency hotline toll free at 800-657-3504. The hotline has limited hours, and if anyone has an immediate need for heating fuel, they should call 911, said Douglas Neville, communications specialist at the Minnesota Department of Public Safety.

The U.S. Department of Health and Human Services also took action in late January, releasing $450 million in low-income energy assistance funds for distribution in various states. Minnesota received $15.8 million of that.

The Minnesota Department of Commerce had earlier announced that it has now raised the maximum amount of energy assistance per eligible household from $500 to $1,000.

The causes

Roger Leider, of Princeton, is executive director of the Minnesota Propane Association. He speculated that if there had just been the extra propane demand during last fall’s harvest and not such a cold winter, the propane problem wouldn’t have been like it is, nor would there be this problem if there had been a normal propane demand at harvest before this extra cold winter.

But having the extra demand at harvest go back to back with the prolonged deep cold was what pushed things so over the top, Leider said.

Both Leider and Tim Kavanaugh, general manager of Federated Co-ops – which sells and delivers propane and has an office in Princeton – said drivers who transport propane should be praised for their efforts.

That includes the drivers of the tanker trucks that haul propane from the big storage depots to the propane companies’ storage points, as well as the drivers who haul loads of propane from those storage tanks out to people’s homes and businesses, Kavanaugh and Leider said.

One of Federated Co-op’s tanker truck haulers, Phil Alderink, talked a few weeks ago about how he has had to awake at midnight to get in line at the propane filling station hours away from Princeton so he can finish the day’s work and be back home the next evening.

The drivers who deliver to the homes have had “a long, hard winter,” enduring the severe cold and deep snow to do their job, Leider said.

Kavanaugh said on Monday he believes the propane prices peaked sometime around Jan. 25 at about $5 or so per gallon. The propane price that Federated Co-ops just posted is $4.19 per gallon, Kavanaugh said.

He added that, prices aside, Federated Co-ops has not failed in its job of delivering propane to its customers. But Federated Co-ops did have to stop taking new customers for a period of 1 1/2 months, Kavanaugh noted.

Federated Co-op had 20 tanker trucks bring propane up from Texas,  he added, and it has ordered freight train cars to bring more propane in to deal with the high demand.

Kavanaugh and Leider said that no one had any idea how severe the winter would be and that there are some lessons to be learned so that homeowners and propane companies don’t get in such a bind next winter.

Propane companies only have so much fuel storage, but there are millions more gallons of storage in all the tanks that are on each private property that could be filled during the summer months or long before the cold weather hits, Kavanaugh said. That way, more delivery can be accomplished before the biggest demand, and it leaves more room in the storage tanks at the propane distributors to fill in advance, Kavanaugh explained.

Summer propane prices are lower than winter times, he said, and people should consider pre-buy contracts to be more prepared.

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