Freezing temperatures across the Midwest and Northeast have created a nationwide propane shortage, causing prices to spike and setting producers of dairy, poultry, flowers and grains on edge.
A poultry producer in Missouri who anticipated spending $20,000 on propane for the winter is now budgeting $100,000 for the season – meaning he “can’t possibly expect to make a profit,” said Blake Hurst, president of the Missouri Farm Bureau. At this point, “he’s just trying to keep chickens alive,” Hurst said.
The shortage is due to what Hurst calls a “perfect storm” of weather and infrastructure problems. Last year, a particularly wet fall forced grain producers to use more propane to dry their crops. In just one week in November more than 2 million barrels of propane, each holding about 32 gallons, were withdrawn from supply – the largest weekly drawdown since 1993, according to U.S. Energy Information Administration analyst Nathan Hamilton.
Then an oil pipeline had to be taken out of use for maintenance, preventing propane manufacturers from replenishing inventories. Meanwhile, early season snowstorms along rail routes throughout the country further limited propane shipments.
So propane manufacturers – who create the fuel as a byproduct of natural gas and oil production – didn’t have time to replenish their supply before the particularly icy winter hit. That’s forced those who need to keep their facilities warm to use more of the fuel than they had expected – and to pay much more than they had budgeted.
In Conway, Kan., where 30 percent of the nation's propane supply is stored, late December prices of around $1.40 per gallon rocketed to $2.50. In Alabama, producers who spent about $1.70 per gallon a week ago are now reporting prices upward of $4 -- and fear that could hit $5 soon.
“The people that produced the stuff did not build enough inventories. They were caught unawares by the weather,” said Hurst, of the Missouri Farm Bureau.
Thirty-four states, including Missouri, Alabama and Iowa, have declared states of emergency. The declarations temporarily suspend some of the regulations governing how long truckers can remain on the job to deliver the fuel to customers more quickly.
But for some producers, time is very short. In Alabama, poultry producers haven’t run out of propane yet, but their careful rationing of the fuel may adversely affect their chickens.
“Chickens [have to come] out of incubator at 99 degrees,” said Ray Hilburn, membership director at Alabama Poultry and Egg Association. The high temperature ensures chickens grow at their peak rate. But now producers are “having to cut the temperature down,” he said. “That cuts down on performance of birds.”
Hilburn said the shortage has left his phone ringing off the hook, though coordination with the state’s propane gas association helped keep most producers supplied. But the situation will only be remedied when the weather changes. “We need a few more warm days in the row,” he said.
In Missouri, Hurst needs the propane to keep his flower supply business running. Flowers due to be delivered to landscapers in Kansas City, Omaha and St. Louis by early spring are already in the ground. “If we can’t get [propane], we lose production, we lose plants,” he said. The shortage has made him consider abandoning propane altogether, in favor of alternative fuels using biomass.
But for now, Hurst is sticking with propane, even though relief might be a while in coming. “There’s some concern that inventories will be completely depleted by mid- to late February,” he said. “It could [take until] March. Or it could be worse.”
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