WASHINGTON, May 2, 2014 – Several factors contributed to the shortage of propane in the Midwest and Northeast last winter, and the government should take steps to ensure it does not happen again, lawmakers and witnesses told the Senate Energy and Natural Resources Committee Thursday.
Sen. Al Franken, D-Minn., said the propane shortage hurt many farmers in his state, and that many went into debt “just to heat their homes.” Sen. John Hoeven, R-N.D., repeatedly asked witnesses for the cause of the shortage.
Melanie Kenderdine, director of the Office of Energy Policy and Systems Analysis at the Energy Department, told lawmakers that “a confluence of unusual events contributed to a severe situation in the Midwest, resulting in significant negative consequences for residential and agricultural customers.”
Kenderdine, and other witnesses, said propane usage spiked first for drying a large and wet corn crop, which was then followed by an extremely cold winter. “No special refill measures were taken to replenish supplies that were depleted by crop drying demand, most likely due to [weather] forecasts and the relatively mild weather of the previous winter,” she said.
Further, the Cochin pipeline, which moves propane from Canada to the Midwest, was offline for maintenance for a few weeks in late 2013.
Kenderdine said various organizations, such as the National Association of State Energy Officials and the National Gas Propane Association, are hosting “lessons learned” meetings to identify steps to prevent future shortages.
Witnesses said transportation issues were, and continue to be, a problem for movement of propane. They said pipelines are moving gasoline, diesel fuel, jet fuel, and natural gas liquids. Rail and truck transportation of propane has become increasingly difficult, they said.
“Competition from other substances for [rail] transportation is intense and growing,” said Joe Cordill, owner of Cordill Butane Propane Service in Louisiana. “In addition, rail transport becomes more unreliable during cold weather conditions when reliable propane delivery is needed the most.”
Cordill and others asked senators to relax government regulations in regards to hours of service for truck drivers hauling propane.
John Zimmerman, former president of the Minnesota Turkey Growers Association and turkey farmer, said the industry in his state saw propane use increase by more than 30 percent from the previous winter. Zimmerman said prices jumped from $1.30 per gallon to $5 per gallon in a few weeks. He said the state turkey industry saw an increase of more than $25 million in heating-related input costs.
“While this propane shortage certainly caused significant price increases, it became clear to many of us that if something was not done we could very well run out of propane altogether,” Zimmerman said. “This forced us to ration what propane we had on hand by lowering temperatures in our barns, shops, and homes."
Zimmerman said the turkey industry is worried about the next winter, and pressed lawmakers to create an early warning system that would allow time to mitigate any shortages of propane supply.
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