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 Prices of the fuel have rocketed to all-time highs in some
regions, distributors are rationing supplies, and some schools have
shut due to a lack of fuel during this year's second bout of Arctic
weather.
The National Propane Gas Association said on Thursday the states of
Wisconsin, Minnesota and Missouri are worst hit and that it has
heard that some retailers have run out of supplies.
But as record cold coincides with pipeline outages and low
inventories, the crisis has spread further. Most households are not
connected directly to propane pipelines, and the system relies on
truck fleets now running at full capacity to get emergency supplies
to states across the Midwest, Northeast and Southeast.
The U.S. Department of Transportation has issued emergency orders
suspending the limits on the amount of time truck drivers can spend
on the road for 10 Midwestern states and 12 Northeastern states, a
rare regional order.
A spokesman for Pennsylvania-based AmeriGas Propane, the largest
U.S. propane retailer, said it was rationing deliveries to "small
pockets" of Alabama, Georgia and Tennessee on Thursday, reducing
supplies to 100 gallons per customer from the standard delivery of
some 250 gallons.
"Supply is very tight. There is propane to be had out there, but
there are supply and transport issues across the country," spokesman
Simon Bowman said.
RATIONING, PRICE SPIKES
U.S. propane production has actually grown thanks to the shale oil
and gas boom in recent years, but because of the higher supply,
domestic prices sank to below global levels which has encouraged
exports of the fuel from the U.S. Gulf Coast to Japan and other
Asian countries.
The current shortage in the Midwest comes at a confluence of events.
A record-breaking cold snap hit at the start of January when stocks
were already low after large amounts of propane was used to dry out
a bumper corn harvest in the fall.
A pipeline outage during most of December exacerbated the situation
and this week's freezing weather, which is expected to last to the
end of the month, has heightened the situation.
All the while prices have soared. Propane heading for the Midwest is
priced against supplies in the hub in Conway, Kansas. Prices there
touched almost $5 a gallon on Thursday, compared with Friday's
pre-freeze price of around $1.75.
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Texas has lifted the need for out-of-state trucks to be registered
with the state to allow other trucks to come and pick up supplies.
"Long lines have formed at Mont Belvieu," said one Houston-based
broker, referring to the largest propane supply hub in the country.
"Lots of out-of-state trucks are showing up."
LOW SUPPLIES
In northern Tennessee, the Stewart County School System opted to
close on Thursday and Friday because of warnings from suppliers they
were focused on deliveries of up to 150 gallons to residences, said Leta Joiner, assistant schools director.
"We're not sure how long this is going to last," Joiner said. "We
decided to err on the side of caution."
One propane supplier in Northern Indiana said customers pleaded for
more fuel when he did his rounds on Thursday. Other customers were
more hostile, accusing his company of exploiting the shortage to
rack up prices.
Few are willing to predict how long this supply squeeze will last.
"We certainly hope that there is a break in the weather," said Roy
Willis, president and chief executive officer of the Propane
Education and Research Council.
"It could be days or it could be weeks. It really depends on the
weather and the logistics of moving the propone."
(Reporting by Sabina Zawadzki, Edward McAllister, Robert Gibbons and
Julia Edwards in New York, Tim Ghianni in Nashville; editing by Lisa
Shumaker)
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