Friday, January 24, 2014
BIRMINGHAM, Ala. (AP) — A cold snap is stretching supplies of propane gas and causing transportation bottlenecks across a broad section of the United States, officials said Friday, sending everyone from rural educators to chicken farmers in search of enough fuel to keep warm.
Governors and federal regulators already have taken the rare step of loosening transportation rules for about 33 states in the South, Midwest and East to allow additional hours for truckers to deliver propane and keep up with demand, according to Jeff Petrash, vice president of the National Propane Gas Association.
The gas often is used outside metropolitan areas to heat homes and chicken houses and to fuel some manufacturing operations, and tankers from the Midwest are waiting in line for hours to fill up with propane at bulk storage locations in the South before heading back north. About 5.5 million homes are heated by propane, according to the U.S. Energy Department.
Prices are spiking, and many are worried that a propane crunch will worsen in coming days as temperatures get even colder and demand rises, sending prices even higher and stretching supplies further.
"I think the only answer is warmer weather," said Marvin Childers, president of The Poultry Federation in Arkansas, Missouri and Oklahoma.
Some are questioning what's driving the spike in prices. U.S. Sen. Chuck Grassley, R-Iowa, sent a letter Thursday to the Federal Trade Commission asking for oversight of the propane market. Grassley noted, as have many retailers, that the price for propane at Conway, Kan. — one of two primary propane storage sites in the United States — has been significantly higher than the price at the other site, in Mont Belvieu, Texas.
"I request that the Federal Trade Commission remain vigilant in overseeing the propane market to prevent possible anti-competitive behavior or illegal manipulation, and to ensure that any supply shortages are not created artificially," Grassley said in his letter.
Running low is already a concern in some places. School officials in Alabama's mountainous DeKalb County were surprised to receive a letter from a major supplier saying the company was cutting off commercial deliveries because of supply problems, said assistant superintendent Brian Thomas.
Thomas said officials were able to find another company that topped off propane tanks at four schools that rely on propane for heat, but administrators are now trying to cut back on usage to make sure the supply lasts.
"I'm working on an email right now asking principals to conserve as much as possible," Thomas said.
Propane supplies were lower than normal before the cold weather partly because farmers had to use an unusually large amount to dry grain before storage. The government said propane supplies dropped to the lowest level ever during the second week of January.
The National Propane Gas Association said it is working with the transportation industry to prioritize shipments of propane.
In Kentucky, where snow and freezing temperatures are predicted through late next week, the propane industry is asking people to alert suppliers if storage tanks fall to 35 percent of capacity to ensure they get a refill before running out.
Meanwhile, agriculture leaders say some farmers in poultry states including Alabama, Arkansas, Georgia, Kentucky, Mississippi, Ohio, Tennessee and Virginia have had to stop taking deliveries of baby birds because they're unsure whether they will be able to get enough propane to keep houses around 90 degrees, which days-old chicks need to thrive.
"This is happening all over. It's one of those perfect storms we couldn't foresee a month ago," said Johnny Adams, director of the Alabama Poultry and Egg Association. The state's $15.1 billion poultry industry has some 2,500 producers and each week hatches 24 million chicks, all of which have to be kept warm.
Childers, whose office is in Arkansas, said propane prices jumped from about $1.80 a gallon to nearly $5 by Friday. The whole poultry industry could grind to a halt if growers can no longer afford propane to keep birds warm, he said.
Tennessee, which is among the states that have let truckers drive longer hours to allow suppliers to make more deliveries, relaxed rules to ensure that propane can get to consumers from supply terminals, where plenty of the gas is available, said Emergency Management Agency spokesman Dean Flener.
"We've heard of localized issues of somebody running short, but the Tennessee Propane Association has worked to get that supply there where it's been needed," he said. "We're not seeing a shortage, but we're seeing high demand and trying to do what we can to get the supply that's there to meet it."
Florida isn't having the same issues because of warmer temperatures, but supply problems could spread if the cold weather continues, said Kim Barber, a spokeswoman for the Florida Propane Gas Association.
In Missouri, some lawmakers were calling for an investigation into the low supply and high prices. State Sen. Mike Parson, R- Bolivar, said he suspects big companies may be trying to boost profits by artificially lowering the supply.
"I hope they prove me to be wrong," he said. "I just don't think there is any doubt about it. There is not any question they are going to make millions of dollars."
AP reporters Erik Schelzig in Nashville, Tenn.; Dylan Lovan in Louisville, Ky.; Jordan Shapiro in Jefferson City, Mo.; Margery A. Beck in Omaha, Neb.; and Michael Schneider in Orlando, Fla., contributed to this report.