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Propane shortage sends suppliers scrambling, prices jumping

The Exchange
Bitter-cold temperatures make a comeback in the Midwest
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After a relatively mild stretch of weather, cold, wintry weather is returning to areas that were hard-hit by a record cold snap less than three weeks ago. Though not record-breaking, temperatures are expected to be up to 20 degrees below average in many areas. Lauren Casey of CBS station WCCO reports

As the northeastern U.S. prepares for another major snowstorm along with extreme cold weather, residents and businesses are suffering from a shortage of propane.

Supplies of propane in the Northeast and Midwest regions took a hit during the recent "polar vortex"-induced cold spell, and deliveries to replenish the stocks have been hampered by poor weather.

That’s caused prices to spike for the fuel that nearly 6 million U.S. households rely on for home heating. Nationwide, propane prices averaged $2.86 per gallon last week, up 17% from the same period a year earlier, according to the U.S. Energy Information Administration.

Prices are even higher in some regions. Residential customers in New York state, for example, paid an average of $3.28 a gallon for propane last week, up from under $3 a gallon in December and 20% higher than at this time last year.

Several governors in the Midwest have already declared states of emergency, suspending rules limiting propane deliveries. Ohio Gov. John Kasich on Jan. 18 issued an emergency proclamation temporarily waiving rules that limited delivery hours for propane and heating oil. Kasich also activated the state’s national guard to assist residents affected by the shortage.

“This will help get propane companies resupplied so Ohioans who use propane to heat their homes can stay warm, while also doing it safely,” the governor said in a statement. “We’re also working closely with county officials to look out for people whose supplies might be getting low. I urge folks to look out for one another right now.”

Ohio is the 17th state to declare an emergency, according to a report by NBC News.

The New England states, which have less storage capacity, have had trouble receiving propane deliveries by rail because of bad weather, as well. And propane deliveries will likely become more difficult as the latest winter storm racing up the Eastern seaboard could bring a foot of snow to major cities, including Philadelphia, New York and Boston.

Prices will likely climb even higher as another patch of extreme cold weather is expected. Temperatures will be 10 to 25 degrees below average across much of the country starting on Tuesday night. Temperatures below freezing could extend as far south as Memphis, Tenn., by Thursday.

The propane shortage has its roots in the Midwest’s farm belt, where record high corn crops this fall led to higher propane use. Farmers use propane to dry crops and tapped more supplies than usual thanks to the huge harvest and above-average rainfall.

At the same time, U.S. exports of propane were booming, leading propane supplies to fall to the lowest level since 1996, according to the Energy Information Administration. According to the Census Bureau, 5% of around 115 million households, or nearly 6 million, use propane as home heating fuel.

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