Propane crisis becomes hot topic

BLOOMINGTON, Minn. -- Minnesotans living in a quarter-million rural homes depend on propane for heat, but soaring prices and shortages that experts predict will get worse are sending chills down their
backs.

Businesses and farmers are in the same situation, as are businesses that sell the fuel.

Gov. Mark Dayton declared the situation a crisis Tuesday after meeting with dozens of key people in the Minnesota propane industry, from farm leaders to propane wholesalers to those who sell it to customers.

“This is not going to go away soon,” the Democrat said.

Near the top of his propane to-do list is calling Republican Texas Gov. Rick Perry to allow more propane to be transported to Minnesota. Dayton also is pressing President Barack Obama on the same issue and he plans to talk with railroad leaders about getting more propane-filled tank cars headed to the state.

Dayton’s administration is increasing the aid available to Minnesotans who cannot afford the fuel.

Today’s problem is a lack of propane that has pushed prices to record levels, in some cases more than doubling in recent months. Those who started a three-day propane convention in Bloomington Tuesday said they have not heard of anyone who has run out of propane and cannot get more, but they were gloomy about their immediate prospects.

The long-term outlook is not bright, either. A Canadian pipeline that delivers more than 40 percent of Minnesota's propane is due to close permanently in April. Since large quantities of propane only are needed in the fall when farmers dry grain and in winter when homes need to be heated, those at the convention suggested that other solutions are needed.

“We are in a real emergency,” Dayton said.

He issued an emergency decree Monday night, allowing state agencies to help Minnesotans affected by the crisis. The state Executive Council, made up of statewide elected officials, is to meet Friday to extend the Monday night order for 30 days.

If it gets to the point that people run out of propane, the state could help local governments shelter them. But, so far, state officials say there is little they can do other than what Dayton outlined.

The issue began in the fall when Upper Midwest crops were harvested late and were wet. That meant farmers used more propane for drying grain.

As the driers were working, cold settled over the region and forced Midwesterners to turn up thermostats and use more propane earlier than normal. Temperatures seldom have gone above normal since then.

“Even a few days with 5-degree temperatures would help,” said Chad Pendill of LPG and NH3 Supply, an equipment supplier in Buffalo.

Temperatures were 5 below, not above, when Pendill said that and forecasts call for more cold than warm days ahead.

Dayton and Wisconsin Gov. Scott Walker both have declared emergencies and their congressional delegations are pressing the Obama administration for help.

“With below-zero temperatures hitting Minnesota hard this week, we need to alleviate this shortage and ensure propane prices don't continue to skyrocket in Minnesota and other states hit by the shortage,” Sen. Al Franken, D-Minn., said as he pledged to continue to turn up the heat on the administration.

Republican state Sen. Dave Thompson of Lakeville, who is running to unseat Dayton, attended Dayton's Monday meeting and said there was little more the governor could do. He said Dayton took the right action to increase funding in an existing program to help poor Minnesotans afford propane.

“Under no circumstances should price controls or other market manipulation tools be implemented,” Thompson said, adding that higher prices encourage conservation. “Higher prices provide the additional revenue necessary to get our retail supply replenished.”

State Rep. Pat Garofalo, R-Farmington, also said Dayton is doing what he can, but said that in the long run the federal government needs to encourage construction of more pipelines.

Railroads emphasize transporting western North Dakota crude oil to the east, Garofalo said, which makes it more difficult for propane suppliers to move their fuel. He said rail cars are “jammed with oil.”

Trucking propane from Texas, he added, "is better than nothing," although it is more expensive than a pipeline.

Adding to the problem is the fact that propane only is needed seasonally, so pipeline operators prefer to move fuels used year around.

Vice President Drew Combs of CHS, a propane supplier based in the Twin Cities, said a long-term solution must include increasing storage on farms and elsewhere so propane can be shipped to the Upper Midwest year
around, not only in spurts when it is most needed.

Combs suggested giving tax breaks to farmers and others who build propane storage facilities.

Executive Director Chris Radatz of the Minnesota Farm Bureau said that government needs to take action: “Make movement of propane a higher priority.”

Radatz said propane shortages are hitting many states. Last week, he said, Ohio was having the biggest problem. This week it is Minnesota and Wisconsin, which have about the same number of homes affected.

Before the crisis hit, the propane industry was making strides in convincing Americans to use the fuel in cars and other vehicles. But Carl Wenner, owner of a Cold Springs hardware store that sells propane, said high prices and short supply changed the future. “This will wipe that out.”

The propane industry sees one bright side after government officials and the news media got wind of the situation.

“It is on everyone's radar now,” Pendill said.