“In the history of propane, we never had anything like we had this winter,” said Mollie O’Dell, a spokeswoman for the National Propane Gas Association.
In Ohio, residential propane costs peaked in February at $3.73 per gallon, up 31 percent from the same period last year, according to the U.S. Energy Information Administration.
The federal agency’s current estimate for winter energy expenditures for homes heating with propane in the Midwest is $2,212, which is $759 higher than projected in October.
Those high costs have hurt businesses and threatened the ability of propane customers to purchase essential heating fuel, according to the National Propane Gas Association.
“The emergency is over, but the solutions to that emergency are just now emerging,” said David Field, executive vice president of the Ohio Propane Gas Association. “Between now and the fall, I’m hopeful that we will straighten out a lot of the problems that we had.”
Last month, National Propane Gas Association President and CEO Richard Roldan testified before the House Energy and Commerce Committee’s Subcommittee on Energy and Power. Roldan made several recommendations for what the government can do to protect consumers who rely on propane. They include a review of federal propane export policies; increased transparency of petroleum products pipeline operations; and expedited increases in storage infrastructure.
Historically, propane has been produced in the Texas, Louisiana and Oklahoma regions, and then transported to the north and east, primarily by pipeline.
Field said the production of fossil fuels from shale formations, including the the Marcellus and Utica formations in Ohio and Pennsylvania, has reversed the traditional flow of fuels through U.S. pipelines.
“The infrastructure that used to deliver propane quickly to the Midwest was in fact being used to deliver the shale gas products the other direction,” he said.
Propane exports also were a significant factor during the winter shortage, according to the National Propane Gas Association.
In 2013, U.S. propane production increased by 1.5 billion gallons. However, propane exports increased by 2 billion gallons last year, from 2.6 billion gallons in 2012 to 4.6 billion gallons in 2013.
More than 20 percent of total U.S. propane was exported last year, up from 5 percent in 2008.
In addition, propane inventories at U.S. storage facilities were at a five-year low at the start of traditional winter heating season, Field said. In October, national propane inventories were at about 67 million barrels, 8 million barrels less than at the same time in 2012.
A primary factor leading to low inventories, particularly in the Midwest, was an unusually wet and large harvest that occurred late in the fall season. That forced farmers to use more propane than anticipated to dry their crops, said Dave Wedderburn, vice president and general manager of Collett Propane Inc. in Xenia.
That was followed by a persistently cold winter, characterized by the “Polar Vortex” weather phenomenon, that drove up demand for all heating fuels, depleted inventories and put upward pressure on prices, experts said.
In the Midwest, propane consumption from October 2013 to January 2014 increased by 410 million gallons, or 9.8 million barrels, compared to the same period in the previous year, according to the National Propane Gas Association.
Wedderburn said the supply situation is improving with the arrival of warmer weather. “We were still a little bit pricey a couple of weeks ago, but now things seem to be back to normal for the time being,” he said.
Area propane dealers are taking steps to reduce their risk in the event of a similar situation next year, such as increasing their storage capacity, said Brian Buschur, a manager at McMahan’s Bottle Gas in Dayton.
Buschur also expects more customers to fill their propane tanks during the summer months, when demand and prices are lower.
Propane customers also might benefit from a monthly budget program that locks in a guaranteed price, regardless of later increases or declines, Wedderburn said. “The people that did that with us this year actually paid in the $1.70’s, $1.60’s. They came out way ahead of the people that had to pay upwards to $4,” he said.
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