(Adds more from governors, prices)
By Julia Edwards and Robert Gibbons
NEW YORK Jan 30 U.S Northern and Midwestern
states called on Thursday for new ways to ease a supply crunch
of the heating fuel propane during the second week of a bitter
freeze, in a sign the shortages are expected to continue into
While millions suffer from the supply squeeze and sky-high
prices, government data showed the fuel was being exported at
historically high levels going into the winter, and analysts say
the pace of sales abroad continued in November and January.
On Thursday, states called for cash to be released to
hard-hit consumers, waivers on road restrictions to be extended
and warned propane suppliers from taking advantage of the
situation by price gouging.
Trucks have rushed to the propane storage facility in Mont
Belvieu, Texas, only to find a two-day wait to stock up,
suppliers and traders said. Nevertheless, Texas stock has been
plugging the gaps in supply as far north as Minnesota.
Six governors from Upper Midwestern states spoke on the
telephone to their Texan counterpart, Rick Perry, and asked him
to extend a waiver on trucking restrictions, which runs out next
"I told Governor Perry how important his previous wavier had
been to Minnesotans, who are suffering severely from this
propane crisis. He very graciously agreed to extend the waiver
when it expires next week," Minnesota Governor Mark Dayton said
in a statement issued after the telephone call.
Governors from Wisconsin, Iowa, North Dakota, Indiana and
Ohio took part in the call, the governor's office said.
Benchmark propane prices for fuel heading towards the
Midwest more than doubled since the start of the year to just
shy of $5 a gallon last week. On Thursday, they swapped hands
for as much as $3.50, but then slipped to $2.45, traders said.
Residents of states such as Wisconsin, Minnesota and Iowa
paid more than $4.50 a gallon on Monday compared with
$1.90-$2.30, according to Energy Information Administration
Such price spikes caused Democrats in Oklahoma on Thursday
to call for state funding for consumers.
"Rural Oklahomans rely on propane to warm their homes and
support their livelihoods," Oklahoma Democrat James Lockhart,
said. "This is about survival for them. We have been diligent in
putting away state funds for emergencies, and I can assure you
that our low-income citizens and the elderly believe this
propane shortage is an emergency."
Wisconsin Governor Scott Walker released $8.5 million for
households and ordered another $8 million in loan guarantees for
propane suppliers having difficulties sourcing the fuel.
Michigan said it wants an extension of a waiver allowing
truckers to drive longer until Feb. 11, another sign that the
shortage there at least, could last for another week or so.
RECORD PRE-WINTER EXPORTS
Energy Secretary Ernest Moniz described the shortages as the
result of a "perfect storm" - unusually high demand to dry out
corn crops came after a later-than-normal harvest with no break
to stock up before the onset of the freezing winter.
He said the Department of Energy has some authority to
prioritize how propane is shipped and it is also in touch with
other state departments to find ways to ease the shortage.
But propane organizations and suppliers say record-high
exports contributed towards the crisis because they depleted
inventories just ahead of winter. Stocks in the Midwest are at
record lows for this time of the year, EIA data shows.
Data from the Energy Information Administration issued on
Thursday showed that, coming into the winter, propane exports
rose to 410,000 barrels per day (bpd) in November, the highest
since the agency began collecting data four decades ago.
That figure eclipsed the 408,000 bpd exported the previous
month, which in itself was a big jump from the 270,000 bpd that
had been exported on average in the previous months of 2013.
And some analysts said the high exports have been more or
less maintained throughout December and January.
Energy consultants RBN Energy, citing fellow consultants IHS
Waterborne Energy, said exports barely dipped below the 400,000
bpd mark in the past two months and, according to their chart,
have stayed above the 375,000 bpd mark.
U.S. propane production has risen hand-in-hand with the
shale oil and gas boom. That led to healthy domestic supplies
and encouraged exports as prices at home fell relative to the
rest of the world.
February Saudi Arabian propane prices, a benchmark against
which Middle Eastern sales to Asia are priced, were set at
$970 a tonne, an industry source said, translating that to
around $1.86 a gallon. That is higher than the $1.51 that a Mont
Belvieu barrel would fetch in the same month.
While Moniz did not refer to exports, other politicians have
noted the high level of sales abroad and said the issue might
impact their deliberations on whether to allow the export of
U.S. crude oil, a critical energy policy issue for 2014.
(Additional reporting by Ros Krasny in Washington; writing by
Sabina Zawadzki; Editing by Steve Orlofsky, Meredith Mazzilli
and Andre Grenon)