By Sabina Zawadzki and Edward McAllister
NEW YORK Jan 24 Millions of Americans are
feeling the pinch of a propane shortage this week as brutal cold
exposes the supply vulnerabilities of a fuel that heats homes,
schools and businesses across wide swathes of the United States.
Prices of the fuel, a liquefied petroleum gas, have rocketed
to all-time highs in Midwestern states, distributors are
rationing supplies, and some schools have shut due to a lack of
the fuel during this year's second bout of Arctic weather.
On Friday, propane heading for the Midwest changed hands at
$4.30 a gallon - more than double its price just last Friday -
although it had traded even higher at close to $5 a gallon on
Distributors were quick to point out the absence of any
reports of homeowners running out of fuel. But as a
record-breaking freeze coincides with pipeline outages and low
inventories, the crisis is expected to linger.
"It's not a permanent shortage and we won't run out, but
there are no avenues to deal with this shortage today other than
a break in the weather," said Brandon Scholz, managing director
of the Wisconsin Propane Gas Association.
"We could be sitting in this situation to spring."
Most households are not connected directly to propane
pipelines, and the system relies heavily on truck fleets now
running at full capacity to get emergency supplies to states
across the Midwest, Northeast and Southeast.
The U.S. Department of Transportation has issued emergency
orders suspending the limits on the amount of time truck drivers
can spend on the road for 10 Midwestern states and 12
Northeastern states, a rare regional order.
A spokesman for Pennsylvania-based AmeriGas, the
largest U.S. propane retailer, said it was rationing deliveries
to "small pockets" of Alabama, Georgia and Tennessee on
Thursday, reducing supplies to 100 gallons per customer from the
standard delivery of some 250 gallons.
"Supply is very tight. There is propane to be had out there,
but there are supply and transport issues across the country,"
spokesman Simon Bowman said.
All the while, federal policymakers representing the Midwest
have heard complaints from constituents angry about the high
Iowa Senator Chuck Grassley called on the Federal Trade
Commission to review the cause of a propane price spike in his
state on Wednesday to "ensure that any supply shortages are not
RATIONING, PRICE SPIKES
U.S. propane production has grown in recent years thanks to
the shale oil and gas boom, but the resulting higher supplies
have caused domestic prices to sink below global levels. That in
turn, has encouraged exports of the fuel from the U.S. Gulf
Coast to Japan and Latin America, where prices are higher.
The shortage in the Midwest comes at a confluence of events:
namely, record-breaking cold at the start of January, when
stocks were already low after large amounts of propane were used
to dry out a bumper corn harvest.
A pipeline outage during most of December exacerbated the
situation, and this week's freezing weather, expected to last to
the end of the month, has heightened the situation.
All the while prices have soared. Propane heading for the
Midwest is priced against supplies in the hub in Conway, Kansas.
Prices there touched almost $5 a gallon on Thursday, compared
with Friday's pre-freeze price of around $1.75.
Texas has lifted the need for out-of-state trucks to be
registered with the state to allow other trucks to come and pick
"Long lines have formed at Mont Belvieu," said one
Houston-based broker, referring to the largest propane supply
hub in the country. "Lots of out-of-state trucks are showing
In northern Tennessee, the Stewart County School System
opted to close on Thursday and Friday because of warnings from
suppliers they were focused on deliveries to residences of up to
150 gallons, said Leta Joiner, assistant schools director.
"We're not sure how long this is going to last," Joiner
said. "We decided to err on the side of caution."
One propane supplier in northern Indiana said customers
pleaded for more fuel when he did his rounds on Thursday. Other
customers were more hostile, accusing his company of exploiting
the shortage to raise prices.