January 30, 2014 / 10:37 PM / in 4 years

UPDATE 1-As U.S. states scramble for propane, exports remain high

(Recasts with Moniz, action by states, analyst on exports)

By Julia Edwards and Robert Gibbons

NEW YORK, Jan 30 (Reuters) - U.S Northern and Midwestern states called on Thursday for new measures to help bring the heating fuel propane into their regions as a bitter freeze extended into a second week, signaling that pockets of shortages have not yet disappeared.

As millions suffer from the supply squeeze and sky-high prices, government data shows the fuel was being exported at historic levels at the end of fall and analysts say the pace of sales abroad was maintained into the new year.

On Thursday, states called for cash to be released to hard-hit consumers, waivers to be extended to give propane-carrying trucks more time on the road and for propane suppliers to desist from taking advantage of the situation by price-gouging.

As trucks from Northern states rush to the largest storage hub of the fuel in Texas, Minnesota Governor Mark Dayton was scheduled to talk with his Texan counterpart, Rick Perry, on how to ease the passage of propane, Dayton’s office said.

Democrats in Oklahoma, meanwhile, called for Governor Mary Fallin to use a rainy-day fund to help homes with their sky-high bills. U.S. benchmark propane prices more than doubled to just shy of $5 a gallon last week.

“Rural Oklahomans rely on propane to warm their homes and support their livelihoods,” Oklahoma Democrat James Lockhart, said in a statement released on Thursday.

“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.”

In Wisconsin, where residential prices doubled to $4.50, Governor Scott Walker released $8.5 million in state funds for households and ordered $8 million in loan guarantees for propane suppliers having difficulties sourcing the fuel.


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 cold winter.

He said the Department of Energy has some authority to prioritize how propane is shipped and that it is also in touch with other state departments to find ways to ease the shortage.

But it has been the states that have acted first. Michigan said it wants an extension of a waiver for truck drivers to spend more time on the road until Feb 11, a sign that the shortage there at least, could last for another week or so.

It offered help with propane bills and encouraged consumers to file complaints if they thought they were charged too much.

“These circumstances are not a free pass for price gouging,” Attorney General Bill Schuette warned in a statement issued by the governor’s office.

Propane organizations and suppliers, however, say record-high exports also helped deplete inventories, which in turn are at record-low levels in the Midwest for this time of the year.

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 say that this high export level had 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.

While Moniz did not refer to exports, other politicians have noted the high level of sales abroad and said the issue may 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 and Meredith Mazzilli)

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