Propane shortage: Winter storm prompts energy emergency in Midwest

A propane shortage in the Midwest is raising concerns about residents who rely on the fuel for heating. The propane shortage has prompted a state of emergency in Ohio, as bitterly cold weather descends on the Midwest.

Al Behrman/AP
Students walk to class Tuesday on campus at Xavier University in Cincinnati. A propane shortage in Ohio has officials concerned for the safety of rural residents who use it as a heating fuel.

A propane shortage in extreme cold weather Tuesday is raising concerns about rural Midwesterners who rely on the fuel to heat their homes. 

Heavy snow is falling in southern Ohio and set to hit northeast Ohio while temperatures statewide are forecast to plunge to around zero overnight. The winter storm is set to raise demand for propane and heating oil, while making it difficult for truck drivers to deliver the fuel to an areas already suffering through a propane shortage.

Meanwhile, in the Northeast, utilities and grid operators are bracing for rising natural gas demand as temperatures plunge and heavy snowfall is in the forecast. 

Ohio Gov. John Kasich declared a state of emergency over the weekend to expedite shipments of propane and heating oil as stretches of extreme cold have depleted supply. The declaration temporarily waives hours-of-service regulations, allowing fuel-truck drivers to work longer hours than normally permitted. Governor Kasich also called on the Ohio National Guard to assist in local efforts.

“This will help get propane companies resupplied so Ohioans who use propane to heat their homes can stay warm, while also doing it safely," Kasich said in a statement Saturday. "We’re also working closely with county officials to look out for people whose supplies might be getting low." 

About 6 percent of Ohio households use propane for heat, according to census data. In about a dozen rural Ohio counties, propane makes up at least 20 percent of household heating fuel. Natural gas is the predominant source of heating fuel statewide – supplying heat to about 68 percent of Ohio households. 

The origins of the shortage actually stretch back to last fall and can be tied to an unlikely culprit: corn.

"For corn to be stored, it first needs to be dried, using large-scale heaters that often use propane for fuel," the US Energy Information Administration (EIA) explains in a report issued last week. "A late-2013 corn harvest, along with cold wet weather, resulted in strong demand for propane at distribution terminals in the Upper Midwest."

Eager to get their product to market, farmers gobbled up propane reserves to dry their corn. In the week ending Nov. 1, Midwest propane inventories dropped more than 2 million barrels, according to EIA. That's the largest single-week drop in November since 1993. 

The propane shortage has driven up prices. Last week, residential propane cost $2.86 a gallon, up 3 cents from a week ago and 6 cents year-over-year.  

Cold weather has made a bad situation worse with early January's polar vortex taking 1.5 million barrels out of Upper Midwest inventories. Winter weather has also made it difficult for fuel-tank drivers to make their deliveries.

"The month of December brought historically cold weather, ice and snow, which further inhibited the transportation of propane. Demand for residential, commercial and agricultural heat soared,” David Field, executive vice president of the Ohio Propane Gas Association, told "All these combined to prevent regional inventories from recovering and the existing pipeline and terminal infrastructure has been unable to recover.”   

The cold front is expected to hit the East Coast Tuesday afternoon, bringing heavy snow and freezing temperatures. That is likely to create bottlenecks in the Northeast's expansive pipeline system, stressing the grid as it did with early January's polar vortex. Already, New England spot natural gas prices were up 186 percent Tuesday, and New York prices rose 181 percent in anticipation of increased demand. 

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