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Archie Ingersoll, Published January 21 2014

Propane costs rise as suppliers scramble to meet residential demand

MOORHEAD – As the price of propane climbs to historic highs this winter, suppliers in the Midwest and elsewhere are scrambling to meet the needs of residents looking to heat their homes.

On Tuesday, the executive director of the North Dakota Propane Gas Association could offer little hope for a price decline anytime soon.

“I don’t know what can be done,” Mike Rud said. “I wish I had some good news for someone on this issue.”

In the past week, the per-gallon price of propane for residential users has jumped at least 70 cents, sending prices in the Fargo-Moorhead area into the range of $2.70 to $3, said Gary Jochim, operations manager for Petro Serve USA, a propane supplier in Moorhead.

‘Historical’ shortage

“This is historical,” Jochim said. “Guys who’ve been around in the propane industry for 40 years are just flabbergasted.”

The shortage started in October when many farmers around the Midwest harvested their corn at the same time, which strained the nation’s supply of propane, a fuel used in drying crops.

“It was the perfect storm. Every state had wet corn,” Jochim said.

The sudden demand from farmers followed by unusually cold weather around the U.S. left propane suppliers playing catch-up.

“As these cold snaps keep dragging out, it puts more and more crunch on the supply line,” Rud said. “We’ve been behind the eight ball for about three months now.”

Because of the shortage, Petro Serve has had to go farther to find propane, which has increased shipping costs. This has contributed to higher prices for residential users who are paying about a dollar more per gallon than last year, Jochim said.

Also factoring into the high price is the need for propane in countries such as Mexico, China and Japan. “As a result, a lot of the propane that we normally would see in the United States is being exported,” Rud said.

25 states affected

Nationwide, more than 14 million households use propane to heat their homes and fuel their appliances, fireplaces and outdoor grills, according to the Propane Education and Research Council. The current shortage has affected about 25 states, including North Dakota, Minnesota, Iowa and South Dakota, Rud said.

At this point, the only hope for a price drop is a stretch of warm weather that would ease demand before spring arrives, Jochim said.

In Minnesota and North Dakota, heating assistance funds are still available this winter for low-income families, officials say.

Carol Cartledge, director of the state’s economic assistance policy division, said 24 percent of North Dakota families participating in the heating assistance program heat their homes with propane.

She said heating assistance expenditures are up 13 percent this winter, but it’s unclear how much the cost of propane has influenced that figure.

Anne O’Connor, a spokeswoman for the Minnesota Department of Commerce, urged propane users to take steps to conserve fuel, keep track of their tank levels and allow for delivery time.

“Don’t wait until you’re almost out to order,” she cautioned.

Need help with heating bills?

In North Dakota, call (800) 755-2716

In Minnesota, call (800) 657-3710

Readers can reach Forum reporter Archie Ingersoll at (701) 451-5734