As temps dip, propane prices heat up – News – The Lake News Online

When a cold front brought another period of sub-par temperatures to the sea area on Tuesday, the cost of propane and other heating fuels was expected to rise as the Midwest suffers from shortages.

When a cold front brought another period of sub-par temperatures to the sea area on Tuesday, the cost of propane and other heating fuels was expected to rise as the Midwest suffers from shortages.

Prolonged cold weather in much of the Midwest this winter combined with the acute extreme cold snap known as the “polar vortex”, in addition to a large, high moisture corn crop in the fall and infrastructure problems are attributed to the rising prices.

The US Energy Information Administration (EIA) reported a temporary propane shortage in the upper Midwest – Minnesota, Iowa, Wisconsin, and Nebraska – due to an abundant corn crop in late October.

Corn and soybeans that do not dry in the field to a moisture content of around 15-16 percent are instead dried using a special propane oven. According to an article by Corn & Soy Bean Digest, most of the corn harvested that fall had a moisture content of 18-26 percent due to late sowing last spring and persistent cool, humid weather in October. The harvest had to go ahead to bring in the harvest before winter.

The shortage in the upper Midwest was exacerbated when demand for propane for home heating needs began in late October and early November.

For the week that ended November 1, propane inventories in the Midwest declined by more than 2 million barrels, the largest one-week inventory in November since 1993, according to the EIA.

With the polar vortex that hit in early January, setting new record temperatures across the Midwest and most of the country, the scarcity spread as more fuel was needed to keep households warm.

The Missouri Propane Gas Association (MGPA) estimates that this state alone will have 80 percent above average heating needs this winter.

The association also blamed “infrastructure realignments” for the inhibition of propane transport in the Midwest.

The Cochin pipeline, which supplied 40 percent of the product used by Minnesota suppliers and supports supplies to six other states, has been closed for repairs, according to the MPGA. It’s also about to be closed to propane production as operator Kinder Morgan Energy Partners LP makes changes in mid-2014 to reverse the flow of the pipeline to the terminals in Canada.

Prices are rising as demand rises in the Midwest and suppliers pay more to keep propane in the area instead of going south to the Gulf Coast, the EIA said in a Jan. 15 press release. Infrastructure changes have sent increasing amounts of propane and other hydrocarbon gas liquids (HGLs) to Mont Belvieu, Texas on the Gulf Coast to meet petrochemical demand as well as the global market for HGLs, the news release said.

The new pipeline, which will transport propane from the Midwest to the Gulf Coast, will move cargo almost seven times faster than before, according to MPGA.

With global propane prices well above US prices, propane shipments will continue to be relocated to the Gulf Coast for export, according to the EIA, and propane prices in the Midwest will continue to rise to keep border supplies in the region.

Missouri is served primarily by the Mid-American Pipeline from a hub in Conway, Kan. supplied from. Conway is also a supplier to the hub in Mont Belvieu, Texas.

The EIA showed rising residential propane prices, with the average US cost per gallon rising near $ 2.40 in early November and rising to about $ 2.87 from Jan. 13.

Last week’s price was up about three cents per gallon from the previous week and about 59 cents per gallon over the same period in 2013.

On January 10, the EIA quoted propane stocks at 38.654 million barrels less than the previous week’s 3.779 million barrels due to rising demand.

While the propane production rate was 1.42 million barrels per day, demand on January 10th reached 1.736 million barrels per day. Compared to the previous week, production declined and demand increased.

Starting January 10th, weekly US propane stocks started falling below the five-year range around the start of the year, while they were above the range last winter.

Both the MPGA and the National Propane Gas Association (NPGA) are working to expedite propane transportation through all modes of transport, from pipeline to rail to commercial vehicle transportation.

In recent weeks, they have called for an exemption from state regulations on opening hours restrictions for airlines participating in emergency operations to expedite transportation.

In Missouri, the State Department of Public Security issued a letter of urgency January 13-19 to waive these regulations. The waiver has now been extended to January 26th.

That means truck drivers are allowed to drive longer hours to bring propane to the Midwest.

Missouri is one of 30 states to grant the waiver sometime this winter, according to the NPGA.

In a more unusual move, the U.S. Department of Transportation issued a regional Midwestern Emergency Declaration on Jan. 19 lifting restrictions in Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Nebraska, Ohio and Wisconsin, and Missouri.

The declaration, with effect for the duration of the emergency or until February 11, provides for regulatory relief for commercial vehicles and at the same time offers direct support for the delivery of propane and heating fuels to the affected areas.

A similar statement applies in 14 states in the eastern United States

Propane wasn’t the only fuel that was affected.

Record natural gas withdrawals were made from storage facilities in the week leading up to January 10, according to the EIA. The extreme cold also affected natural gas production this week, with freeze-offs occurring in parts of the shale in Pennsylvania and Arkansas.

In a 2009 EIA poll, 49 percent of Missouri households used natural gas as their primary fuel and over 30 percent used electricity. Around 15 percent – especially in rural areas of the state – used propane as their main fuel for their homes.

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