Iowa leaders seek answers, assistance for Iowans during spike in propane prices

Frigid winter has led to skyrocketing demand for propane to heat homes

Published: January 27 2014 | 4:25 pm - Updated: 29 March 2014 | 2:44 am in

Iowa leaders are taking action to find the cause behind the Midwest propane shortage and how to provide assistance to Iowans impacted by the spike in prices.

Gov. Terry Branstad and Lt. Gov. Kim Reynolds sent a letter to President Barack Obama Monday asking for help to ease the burden the shortage is placing on Iowans who use propane to heat their homes during the winter.

The letter asked the Transportation Department to expand the exemption of the “hours-of-service regulations to ease the movement of propane fuel" to states facing shortages and asked the Energy Department to ease regulatory barriers to quicken propane shipments. Branstad called on Texas Gov. Rick Perry  and Lt. Gov. David Dewhurst last week  to expedite shipments to states in need of propane.

The liquid propane is used by rural Iowans to heat their businesses and homes, and the frigid winter has lead the demand for the fuel to exceed the supply and a spike in prices.

Iowa Rep. Todd Prichard, D-Charles City, and Rep. Joe Riding, D-Altoona, announced legislation Monday afternoon to provide $1 million to an energy assistance program to help Iowans cover the surge in propane costs.   The two were joined by propane industry officials and other lawmakers packed into the House Lounge.

Jeff LaPan, senior accounts manager of propane for CHS Inc. a supplier in Minnesota, said the extended cold and not enough stored propane at the beginning of the season has contributed to the rise in demand.

The Midwest’s supply of propane was at 23 million barrels before the chilly winter season started, 5 million barrels short of the preferred stored supply.

“With the demand we had it was just not enough to keep pace and when you have a short supplied market with heavy demand, again supply and demand,” LaPan said.

He also said the industry has experienced difficulties in transporting the supply including the closure of an important pipeline and lack of access to railcars transporting propane. He said if current demand continues the state could run out of its supply by  mid-February.

House Speaker Kraig Paulson, R-Hiawatha, said there is more information needed to properly address the issue now and into the future.

“The dramatic and rapid increase in the price of propane for Iowans is a concern," he said. "We’re looking into it … trying to make sure we understand exactly what’s putting the pressures on and what we can do to be helpful."

U.S. Sen. Chuck Grassley, R-Iowa, and Sen. Tom Harkin,D-Iowa, both called on the Federal Trade Commission to investigate the rising propane costs last week.

“Something is not right here and we need some answers,” Harkin said when asked about the propane situation at a visit to the Iowa statehouse Monday.

Harkin said data from the request will hopefully shed light on the rising costs, which could help  lawmakers decide if regulatory action might help prevent the situation in the future.

A report from the Iowa Department of Agriculture released Monday said prices in retail propane continue to rise since last week, from $4.18 to $4.71, however there are indications propane prices might begin to fall.

LaPan said in the meantime consumers can practice a few short term solutions to ease their own personal demand:

  • Winterize unused buildings and do not heat them using propane
  • Reduce the thermostat in the home by five to 10 degrees
  • For propane users don’t request refill until the tank's supply falls below 25 percent
  • Limit hot water use

Reporter James Lynch contributed to this story.

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