Cold weather, short supply driving up propane prices

2014-01-22T16:35:00Z Cold weather, short supply driving up propane pricesBy JESSICA HOLDMAN | Bismarck Tribune Bismarck Tribune

Employees at Rud Oil & Propane Co. in Center didn’t have time to stop on Wednesday. One driver had been out delivering propane until 8 the night before and planned to stay out that late again.

A propane shortage across the Midwest has driven propane prices in North Dakota and surrounding states to record highs during the colder-than-average winter.

Propane is running anywhere between $3.59 and $3.79 per gallon, said North Dakota Propane Gas Association President Mike Rud.

“And this isn’t over yet,” he said. “The price looks like it can go even more ... This is not good for the consumer and it’s not good for marketer.”

Customers who were full at the end of the summer are already running low again and need to fill because of the cold weather.

“We’re still trying to catch up from before (a month ago),” Dave Walth of Gray Oil Co. said. “Availability is really, really limited.”

Walth said the Mandan company has not been able to get as much product as it would like.

Rud said large companies that normally go through three semi loads of propane a day only may be able to get one. Hours of service for truck drivers have been waived through Feb. 6 to help combat the problem in the short term.

It’s not unusual for prices to go up in winter, but Rud and Walth both said this is the highest they’ve ever seen it.

Walth said Gray Oil is trying to help customers keep costs down by just supplying them with enough propane to get by until prices return to normal.

The shortage was caused by a confluence of events beginning in October, according to a statement from the propane association.

Corn and grain crops that are usually harvested in stages were harvested at the same time throughout the Upper Midwest. The crop also remained wet, which required propane for the drying process prior to storage.

As the harvest demand ended, a massive winter storm affected most of the country, increasing residential and commercial demand. The average number of heating degree days is more than 10 percent higher than last year. Colder than normal weather continues to be projected.

Another difference between this year and previous years is propane exports. In 2013, more than 20 percent of propane nationwide was exported, Rud said, up from 5 percent in 2008.

All these combined to prevent regional inventories from recovering. It has required longer driving distances and loading times, a scarcity of available product and delays in making deliveries to customers.

Walth and Rud said propane companies are hauling in propane from wherever they can get it — Kansas, Nebraska, even as far south as Texas.

“We’re just all scrambling all over,” Rud said. “It’s just not the next day like we’re used to happening.”

Rud said customers are being asked to schedule deliveries when their tanks read 35 percent to give suppliers enough notice.

Rud said delivery time may vary from marketer to marketer. Walth said Gray Oil is still able to make same day deliveries but other suppliers may take longer.

(Reach Jessica Holdman at 701-250-8261 or jessica.

holdman@bismarcktribune.com.)

Reach Jessica Holdman at 701-250-8261 or jessica.holdman@bismarcktribune.com.

Copyright 2016 Bismarck Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.