August 19, 2014 – Propane supplies might be adequate for this winter’s heating needs, assuming it can get to consumers.
“There is plenty of inventory,” said Vern Mastey, propane manager for Country Visions Cooperative of Reedsville, which has an office in De Pere. “Inventories are higher than what they were last year by quite a bit. The only thing that could come in is if it gets to be a distribution problem.”
Last winter, homeowners across the nation, including in Wisconsin, either couldn’t get propane or paid dearly for it. Facing a national supply crisis in February, federal regulators intervened, ordering pipeline operators to give priority to propane shipments to markets where some residents were without heat.
About 50 million homes use propane for winter heating, water heaters, stoves and other appliances, according to a recent story by McClatchy/Tribune – MCT Information Services. Aside from being a winter product used in homes across the Midwest and New England states, propane has many farm and commercial uses. California, Florida, Illinois and North Carolina are among the largest users of propane.
The U.S. Energy Information Administration is estimating propane consumption this year will return to 2012 levels. That will depend in large part on the weather. A late corn crop last year required more use of propane to dry the product, and in Northeastern Wisconsin, at least, another late crop is possible. Also, last year was a record-cold winter. Third, one major importing pipeline was reversed for exporting, robbing the United States of an important source fuel.
All of which made last year a perfect storm of the unforeseeable, Mastey said.
“They exported a lot. The inventories weren’t as high. We thought we had plenty,” he said.
In addition to efforts by the government to ensure better supply, consumers are taking action to protect themselves.
“Customers have added some extra storage and we are going around now so they have a full tank to start with,” Mastey said. “This year, a lot more of the contracted for the winter, so they are locked.”
Matsey said the price of propane is higher than last year at this time, but not as high as he expected.
“I thought we wouldn’t see anything less than $2 a gallon, but it’s below $2,” he said.
Natural gas, which is used by the majority of homes in Northeastern Wisconsin for heat, remains stable.
“There’s not any indication there will be any problems,” said Kerry Spees, spokesman for Wisconsin Public Service Corp., Green Bay. “Prices are slightly higher than normal, but lower than last year.”
According to the U.S. Energy Information Administration, natural gas spot prices fell from $4.47 per million British thermal units (MMBtu) at the beginning of July to $3.78 MMBtu at the end of the month as natural gas inventory increases continued to outpace historical norms. EIA said it expects that the Henry Hub natural gas spot price, which averaged $3.73 per MMBtu in 2013, will average $4.46 per MMBtu in 2014 and $4 per MMBtu in 2015.
Article by Richard Ryman of the Press-Gazette Media