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Deep Freeze: Propane Industry Tries to Thaw Supply Chain

By / Jan 27, 2014 (iStock/Thinkstock)

The U.S. propane industry has struggled to get its heating gas to the parts of the country that need it most during these weeks of brutally cold weather. The National Propane Gas Association is working to solve the issue.

It isn’t just natural gas furnaces that are getting trade groups all fired up this time of year.

The propane industry—which produces the primary alternative to natural gas for heating homes—has had a rough run of it in recent weeks, as a series of recent cold spells have forced major price spikes and created supply chain issues that have left consumers out in the cold. More details:

What’s causing the issues? Speaking to NPR, Jeff Petrash, the National Propane Gas Association’s (NPGA) vice president and general counsel said that a number of factors are at play, including the recent cold weather (obviously) following a few years of fairly warm winters and the farming industry’s increased need for propane after a late harvest in the Midwest. “Most people don’t realize that huge amounts of propane are used in grain-drying,” Petrash explained. “So we had a large and later-than-normal grain harvest that called for large volumes of propane just as we were entering the winter heating season.”

Plenty of supply in the wrong places: There is a significant U.S. propane supply—domestic production increased this year (though exports are also on the rise)—but it’s simply not where it’s needed. Simon Bowman, a spokesman for the retailer AmeriGas Propane, told Reuters that the issue was severe enough that the company has had to ration its supply to some areas of the country. “Supply is very tight. There is propane to be had out there, but there are supply and transport issues across the country,” he said.

Steps being taken: NPGA has posted a statement on its website describing the steps the industry is taking to help alleviate the infrastructure issues, including working with the U.S. Department of Transportation and agencies in various states to allow more regional movement of propane transporters. (The association lobbied the federal Transportation officials on this issue earlier this month.) “In addition to seeking relief at the federal level, NPGA is working with officials within the pipeline, rail, and truck transport industries and asking for propane shipments to be prioritized within their industry,” the association said in the statement.

When will it stop? It’s unclear how long the supply-chain bottlenecks will last, according to Propane Education and Research Council President and CEO Roy Willis. “It could be days, or it could be weeks,” he told Reuters. “It really depends on the weather and the logistics of moving the propane.”

Ernie Smith

Ernie Smith is the social media journalist for Associations Now, a former newspaper guy, and a man who is dangerous when armed with a good pun. More »

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