Spinal Column: Propane shortage has eased slightly but supplies remain tight

By Sen. Mike Kowall
15th Senate District

More people in Michigan heat their homes with propane than do residents of any other state. Because of this year’s extreme winter, with its record-low temperatures, keeping heating supplies stocked has been more important than ever. The cold has affected all fuels used by consumers—natural gas and heating oil as well as propane.

But this has been a highly unusual time for the propane industry in particular. Uncommon circumstances involving four factors—crops, cold, pipelines and exports—have reduced the inventories of propane and raised its price.

Crops. Farmers throughout the upper Midwest harvested abundant grain crops this fall. The yield was much larger than normal, and above-average rainfall totals meant the crops were very wet. Before grain crops can be stored, they must be dried. Drying these crops required massive amounts of propane to fuel the drying equipment.

Cold. This past fall was colder than normal. Then, when fall left, early winter arrived with its unusual “Polar Vortex,” causing severe and dangerous cold. The low temperatures in both fall and winter drove the demand for propane higher.

Pipelines. Two events involving propane pipelines caused the price of the fuel to increase and supply to decrease. The Cochin pipeline transports a significant amount of propane from Canada to the Midwest. The pipeline was shut down for repairs, causing suppliers to travel farther for their propane, raising associated transportation costs. Meanwhile, the flow of a Midwest pipeline previously in propane service was reversed to allow the pipeline to begin moving ethane to the Gulf Coast.

Exports. Finally, U.S. supplies of propane are down due to increased exportation of the product. In 2013, more than 20 percent of total U.S. propane was exported, a fourfold increase from just five years earlier.

As a consequence, Michigan is one of more than 30 states to declare a propane energy emergency.

The state has taken steps to alleviate the shortage. To help service residents with available supply as quickly as possible, Gov. Rick Snyder has issued executive orders exempting motor carriers and drivers transporting propane and heating oil within Michigan from certain regulations and requirements.

Gov. Snyder and governors from six other Midwestern states last week sent President Barack Obama a letter formally asking for assistance in dealing with the propane supply shortage.

In addition, the Michigan Public Service Commission is monitoring the state’s propane supply and is leading an effort with other affected states to monitor and coordinate responses.

As a result, though supplies remain tight since the emergency was declared, the shortage has eased slightly.

To conserve your propane, follow these tips offered by the Michigan Propane Gas Association (MPGA):
•    Turn down your thermostat 5 to 10 degrees, if possible.
•    If you have a propane hot water heater, reduce hot water usage.
•    Do not heat any rooms or buildings that do not have to be heated.
•    Reduce stove use if you have a propane stove.
•    Avoid calling your propane supplier until your gauge shows you are below 25 percent.

The MPGA also recommends the following steps for working with your propane retailer:
•    If you are out of propane or if your propane company is not able to provide propane, seek other options. There are multiple propane companies servicing every county of Michigan.
•    Work with your propane company to get your home on a regular delivery schedule.
•    Discuss payment plan options with your propane retailer. Some retailers will help you spread your projected annual cost of propane over many months, spreading out the cost of seasonally higher bills.

Financial assistance may be available in the form of the Home Heating Credit. The Michigan Department of Treasury is now processing the credit, available to low-income Michigan utility customers, including propane customers. In addition, the Michigan Public Service Commission announced $89 million in grants to 14 organizations located throughout the state to help low-income customers with energy assistance for this heating season.

If you have any questions or concerns regarding the state’s propane supply situation, do not hesitate to contact me toll free at (866) 301-6515.

My fellow lawmakers and I, along with the administration, will continue to monitor the propane situation in Michigan. As always, the health and safety of our residents is our paramount concern.

This column first appeared in the Spinal Column. Senator Mike Kowall, R-White Lake, is the chair of the Senate Economic Development Committee. He serves the citizens of the 15th Senate District, representing western Oakland County.