Monthly Archives: February 2014

The Rundown: How the National Propane Shortage is Affecting PA

The propane shortage is affecting Pennsylvanians as well as residents and businesses across the country. In an article about the 2014 propane shortage, we mentioned that the U.S. exported 20% of its propane in 2013, meaning that the current propane shortage isn’t just affecting the Pennsylvania and the U.S., but also countries around the world.

It’s easy to see that everyone is being affected, but, as a company that offers propane delivery services in Bucks Country, PA, we thought it was worth taking a closer look at the impact the shortage is having on residents and businesses in the state.

The following serves as a rundown of how commercial and residential propane standards are shifting in PA as a result of the propane shortage.

Prices are Rising

According to an article by Fox 53, a news source that covers Central PA, “In Pennsylvania, the average propane residential price was $3.75 per gallon at the end of [the last full week in January 2014]. That’s the highest price since EIA began keeping track in 1990.”

The EIA, the U.S. Energy Information Administration, retrieves data and analyzes it for government use and citizen awareness.

Notice the dramatic shift in propane prices at the beginning of 2014 in the graph below. (And, on a more optimistic note, notice how the rise in price from 2000 to 2008 refers to the rise in popularity of this amazing, energy efficient gas.)

energy-efficient

 

 

 

 

The following chart helps show the stability in propane pricing throughout 2013 until the shortage struck in 2014. From January 2013 to December 2013 the dollars per gallon of propane only rose slightly more than one dollar. But from the first week in January 2014 to the first week in February 2014, the price per gallon spiked about fifty-five cents!

propane-pricing-2013

 

 

 

To get more insight, visit the EIA’s propane page for PA.

Propane Suppliers are Working Overtime

Before the shortage, there was a limit to the amount of hours a truck driver carrying propane and other resources could consecutively operate a truck. That limit was extended during January due to an action by the Pennsylvania Department of Transportation (PennDOT). And now, in February, many speculate that a similar action will be put in place.
The initial action by PennDOT said:

“Drivers usually must take a mandatory rest period after 11 hours behind the wheel. The limit for driving hours is extended to 14 hours.”

The action also temporarily changed the 60/70-hour limit rule that “requires drivers to stop driving upon accumulating 60 or 70 on-duty hours over a period of seven or eight consecutive days, respectively.”

This is just one of the ways propane suppliers are working harder than ever to help their customers and get the propane industry back on track.

Conservation is Now Key

Customers of various propane suppliers are currently unable to receive typical propane refills. For instance, a customer with a large propane tank may only be able to get their tank filled halfway. This is one way suppliers are working together with customers to conserve during the shortage.

One supplier interviewed by Fox 53 said his company is prioritizing customers like hospitals and giving residential customers only what they need and nothing in excess.

While GasTec does support conservation, it doesn’t necessarily employ the same tactics in the region. If you have any questions about what we’re doing now to conserve propane, please ask us a question in the comment section below. Also, any other questions related to our operations during the shortage are welcome.

The Cause of the 2014 Propane Shortage and What it Means for You

On January 22, 2014, the National Propane Gas Association (NPGA) issued a statement regarding the propane shortage that started in the latter half of 2013. This statement confirms that the shortage is, in fact, a serious matter and that, as a propane supplier, we’re paying the price – literally. As are you, whether you use propane for residential, commercial, or automotive purposes.

According to the NPGA statement, “The U.S. Department of Energy reported that cold weather led to record-high natural gas storage withdrawals, as well as propane.”

NPGA also noted that these are the largest withdrawals in the past 20 years, and during January 2014, the record for low propane levels was broken twice.

As economic laws tell us, supply and demand allows for affordable pricing when each is relatively equal to the other. But with the propane shortage, there’s now a low supply and a very big demand. For you – and us – this means that prices are higher than ever before.

Image of: idead supply and demand graph for propane.While propane companies like our own offer competitive pricing and always take an extra step to make customers and their communities the #1 priority, the propane industry is severely limited in supply right now. This means it’s harder than ever to offer desirable pricing for propane.

However, there is one thing GasTec has during the shortage that competing propane companies we’re currently helping out don’t – propane.

That’s right – unlike many companies in our industry right now, GasTec is one of the few that has access to propane. And although we can’t supply it at the rate we’d like to, we’re grateful for it; just as our current customers are who are going through this hard time with us, paying the price but remaining loyal to the gas they love. We’re also confident that our customers will be rewarded for their loyalty, because like with all past gas shortages, a rise in supply is imminent.

During this shortage, it’s important to remember that no shortage can negate the fact that propane is still one of the most efficient forms of alternative energy in existence today.

How Did this Happen?

As previously mentioned, cold temperatures were the cause of the shortage. But there was more at play than what you think. See, shortages didn’t solely occur because homeowners were using more propane for in-home heating and other household uses. While this may have played a small part, propane heating for homes is incredibly efficient and, therefore, would unlikely ever be solely responsible for such a shortage.

Where the shortage largely stems from is the agricultural industry.

According to the NPGA statement:

“Abundant grain crops were being harvested throughout the Upper Midwest almost simultaneously this fall. Ordinarily, the harvest progresses in stages through the region but in late 2013, the harvests happened at the same time over a wide area. This was a large, wet crop which required massive amounts of propane in order to be dried prior to storage. That demand reduced propane inventories throughout the area.”

Another area of industry that caused the shortage was infrastructure – specifically, as it applies to the reparation of pipelines responsible for transporting propane. One of these pipelines mentioned in NPGA’s statement is the Cochin Pipeline that delivered 40% of propane to suppliers in Minnesota before the shortage.

The shutdown of major pipelines like the Cochin Pipeline caused a “chain reaction” across the States, leading one supplier to ask for propane from another supplier, and on and on.

This is similar to what our propane company in Bucks County is currently experiencing; however, we’re taking the necessary steps to make sure our supply doesn’t run short for our current customers.

When Will it End?

This is the question we get asked most frequently. And the truth is, we’re not exactly sure, and neither is the NPGA – an association we trust as a resource for delivering this kind of information.

What we do know, though, is that the NPGA report said 20% of U.S. propane was exported in 2013.

For the shortage to end sooner than later, this percentage needs to be addressed if it hasn’t been already. Once this happens, and once suppliers start relying less on other propane suppliers, propane prices will start returning to normal.