Traverse City Record-Eagle

January 29, 2014

Shortages cause propane prices to skyrocket

BY MICHELLE MERLIN
mmerlin@record-eagle.com

— TRAVERSE CITY — A “perfect storm” of conditions is causing propane prices to spike, hitting families hard during the coldest winter in recent years.

Propane prices rose to a statewide average of $2.73 per gallon on Jan. 20, according to the Michigan Public Service Commission, although propane providers said prices are now even higher. Some propane customers locked in prices through price-set plans at the beginning of the winter, but others are now footing the bill of higher prices due to cold weather, shortages of propane and other factors.

“Some people have described this as a perfect storm of multiple factors coming together at the same time to create this supply problem,” said Judy Palnau, a media and public information specialist for the Michigan Public Service Commission.

Scott Overholt, the owner of Traverse City based Tri-Gas Distributing Company, said propane prices rose an average of 85 cents in the last week, bringing costs up to around $3.46 per gallon. Matt Stevens, owner of Buckley-based Stevens Propane, said prices have spiked dramatically.

Overholt, who’s grandfather founded Tri-Gas in 1947, said the shortages remind him of the 1970s energy crisis.

“Not very many people have any gallons left to sell,” Overholt said. “If the weather would break soon, that would really help a lot, but it doesn’t look like it’s going to.”

There are multiple reasons for the price spike. A late, wet corn harvest caused farmers to use propane to dry their crops in the fall. Then, the early November winter caused people to start cranking up the heat sooner than expected. Snowstorms followed, hindering propane transportation, and several pipeline issues have kept some supplies of propane from hitting the market.

Central Lake resident Janet Weir has turned to a local non-profit for help in securing propane. Weir is homebound in the wake of hip replacement surgery, and most of the water pipes in her home have frozen. She said she’s only able to pay her heating bill because of help from Good Samaritan Family Services, which provides heating assistance to people in the area.

“Propane prices are beyond me,” Weir said. “Normally, it’s a choice between taxes and propane, but with the help that I get, I can have heat and pay my taxes.”

Weir is not alone. Mary Peterson, director of Good Samaritan Family Services, said people sometimes heat homes by leaving oven doors open and sit inside all bundled up in winter coats.

“It’s really scary for folks, especially people on fixed incomes that can’t afford it to begin with,” said Mary Peterson, the director of Good Samaritan Family Services’ pantry and resale shop, which also helps people with their heating bills. “I think there’s just a lot of fear and real concern with people, especially with the cold and no let up in sight.”

The Northwest Michigan Community Action Agency, which offers energy assistance in ten counties around Traverse City, recently compiled data for the Department of Human Services. Members compared heating costs for clients using five different propane companies, said Kris Brady, the agency’s community services director. One company’s prices jumped from around $2.33 per gallon in October to $3.93 a gallon in January.

Governor Rick Snyder declared Michigan in a “state of energy emergency” through the end of January, and the federal government waived restrictions on how long propane truck drivers can be on the road.