Propane shortage becomes unexpected priority for Midwest's lawmakers in first part of 2014

Minnesota’s legislative year began by tackling a problem few could have predicted only months earlier — a spike in the cost of propane and its impact on people (mostly in rural areas) who use it to heat their homes. Across the Midwest, the propane shortage has led to a spate of state legislation, gubernatorial-declared energy emergencies and executive orders.

More than any other U.S. region, the Midwest relies on propane to heat its homes. This fuel is also used to dry agricultural crops, and an unusually wet harvest season caused an increase in demand for propane in the fall. This, in turn, contributed to lower supplies and higher prices in the winter. Other factors included the temporary closure of a pipeline, below-average temperatures and a rise in propane exports.

According to the U.S. Energy Information Administration, average residential prices for propane in the Midwest jumped to more than $4 per gallon in late January. They were $1.77 a year ago.

Minnesota’s HF 2374/SF 1961 appropriated $20 million to expand the reach of the Low Income Home Energy Assistance Program. Wisconsin lawmakers, meanwhile, were quickly advancing a bill in February (AB 770) to provide low-interest loans to middle-income residents affected by the higher propane costs.

Earlier in the year, governors took emergency actions to bolster the supply of propane — temporarily waiving limits on the amount of hours logged by propane truck drivers, for example, and easing weight limits for vehicles transporting the fuel.

Future spikes in propane prices may only occur if there is another perfect storm of market forces and weather conditions. But the recent problems are a reminder of the importance of having an adequate supply and the factors that can result in shortages.

In its most recent long-term projections, the Energy Information Administration predicts that the residential price of propane will grow at an average annual rate of 2.3 percent over the next three decades.

Stateline Midwest ~ March 20141.71 MB