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Suppliers caught in propane pinch

| Saturday, Jan. 25, 2014, 12:01 a.m.
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Mark Burger of Blackhawk Propane delivers propane to a rural home on January 24, 2014, near Clinton, Wisc. A shortage of propane in the Midwest has caused prices to surge upward to near $5 a gallon in some markets. The shortage is attributed to an unusually cold winter, increased exports, and a cold wet fall that forced many farmers to use propane to fuel dryers for their crops.

Chad Dice has been able to keep his customers in Greene and Fayette counties supplied with propane to heat their homes, but only because he's rationing those with larger tanks to half their normal allotment.

“Anybody else, they've been filled up,” said Dice, who operates Bottled Gas Service in Carmichaels.

His company, a smaller supplier in the region, could come up short if the sub-zero cold weather settles in.

“It depends on how long the cold stays, but I don't believe (the company will have enough),” he said.

Other propane suppliers said they're having a hard time getting fresh supplies as the state braces for another round of brutally cold weather.

Strong demand has pushed propane prices higher.

A gallon cost $3.42 this week in Pennsylvania, an increase of 32 cents from Dec. 2 and nearly 50 cents from January 2013, the U.S. Energy Information Administration said. The national average price jumped 10.3 cents this week, the largest weekly increase in four years.

The unrelenting cold has increased the demand for propane, the primary heating source for more than 178,000 Pennsylvanians, most of them living in rural areas.

That's about 3.6 percent of the home heating market in the state; most homes use natural gas, fuel oil or electricity.

Amerigas, which operates nationwide, has been rationing in select markets, said spokesman Simon Bowman.

“The situation changes day by day,” he said. “Supply is tight, but there is propane out there. It has to be moved. Our supply people haven't slept in days.”

“Things are tough,” said Mike Conroy of Youngstown, Ohio, who has been selling propane at Youngstown Propane for 15 years. The company usually receives propane shipments daily, but lately it's been about twice a week.

“There's some available in the South, but in our area, it's hard to get,” he said. “It's been cold for so long.”

A convergence of factors this winter has exacerbated problems in the propane distribution network, according to the Pennsylvania Propane Gas Association.

An unusually wet harvesting season and a bumper corn crop in the Midwest meant farmers used more propane to dry their crops. A pipeline that traverses North Dakota, Minnesota, Iowa, Illinois, Indiana, Michigan and Ohio was shut down for maintenance last month. And proposals to build storage facilities are collecting dust on the desks of government bureaucrats.

“The propane supply in the United States remains the strongest it has been in recent memory,” said Shelby Metzger, executive director of the propane association. “What Pennsylvanians are feeling are the results of a strained transportation and infrastructure system that are masquerading as a propane shortage.”

Some suppliers are faring better.

Thanks to storage put in 10 years ago after a similar shortage, Ross Welding Supplies and Propane in Fawn will have plenty of propane to last until spring, said company President Ross Grimm.

The company has 180,000 gallons in storage at locations in Greensburg, Fawn and Clinton.

“My customers will have gas; I don't have a worry in the world about it,” Grimm said. “I know a lot of people in this area who are going to run out.”

He said local Marcellus shale natural gas drillers supply about 30 percent of the propane consumed locally. The gas is separated during natural gas processing.

“They're helping, but the pipeline can only supply so much,” Grimm said.

Dave Talmage, general manager of Smith Propane and Oil, a subsidiary of Glassmere, said the company got a delivery on Thursday.

The company is fairly new in the propane business, so it doesn't have as large a customer base as “the big guys do,” he said.

But they did have to search for a good supply, Talmage said.

“I happened to get hooked in with a good supplier,” he said. “We're just trying to keep up with all the demand.”

Trib Total Media staffers Bob Stiles, Jodi Weigand and Brian Rittmyer contributed to this report. Craig Smith is a staff writer for Trib Total Media. He can be reached at 412-380-5646 or csmith@tribweb.com.

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