By DOUG SCHMITZ
Iowa Correspondent

BLOOMINGTON, Ill. — Despite record demands placed on supplies during this fall’s historically long harvest season, at least one major U.S. propane (LP) supplier is confident non-farm users should have plenty to heat their homes for the upcoming winter months.
“The major pipelines went off allocation on Dec. 1,” said Randy Miller, GROWMARK director of propane operations in Bloomington, Ill. “Although some parts of (Illinois) have a ways to go, we seem to be over the biggest rush.

“Interestingly, we came into the fall season with near-record supply levels in the Midwest – thinking this summer we could have a good grain drying season. But I don’t think anyone could have expected the kind of demand we have seen the last two months.”

According to the National Propane Gas Assoc. (NPGA), more than 865,000 farms use propane to power irrigation pumps, grain dryers, standby generators and other equipment. Early last month in Iowa, Gov. Chet Culver issued a proclamation that eased road restrictions on truck drivers transporting propane into the state for farmers to use during the final days of harvest, which has already spiked an increase in LP demand.

Culver said suspending the hours of service requirement for truck drivers delivering propane would help bring LP into the state quicker, helping to also ensure an adequate supply of fuel for farmers drying their crops after this year’s harvest.

As a result, near-record corn yields, coupled with a wet and late harvest, had significantly reduced propane inventory levels, Miller said. “Recent demand was really just greater than the propane infrastructure’s ability to move the product through the line as fast as trucks could load it out,” he added.

Even as Midwest farmers finish drying their grain, Miller said many FS member cooperatives are “shifting their focus to customers who use propane to heat their homes.

“A lot depends on the weather, but I see no cause for alarm this early in the home heating season,” he said. “Last year, (Illinois) had a lot of grain drying followed by a cold winter, and supply was adequate.”

To date, nearly 5 million U.S. households rely on propane for home heating, with an estimated 3 million using propane for residential water heating, the NPGA said. Conversely, according to the Ohio Propane Gas Assoc. (OPGA), over the past eight weeks alone, propane inventories have plummeted 11.5 million barrels from a level well above the average range, to near the lower boundary of the average range.

The OPGA said total U.S. inventories of propane fell by 1.3 million barrels just last week, to 61.4 million barrels.

“The Midwest regional stocks experienced the largest decline of 0.8 million barrels,” the Columbus-based organization stated. “The Gulf Coast region drew by 0.4 million barrels and the Rocky Mountain/West Coast region fell by 0.1 million barrels.”

The East Coast regional inventories grew slightly, with propylene non-fuel use inventories increasing their share of total propane/propylene inventories from 3.4 to 3.5 percent. Propane production increased to the highest level since June 5, at 1.1 million barrels a day, the OPGA added.

As far as cost, the U.S. Energy Information Administration (EIA) stated it is now predicting propane fuel bills to be lower this winter in every part of the country.

According to the EIA’s Short-Term Energy and Winter Fuels Outlook released Oct. 6, the administration predicted households heating primarily with propane will spend an average of $280, or 14 percent, less this winter than they spent last winter.

The EIA said Midwest households using propane, however, would see the biggest drop – 21 percent.

The report said natural gas households would spend an average of 12 percent less than they did last winter, and households that use electricity or heating oil will spend an average of 2 percent less.
Miller said most propane suppliers will offer customers many payment options in the summertime for the next heating season, allowing customers to lock in prices at that time, which can be prepaid or balanced over even payments.

Although some farmer cooperatives aren’t overly concerned about the winter propane supply, the Iowa Propane Gas Assoc. (IPGA) in Des Moines recently asked for an emergency proclamation/hours of service waiver from Culver’s office.

“I have been told that there is plenty of propane – the issue is that the pipelines can’t keep up with the demand during this cold snap,” said Deb Grooms, IPGA executive director. “We don’t keep track of propane prices due to our anti-trust laws.

“(But) my members have been telling me that some of the pipeline terminals are out and there are a lot of trucks in line at other terminals.”
Miller said Midwest propane stocks remain just slightly higher than year-ago numbers, with total U.S. propane stocks slightly under year-ago numbers.

“We are still seeing pockets of grain drying demand and will likely see this into early 2010, so propane demand at the terminal level remains strong,” he said.

“So now, it becomes a question of what type of winter we have.
“As a homeowner, it is best to align yourself with a reputable propane supplier and operate on a keep-full basis, allowing your supplier to make sure your propane tank is full through the winter months.”