Propane prices up on regional shortage

A “perfect storm” of events has caused a 30 cents-per-gallon spike in propane prices in this area, according to Amber Backen, chief financial officer of Creative Energy in Jamestown, N.D.

“The crops need drying after the wet conditions and the cold snap meant homes need heating,” she said. “That is causing a short supply and prices are up.” Backen said the problem started with harvest across South Dakota and Minnesota. Farmers in those areas used more propane than anticipated to dry wet crops. In some parts of those states, propane terminals are empty and propane dealers have limited sales to residential use rather than allowing sales for agricultural use, Backen said.

The Federal Energy Regulatory Commission has accepted a proposal to allow the emergency transportation of propane to the region over a 30-day period, according to information released Nov. 20, by Senator John Hoeven (R-ND). The FERC is also initiating an alternative dispute resolution process to alleviate propane shortages in the Midwest.

Backen said Creative Energy had sent a semi to Kansas for a load of propane because nearer terminals are all out of propane. Creative Energy is a retailer and distributor of fuel products with locations in Jamestown, South Heart and Belfield.

Alicia Harstad, Stutsman County Extension agent for agriculture and natural resources, said some area farmers may reconsider drying crops with the higher propane costs. “They’ll have to look at the cost effectiveness of it,” she said. “Corn prices are an issue. Quality and price are down and drying costs are up. There are definitely people who will wait for the corn to dry naturally.”

Backen said sales of propane for grain drying are a seasonal need that usually peaks earlier in the year when harvest normally occurs. “Now that home heating starts up, the allocations get eaten up quickly,” she said.

The current situation is not nearly as much of a problem as during the winter of 2013-14. That year a nationwide propane shortage caused prices to peak at about $5 per gallon. Since then, many propane dealers have invested in storage facilities and terminals to accept rail and truck delivery of propane to the area.

“With South Dakota and Minnesota wrapping up drying, we could see a rebound in prices,” Backen said.

Load comments