CNHI/Southeast Iowa

January 24, 2014

Propane prices spike consumers, suppliers

OTTUMWA — You know it’s a bad sign when the state comes out with a press release with a dire warning one day and it has been surpassed within 48 hours.

Propane prices are spiking at what Iowa officials have called an “unprecedented” pace. Prices in October were about $1.52 per gallon. It was up to $1.99 by mid-January.

It’s over $4 per gallon now and is still rising.

The massive jump in prices is being blamed on supply issues related to getting the propane to the Midwest. There are questions though about whether it’s really a shortage and, if it is, what is causing it.

Doug Dick, who sells propane locally for Hamilton Produce, doesn’t buy the claim that the situation is entirely due to shipping issues.

“We’re getting ripped off, quite frankly,” he said. “There’s obviously a shortage of supply.”

The issues began well before the spike. Midwestern crops were late after a very wet spring. While Iowa dried out over the summer, adjacent states didn’t. That raised demand for propane to run driers for the crops. One Minnesota supplier told Dick he was running heating supplies all day and propane for agricultural use all night just to keep up.

There was no letup after the fall as Iowa plunged into a cold winter. But Dick sees more at work than just the weather.

“The big thing is we’ve gotten really good at exporting propane in the United States,” he said. Dick thinks that is a major part of the crisis.

For Jerry McKim the spike has been disastrous. He runs the state’s low-income home energy assistance program, better known as LIHEAP. The program still tries to help people, but the price spike has gutted its buying power.

“We had a minimum benefit for fuel delivery customers. That was $500,” he said. “At $1.75 per gallon that might have gotten them a fair amount of propane. Now $500 won’t even come close to the minimum delivery amount. Our buying power has been diminished significantly.”

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