• Propane: Soaring prices prompt call to restrict exports
    By
     | February 18,2014
     
    Anthony Edwards / Staff Photo

    A propane tank outside a home on Stratton Road in Rutland.

    As temperatures have put much of the nation, even the South, in the deep freeze this winter, driving up the price of propane, Vermont’s congressional delegation is urging the Obama administration to impose restrictions on international exports of the heating and cooking fuel.

    According to the state’s three-man delegation, despite record propane production that outstrips demand, prices in the U.S. jumped 60 percent during the last year. In Vermont, where 15 percent of households rely on propane for heat, they said prices have risen 30 percent in the past three months to an average of $4.13 a gallon last week.

    Demand for propane has increased in recent months, starting in the fall with Midwest farmers needing to dry out their harvest from a particularly wet season. Coupled with that, unseasonably cold temperatures have gripped parts of the country unaccustomed to winter weather.

    In a joint letter to Secretary of Commerce Penny Pritzker, Sens. Patrick Leahy, Bernard Sanders and Rep. Peter Welch blamed the jump in prices on exports.

    “The problem is that almost all new propane production over the past three years has been exported to more lucrative overseas markets instead of being used to meet consumer demand right here in the United States,” the delegation wrote in their Feb. 14 letter to Pritzker.

    The U.S. Energy Information Administration reported last week that the average propane price stood at $3.76 a gallon; across New England the average price was $3.85 a gallon compared to $4.13 in Vermont.

    The average price of heating oil in the state was $3.95 a gallon. Across the six New England states, the average price was $4.15 a gallon.

    Matt Cota of the Vermont Fuel Dealers Association agreed that exports have driven up prices.

    “This is the crazy irony of this situation,” said Cota, the VFDA executive director. “We produced more propane in the last calendar year than we ever had. We produced 1.3 billion gallons more propane.”

    He said that’s a “massive” jump in production. But, he said, for domestic consumers, that’s been offset by propane exports of 1.7 billion gallons.

    “We would like much of that product, or at least some of that product that’s being sent off shore, to come to the Northeast,” Cota said.

    But Cota said restricting exports alone won’t completely solve the problem. He said there is a lack of propane-storage facilities.

    He said one possible location under consideration by New York Gov. Andrew Cuomo is in the Finger Lakes region.

    Cota said there are two sources of propane: crude oil and natural gas, with 75 percent of current propane production an offshoot of natural-gas production.

    He said Vermont receives its propane from two major outlets: Rutland and the southern part of the state receive the bulk of its propane from the pipeline in Selkirk, N.Y., outside Albany while the northern part of the state receives much of its fuel via rail from Canada.

    The problem is made worse by a transportation bottleneck in parts of the country. “The fact that rail cars don’t move very fast when you have 30 inches of snow … and much of our supply comes by rail,” he said.

    The other issue is that other fuels besides propane make use of the same pipelines. Cota said the Federal Energy Regulatory Commission recently prioritized propane over other fuels using the pipeline.

    In their letter to Pritzker, the state’s congressional delegation urged invocation of a provision in the Export Administration Act to “act quickly to temporarily restrict propane exports, to increase the domestic supply of propane, which will help reduce the financial burden on poor and middle-class families across the country during this particularly cold winter.”

    They noted that the problem is most severe for low-income Vermonters with 25 percent of LIHEAP clients relying on propane to heat their homes.

    bruce.edwards @rutlandherald.com

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