High demand, low supply causes propane-fueled headache locally

Feb. 20, 2014 @ 05:02 AM

A national propane shortage has led to local rationing and "the worst winter" one Sanford businesswoman has seen in her 22 years in the industry.

Faye Libby is the operational manager at Hunter Oil & Propane, the only independent dealer of propane and propane accessories in the area. She said the last few weeks have led to the highest prices the company has ever charged, as well as a large number of people burning through their supply faster than normal because the colder it gets, the more fuel it takes to heat a house, chicken coop or greenhouse.

"People don't understand when it's 8 degrees, 10 degrees, how much propane they're going to burn," Libby said.

She said people using propane to heat their homes need to resist the temptation to crank the thermostat to 70 degrees and should also turn the heat down or off when no one is home. She said people also need to call their dealer once the propane tank reaches 20 percent capacity.

"A lot of the problems we had were people who called and said, I'm out of gas, and I need gas today,'" Libby said. "We had to explain to them that we have many, many people in front of you, and there are only so many hours in the day."

Unusually cold weather nationwide has led to record-high demand for propane in the past several months. Libby said that was exacerbated by unexpectedly high usage by the agricultural industry in the Midwest this summer, as well as loosened export restrictions that have led to energy companies shipping propane out of the country at historic rates.

It has all led to a crisis rooted in simple economics: When demand goes up, prices go up. When supply goes down, prices go up. In this case, both are happening at the same time.

The situation has been especially pronounced in North Carolina. Prices for residential propane have jumped $1.35 per gallon in the last year — including $1.01 in just the last month — to $4.15 as of Feb. 10, according to the U.S. Energy Information Administration. That group lists only two other states, Rhode Island and New Jersey, with higher average prices among the 26 East Coast and Midwest states it tracks.

In addition to Hunter Oil & Propane and its affiliate D&H Propane, two other Sanford companies deliver propane: Cooper LP Gas and Blossman Propane Gas and Appliance. Both are part of national companies, and local employees either couldn't be reached for comment or said they could not speak to the media about the shortages.

However, Cooper LP's website does feature a letter from Jerry Sheridan, the president and CEO of AmeriGas, the company that owns Cooper LP. The federal government temporarily lifted restrictions on the number of hours propane truckers can log, and he said since then, the company's drivers have been working from early morning until late at night "day after day" to try to meet the demand.

Sheridan apologized to any customers who have still been inconvenienced despite those efforts, blaming record-high demand and "extreme weather" beyond anyone's control.

The President and CEO of Blossman Gas, Stuart Weidie, told a trade magazine, Fuel and Fleet, in late January that there's enough propane for everyone — and that distribution issues have caused the shortage most American propane customers are seeing.

"What we're experiencing in the price spike is temporary in nature," he said. "We've got plenty of gas, but it's not necessarily where we need it to be."

The owner of Hunter Oil, Don Worsley, recently sent a letter to the company's customers that tanks would only be filled to 60 percent instead of the normal 80 percent. He said this will hopefully keep bills down for customers until prices deflate and should also ensure the company doesn't run out of gas in the coming weeks.