Officials Take Action To Ease Burden Of Propane Shortage

Officials Take Action To Ease Burden Of Propane Shortage

Governor issues a proclamation of "disaster and emergency" due to record high prices for LP-gas in upper Midwest.

Governor Terry Branstad late last week declared a proclamation of disaster and emergency in the state of Iowa due to record-high propane prices throughout the Midwest. The emergency proclamation activates the disaster response plan of the Iowa Homeland Security and Emergency Management Department.

The order says the risk to Iowans posed by the tight propane supply and high prices remains "significant and unabated." The executive order authorizes the "use and deployment of all available state resources, supplies, equipment and materials as are reasonably necessary to assist those citizens located in the disaster" counties.

SOARING PROPANE PRICES: Iowa governor Terry Branstad on January 31 took additional steps to help Iowans cope with the propane shortage.

Also, on Friday the Iowa governor's office issued a statement saying he has had "productive conversations" with the U.S. secretaries of energy and transportation, with Texas governor Rick Perry, and with company officials in the propane industry and with people in Iowa who depend on propane to heat their homes and run their farms and businesses. "We all agree we need to do everything possible to resolve this propane issue," says Branstad.

Propane prices have risen rapidly during the past week or so, reaching a high of $5 a gallon in some areas of Iowa, doubling in price within a few days. The rapidly rising propane prices are being blamed on market conditions—an extremely cold winter that followed a fall harvest of wet grain that required extra drying with propane-fired gas dryers.

Transportation issues have also complicated the process of getting propane to areas of the country that need it. Some Iowa trucks in recent days have been hauling propane all the way from Texas to Iowa, as propane is available in Texas and is significantly cheaper from sources there—where propane is manufactured.

Iowa officials are urging the federal government to ease regulations
Also in Friday's statement from the governor's office, Iowa Lt. Gov. Kim Reynolds said the state continues "to urge the federal government to reduce the regulatory burden so propane can be transported to Midwest states. We have driven our message of collaboration across state lines from Texas to Washington D.C. to make sure Iowans have the propane they need to heat their homes, and businesses are able to fuel their operations, and livestock producers can warm their animals."

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Last Thursday, the U.S. Department of Health and Human Services released $7.4 million for Iowa's low-income home energy assistance program, called LIHEAP, part of the state's annual appropriation. Also on Thursday, Iowa congressmen Dave Loebsack, Tom Latham, Steve King and Bruce Braley joined together in a bipartisan effort to ask the Federal Trade Commission to investigate the spike in propane costs. Branstad and Iowa's two U.S. Senators—Chuck Grassley and Tom Harkin—have also asked the FTC to look into the propane situation and find out more information about the reasons behind the huge price jump.

In addition, Braley sent a letter to Mark Wetjen, chairman of the Commodity Futures Trading Commission, calling for an investigation into whether price gouging or market manipulation is occurring in the propane market. "Propane prices have skyrocketed during a brutal winter, creating terrible burdens for Iowans," Braley said in a news release. "Many families are faced with having to choose between heating their homes and paying other critical bills, and I want to ensure that the reason for these price increases is being responsibly examined."

Propane prices have begun to retreat from record highs
Propane prices last Wednesday began to retreat from record highs of $5 per gallon in some areas of Iowa. The Iowa Department of Agriculture conducts and releases a weekly survey of fuel prices in the state. "There are significant signs that the situation is much improved from only a few days ago," said Harold Hommes, last Friday. "But propane supplies continue to be tight." Hommes is a market analyst with the Iowa Department of Agriculture.

The Wednesday January 29 ag department survey showed propane prices averaging $3.78 per gallon in Iowa, down from a statewide average of $4.71 per gallon on Monday January 27. A week earlier, the statewide average price for propane was $2.61 per gallon.

To Get Help And Information: The Iowa governor's office last week launched a propane shortage website, which includes information on how to get heating assistance. The webpage is a one-stop shop with information regarding the low-income home energy assistance program or LIHEAP, information about reductions in regulatory burdens to aid propane transport, other related energy information, cost-saving tips and additional resources for Iowans to use to help cope with the propane shortage. The propane shortage and cold weather is prompting some Iowans to seek alternative sources of heat. The webpage has a link to important safety information for people using space heaters and other heat sources.

TAGS: USDA
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