Large propane demand, short supply
Harvest happening late this year is nothing new on the radar. Later harvest and higher moisture mean that farmers will dry out corn using machines fueled by liquid propane. The only problem is the shortage of propane across the Midwest.
Agriculture.com Marketing Talk senior contributor jennys_mn brought the propane shortage to our attention in Marketing Talk by asking, “Anybody hearing anything about a propane shortage? Rumor going around that Minnesota is getting short on LP -- already -- and we have a long way to go yet.”
Minnesota, South Dakota, and Iowa have all declared a state of emergency to suspend rules for semi drivers, so they can transport propane from Nebraska and Kansas. North Dakota’s governor issued an executive order Tuesday to extend the hours of transport of such products valid through November 22.
Iowa Governor Terry Branstad announced the emergency declaration on Thursday saying, “Iowa residents have extremely low supplies of propane because of a late harvest and high demand for petroleum products throughout the Midwest. It went into effect Friday and ends November 7. South Dakota’s similar suspension lasts through November 30."
Minnesota Department of Agriculture Commissioner Dave Fredrickson states that a pipeline formerly moving propane to Minnesota is switching to light condensates associated with oil shale, making the shortage even more overwhelming.
A declaration of this type is not uncommon during this time of year.
“Most consumers and agricultural producers won’t even know that we are in a shortage situation in South Dakota because the propane haulers do a great job of making sure that their customers always have a product,” says Dawna Leitzke, South Dakota Petroleum and Propane Marketers Association executive director. She assures that consumers have no need to worry about running out of product.
How will this affect prices?
Propane is no longer part of the futures trade, but Marketing Talk contributor NateWCMN and jennys_mn gave us updates in Marketing Talk.
“Local co-op in central Wisconsin -- with your own tank -- is $1.51, but they said they were going to be going up,” explains jennys_mn.
NateWCMN adds, “Yes, propane is short in west-central Minnesota. Local co-op just bumped drying cost half a cent a point to cover increased transportation cost. Apparently they are having to go quite a distance to haul it in.”
All states reminded that suspending these rules temporarily does not mean that drivers should continue transporting while they are fatigued or ill. Drivers need to rest and should sleep certain hours before returning to service.