Propane Shortages Leave Many U.S. Homeowners in the Cold

Icy weather puts strain on energy supply, especially in the Midwest.

A propane delivery arrives at a farm January 24 in Wisconsin. Increased demand from both farms and residences amid freezing weather has caused fuel shortages and price spikes, especially in the Midwest.

Early last week, Sue Arganek, a 58-year-old postal worker in Amberg, Wisconsin, huddled in her bed dressed in long underwear, two pairs of pants, several pairs of socks and a heavy fur coat. Outside, the temperature dipped to -12°F (-24°C).  For more than a week, Arganek's thermostat had been set at 50°F (10°C), to conserve the dwindling supply of propane that heats her home. But the pilot light had finally gone out.

Arganek had assumed she was prepared for the long, cold winter 75 miles north of Green Bay. In June, Arganek prepaid a local fuel supplier almost $1,600 for 1,000 gallons of propane, enough to heat her three-bedroom house until spring. But when she called the supplier two weeks ago to request a delivery, the supplier told her the company's fuel was gone. (Take related quiz: "What You Don't Know About Home Heating.")

"They said 'I suggest you buy some electric heaters, ma'am,' " said Arganek. "Well, there were no space heaters available within 70 miles. Everyone is panicking. They are buying all the heaters they can." She drained her water pipes to keep them from freezing and moved with her two cats to a friend's mobile home.

Lowered Thermostats

In the United States and Canada, frigid winter temperatures are testing utilities and straining already-stretched energy supplies, and thousands of people like Arganek have been left shivering. (See related blog post: "Four Ways Winter Weather Is Causing Energy Supply Problems.")

On Saturday, a natural gas pipeline explosion in Manitoba that left 4,000 Canadians without heat also prompted concern that U.S. fuel deliveries would be interrupted. Minnesota-based Xcel Energy subsequently asked customers in parts of Minnesota, North Dakota, and Wisconsin to set their thermostats at 60°F (15°C). Xcel lifted the appeal on Tuesday.

PJM Interconnection, the electric grid operator that serves 13 states from Delaware to West Virginia and the District of Columbia on Monday asked customers to turn down their thermostats in anticipation of a cold snap that could increase power demand. (See related blog post: "Why Does the Power Go Out When It's Cold?")

But the 5 percent of U.S. households that burn propane seem at the greatest risk of losing heat in the coming weeks, or paying steeply increasing costs to fill their tanks. Across the country, prices for the fuel have risen dramatically, as increased demand paired with strained delivery lines have led to a fuel shortage.

National propane stocks have plummeted 45 percent from January 2013, according to the U.S. Energy Information Administration (EIA), and the average national retail price per gallon has shot to a record $4.01, an increase of 75 percent over the same time period. Prices for heating oil, the fuel used by 6 percent of U.S. homes (mostly in the Northeast), also hit a record high this week of $4.18 a gallon.

In the hardest-hit regions of the Midwest, however, customers are paying much more for propane-up  to $7 a gallon in northeastern Wisconsin, if they are lucky enough to find a supplier with any to sell.

"This has kind of caught us all off guard," said Eric Burmeister, director of emergency management in Marinette County, Wisconsin, which is experiencing a severe propane shortage. Burmeister said he has fielded a number of calls from people with nearly empty fuel tanks, many of them senior citizens living on fixed incomes who can't afford to pay for fuel.

"To say to a family that has already put out $2,000 for fuel that they need to come up with another $1,000, it's just not there," Burmeister said. "That's the biggest issue we are seeing right now."

A Scramble to Meet Fuel Demand

Even before the supply crunch, propane was an expensive heating fuel. The EIA noted in its annual winter projections that propane-fueled Midwest households would pay more than double the heating bill of households that rely on natural gas.  The agency now expects that households heating with propane in the Midwest will spend an average of $120 more this winter to heat their homes than last winter, while households in the Northeast will spend an average of $206 more. (See related story: "No Freeze on Winter Energy Prices, Despite Natural Gas Boom.")

The strain on propane supply was caused by a number of events. According to the National Propane Gas Association, the crisis is a result of a 2013 rise in U.S. propane exports, increased agricultural demand during the crop drying season, rail rerouting that stalled Canadian imports, and repairs on the Canadian Cochin pipeline that passes through the United States en route from Alberta to Ontario.

The Obama administration and states are scrambling to respond. The U.S. Department of Transportation has issued emergency orders that exempt transporters in 37 states from a number of safety regulations while they are delivering heating fuel. Across the country, governors have also declared states of emergency in order to ease transportation regulations and increase propane deliveries.

In Georgia, which like much of the South is suffering the effects of a major winter storm, Governor Nathan Deal on Monday signed an executive order prohibiting propane providers from price-gouging. Due to the state's unusually cold weather this winter, Georgia has seen a higher demand for propane gas that has resulted in shortages and escalating prices, according to the governor's press release.

In Wisconsin, Governor Scott Walker released $8.5 million to help low-income residents pay for propane and is pushing a $5 million loan guarantee program to spur banks to expand credit to propane dealers. Minnesota Governor  Mark Dayton has instructed his commerce commissioner to help guard consumers from price-gouging. In North Dakota, payments to propane vendors made as part of the state's Low Income Home Energy Assistance Program have increased almost 8 percent from a year ago, according to Heather Steffl, a spokeswoman for the program.

But so far, many residents of the Midwest are feeling little relief. In northeastern Wisconsin, the shortage has caused businesses to cut hours and at least one church to cancel services. In addition to heating, many homes and businesses in the area rely on propane for cooking fuel and hot water. Alan Walesh, the owner of Jungle Jim's, a bar in Silver Cliff, Wisconsin, said he has slashed the menu during the week to food he can prepare in the microwave. In the bar, Walesh said he hears many stories of people abandoning their houses and moving in with family members.

"Some have run out of propane already and there are a lot of people who are getting close," Walesh said.

Many of them are elderly. Angela Thompson, officer coordinator of Marinette County Elderly Services in Crivitz, Wisconsin, said she is fielding calls all day from people concerned about losing their heat. Many of them are down to a tank that is 20 percent full or less. "That doesn't get you very far in this cold," she said, adding that temperatures have dipped so low this season that ice fishermen for the first time in recent history are purchasing extensions for their augers, tools used to drill through the thick ice on nearby Lake Noquebay.

Since Sue Arganek ran out of propane in her home, she spends her days calling the 15 fuel dealers within 100 miles of her home, hoping to buy fuel. Arganek said dealers are selling only to current customers and fulfilling prepaid contracts. On Tuesday, she finally found a dealer with propane for sale. The price was $7 a gallon. She said it's unclear whether she will get a refund from the company that was unable to deliver the prepaid fuel.

Arganek said she can afford to buy 100 gallons, which she expects will last two weeks. She was unsure what she would do when it ran out. "Where do you go to get the next $700?" she asked. "I'm going to hurry up and file my income tax return." (See related story: "Six Stealthy Energy Hogs: Are They Lurking in Your Home?")

This story is part of a special series that explores energy issues. For more, visit The Great Energy Challenge.