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Effects of propane shortage felt in Keweenaw with high prices

January 30, 2014
By KURT HAUGLIE - DMG writer (khauglie@mininggazette.com) , The Daily Mining Gazette

HOUGHTON - Staying warm this frigid winter may become difficult for some people because of a shortage of propane in Michigan and much of the rest of the country.

The shortage is due to a combination of factors, and the situation is being examined for possible solutions to keep the fuel available for the rest of the winter.

Propane is a by-product of natural gas processing and petroleum refining. It can be compressed to a liquid for transportation. Among other things, it is used to fuel furnaces for home and business heating.

Article Photos

Kurt Hauglie/Daily Mining Gazette
A combination of factors has caused a shortage of and increase in price of propane in much of the country, including the Copper Country. A bipartisan group of Michigan legislators is looking into the situation to determine what can be done, if anything, to remedy it.

In a written statement dated Monday, a bipartisan group of Michigan legislators expressed concern about the propane shortage in the state.

The legislators are State Representatives Scott Dianda, D-Calumet, Ed McBroom, R-Vulcan and John Kivela, D-Marquette, and State Senators Tom Casperson, R-Escanaba, and Howard Walker, R-Traverse City.

In the written statement, the legislators stated they will ask Michigan Attorney General Bill Schuette to monitor the cost of propane in the state to make certain there is no price gouging during the shortage.

According to a statement on the Michigan Public Service Commission website dated Jan. 17, one of the causes of the propane shortage was the closing of a propane facility in Rapid River due to the repair of a pipeline in Wisconsin.

Also according to the MPSC website, on Dec. 20, Gov. Rick Snyder declared a state of emergency for propane. On Jan. 10, he expanded the state of emergency to include heating oil through Friday. Snyder's executive order exempts motor carriers and drivers transporting propane from the hours of service regulations and requirements.

As of Jan. 17, 24 states have declared propane energy emergencies, according to the MPSC website.

Casperson said he wants to know why the pipeline repair in Wisconsin was done in one of the coldest Januarys in years.

"We're trying to get to the bottom of that," he said. "The flow (of propane) isn't there."

If government officials allowed permits for the pipeline work to be done, Casperson said that would cause him to be concerned.

"That needs to be questioned," he said.

Casperson said he's heard from some propane suppliers that the shortage is hurting them financially.

"Some of them are taking it on the chin," he said.

Before a heating season begins, Casperson said many suppliers will make agreements with some of their customers to buy a certain amount of gas at a set price for the heating season.

With the shortage and increase of prices from the larger propane suppliers, the local propane dealers are facing difficulties. Some have gone out of business and some have taken out loans to continue to operate.

Casperson said he was intending to meet Tuesday with other Upper Peninsula legislators, and representatives of the attorney general, secretary of state, the governor, the Michigan Department of Transportation and Michigan Department of Environmental Quality to talk about the propane shortage situation.

One of the issues he wants to discuss is the possible easing of both federal and state regulations controlling the distribution of propane, Casperson said.

"I don't think there's a lot of time to play around," he said. "It's an emergency."

There has been a surge in the drying of corn, which uses propane for the drying heaters, contributing to the shortage, Casperson said. Corn was harvested late and it was wet. Other factors include the extreme cold in January, heavy snowfalls in December and January, the pipeline shutdown, a rail closure in Canada and poor driving conditions affecting delivery trucks.

"It's almost a perfect storm," Casperson said.

 
 

 

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