Midwest propane shortage caused by shutdown of major Mexico producer, other factors.

Anybody know what caused the shutdown, what company, etc.?

Shortage raises cost of propane Cold snap could leave rural Iowans shivering

Source: The Des Moines Register Publication date: Feb 09, 2000

A shortage of propane fuel is driving up prices in Iowa and causing concerns that some rural residents could wind up without heat if another cold spell hits soon.

"If this happened in December or January during a four-week subzero cold snap, it would have the potential to cause some real problems," said Craig Schmidt, executive vice president of inputs at Heartland Co-op.

Snow is forecast for the weekend, with highs in the 20s and 30s and lows in the teens. Paul Schreier, the Cenex Propane manager in Des Moines, said higher prices, propane shortages and cold weather don't always mean good business. "Short-filling" customer tanks means more trips, unhappy customers and stressed drivers, he said.

Several factors are causing the shortage and pushing propane prices up, said David Downing of the Iowa Department of Natural Resources:

 The shutdown this winter of a major producer in Mexico, prompting diversion of U.S. propane to Central America.  * High oil prices in general, which have kept some petrochemical industries from switching to alternative fuels, as they often do when propane prices rise.  This year's unusually cold weather in the East and South, which has resulted in a diversion of more propane to those parts of the country.  Downing said the situation is better than it was in late 1996, when retail propane prices doubled, climbing as high as $1.45 a gallon.

Last week, retail prices were about 80 cents a gallon in many areas, Downing said. That's an increase of a dime a gallon in the last three weeks, he said.

A construction accident in Nebraska on Monday added to the problems, shutting down a pipeline serving western Iowa. A spokesman said the line could be operating again today.

The accident occurred near Valley, Neb., west of Omaha, when a backhoe sank in soft earth where pipelines are buried. Kelly Swan, a MidAmerican Pipeline Co. spokesman, said a crane was brought in to lift the backhoe off the line.

As a safety precaution, he said, the MidAmerican pipeline that serves western Iowa was shut down until the backhoe is removed and repairs are made.

As a result of the accident, MidAmerican's Iowa terminals in Whiting, Ogden and Sanborn were closed, Swan said.

MidAmerican terminals at Iowa City and Dubuque were unaffected, he said, but have been operating on reduced allocations since last week due to the overall shortage.

Swan said MidAmerican temporarily shut down both the eastern and western Iowa legs of its pipelines last Wednesday for a day to allow supply to build up in the lines. Since reopening the legs Thursday, MidAmerican has been limiting withdrawals, although the restrictions were eased over the weekend and were to be eased again today, Swan said.

Iowa's other major propane pipeline, owned by [Kinder Morgan Energy Partner]s of Houston, will begin allocating withdrawals today, a spokesman said. That pipeline has terminals in Pleasant Hill, Clear Lake and Coralville.

Downing, of the state natural resources department, said about 14 percent of Iowa homes are heated by propane, almost all of them in rural areas. Most can't switch to other fuels, he said.

Iowa's propane supply started the winter in good shape. Propane is a major fuel source for drying grain, and because crops were dryer than usual, less propane was used from October through December, Downing said.

Propane wholesalers contacted Tuesday said that they were getting by on the reduced supplies so far but that the shortage was annoying. Supply trucks must make extra trips or drive farther for loads. "Our efficiencies go to heck," said Bruce Passow of NEW Cooperative Inc. in Fort Dodge. Gas prices  ON THE RISE: Gasoline prices in the Des Moines area shot up by about 10 cents a gallon at some retail outlets this week, reaching $1.39 for a gallon of self-serve unleaded regular.   PREDICTIONS: David Downing of the Iowa Department of Natural Resources said he expected prices to fall back relatively soon, leveling off somewhere between $1.29 and $1.39. The prices are believed to be the highest in Iowa since about 1990.   REASONS: Downing said higher gas prices stemmed from OPEC limits on production and a cold snap in the northeastern United States that increased demand for heating oil.  -William Ryberg Publication date: Feb 09, 2000 ) 2000, NewsReal, Inc.

-- Carl Jenkins (Somewherepress@aol.com), February 10, 2000

Answers

hmmmmm.

The best explanation I've heard for the propane shortages in the mid-west has come from the OPIS alerts that indicate that one of the really major pipelines, owned by Williams, had problems with "metering." Not y2k, of course -- pipelines never are able to meter properly, so companies never know who to bill (grin)

-- rocky (rknolls@no.spam), February 10, 2000.