Long-term solutions to propane problems unaddressed by legislature


The root causes of this past winter's propane shortage and record-breaking price spike may not be addressed by lawmakers this year, the Pioneer Press reports.

The paper says there are three bills making their way through the Capitol right now, and none put protections in place that would help prevent future crises – despite lawmakers saying earlier they'd like to address these structural issues.

The proposal with the most traction, the Pioneer Press reports, would make the propane industry more regulated by addressing price disclosure, payment plans, discrimination issues and adding other protections. The companion Senate bill was amended earlier this month, and adds two components, the paper reports: a short-term loan program for state residents who can't afford to buy propane; and a doling out of heating aid during the off-season, so people can stock up when prices are cheap.

But issues such as storage, infrastructure to deal with the changing demand and regional reserves aren't addressed, the paper says.

There is also a bill that would exempt propane tank purchases from sales tax (though is unlikely to pass, the Pioneer Press notes), and one that proposes a study to evaluate the possibility of shifting from propane to natural gas – which the paper says wouldn't immediately address the possibility of another propane shortage and ensuing price spike.

And that would very well couldn be coming again. AgWeek earlier this month reported propane supplies in west-central Minnesota are likely to be tight for years to come.

Scott Rohlik, a Cenex Harvest States regional fuels manager, said managing the "new reality" is key, the site reported. including planning ahead, contracting for supplies and adding more on-site storage.

The site reported propane use in the state this past winter is expected to finish between 300 and 350 million barrels (after a fall of unusually-dry crops, and a winter of unusually-cold weather). Which is a lot, but not a record. Minnesota used 365 million barrels in 2009, Rohlik said.

But come April 1, the state is losing access to a pipeline that provides 40 percent of Minnesota's propane.

Earlier this year Roger Leider, president of the Minnesota Propane Association, said the closing of the Cochin Pipeline shouldn't increase the price of the fuel by itself. But it will change how propane is distributed and stored in the state.

News of a propane shortage began funneling out in January, during a month of frigid temps and polar vortexes.The price of delivery jumped 50 percent in just a week, and overall prices were 17 percent more than the year prior.

Lawmakers reacted in February by unanimously passing additional heating aid, boosting the assistance fund by $20 million. The account was nearly empty due to the bitter cold winter and increased need.

Propane is commonly used as heating fuel in rural areas that aren't connected to natural gas lines. About 250,000 Minnesota homes, farms and businesses rely on the fuel.

Sen. Al Franken was concerned about potential price-gouging by propane companies, as prices quickly skyrocketed.

“Are producers taking advantage of people’s anxieties and trying to profit from this terrible situation?” said Franken, adding he was on a fact-finding mission. “That’s what I’m trying to find out.”

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