Iowa officials rush to action on surging propane prices
3:14 PM, Jan 27, 2014 | by Jason Noble |
Elected officials in Iowa took steps Monday to confront surging propane gas prices that have walloped ratepayers trying to warm their homes in an unusually harsh winter.
Gov. Terry Branstad sent a letter to President Barack Obama asking his administration to suspend regulations, making it easier to bring propane to market. Lawmakers in the Iowa House, meanwhile, will seek $1 million in additional funding to help low-income Iowans heat their homes.
Skyrocketing prices have families in rural areas sealing off parts of their homes and potentially engaging in unsafe heating practices, state Rep. Patti Ruff, D-McGregor said Monday.
Industry officials suggested homeowners drop their thermostats five to 10 degrees to conserve energy.
Branstad’s letter asks for an expanded exemption to “hours-of-service regulations to ease the movement of propane fuel to customers in states facing shortages” and relaxed regulations on propane shipments via rail and pipeline.
He also asked the Obama administration to “examine current propane market forces” and consider restricting propane exports to ensure there is enough propane available to serve domestic needs.
State Reps. Joe Riding, D-Altoona, and Todd Prichard, D-Charles City, announced legislation in an informal hearing on Monday that featured several propane industry representatives and packed a Statehouse meeting room.
Prices for the liquid propane gas many rural Iowans use to heat their homes have surged in recent days, the result of spiking demand because of persistent cold temperatures and lower-than-ideal supply across the Midwest.
The Midwest entered the winter home-heating season with a supply of about 23 million barrels, said Jeff LaPan, an account manager for Propane CHS Inc., a wholesaler. That’s 5 million barrels less than the ideal supply.
Further complicating the issue are supply chain difficulties, including the closure of a key pipeline and lack of access to propane-carrying railcars, LaPan said.
“When you have a short-supplied market with a heavy demand, it’s just supply and demand,” he said.
Propane prices typically are around $2 a gallon. They rose to $3.50 and peaked at more than $5 last week. That increase could increase the cost of filling a 500-gallon tank by more than $1,000.
Inventories of propane have dropped quickly enough that it’s possible the state could run short on supplies by mid-February unless demand slackens, LaPan added.
“A lot of it really depends on what the future weather is and what can be pushed into the pipeline,” he said.
The bill that will be introduced by lawmakers won’t address the supply-side problems, but would soften the blow of higher prices for poorer Iowans.
The Low Income Home Energy Assistance Program, known as LIHEAP, provides a subsidy for heating costs for Iowans earning less than 150 percent of the federal poverty level – about $35,000 for a family of four.
The bill would add an additional $1 million in state funding for the program. It’s currently being drafted and should be introduced later this week. Riding said there may also be discussion of changing eligibility guidelines so that more people are able to access the subsidy.
Riding said he has heard bipartisan interest and believes the bill could be approved in time to help Iowans this winter.
“As long as it is a singular, emergency statement and isn’t tagged with anything else,” he said.
Industry officials offered several tips for conserving energy and staying safe in the cold temperatures:
-Lowering thermostats by five to 10 degrees
-Winterizing and cutting off heat to unused buildings
-Reducing hot-water use
Propane gas users, they said, also should suspend automatic refills of their storage tanks and not request refills until their supplies fall below 25 percent. They also warned against using propane grill tanks for home heating, which could be dangerous.